Petty Cash Audit: Fill & Download for Free

These are all fair questions, but I'm afraid you're over thinking this.Petty, by definition, means trivial or of little importance.Petty cash, as one might imagine, involves a tiny amount of cash on hand that makes paying for small incidental expenses easier, rather than issuing a company check.Obviously, you don't want cash sitting on the counter, even though it is a relatively small amount. On the other hand, you don't need a safe the size of Fort Knox either. A small locking box from any office supply store will alleviate any temptation. Nobody in the company is going to risk losing their job trying to break into a box that contains such a tiny amount of money. The lockbox can be stored in a desk (with a lock) or small office safe.From a security standpoint, it is best that one person be appointed the 'custodian' of the petty cash fund. That means that they are held responsible for the security of the fund and accountable for all of the disbursements made from it.The petty cash fund can be any amount the company deems is appropriate, but for most companies, I would think $100-$200 would be sufficient, depending upon how frequently it is used. There is no magic number. It could be $500 or $50 if you wanted it to.A log should be kept by the petty cash custodian to record all disbursements made from the fund. It could be a manual ledger or simple spreadsheet.Each disbursement should be evidenced with/supported by a receipt and the sum total of all receipts plus the remaining cash on hand should equal to the original petty cash fund at any given time. In the example above, I have $60.33 cash on hand + $139.67 in receipts = $200 (the original amount of the petty cash fund).When the fund gets 'low' (a judgement call), a check is cut to be cashed at the bank, which replenishes the fund to its original position ($200, in this example). The receipts serve as the supporting documentation for the check just cut. The disbursement may be approved by the office manager or other person in authority.A second custodian should be given the key to the lockbox and should be authorized to perform surprise audits on the fund to ensure receipts are properly accounted for and no misappropriation of funds is occurring. This person serves as the primary custodian, in the event the designated person is not on the premises at the time the disbursement is needed/required.That's petty cash, in a nutshell.I hope this is helpful.

If you were doing a financial audit of a company’s books, and found that 96% of their petty cash was unaccounted for, would it be fair to claim that you, the accountant, understood only 4% of the practice of accounting? Would it be a good argument to say that, because of this petty cash discrepancy, there might be hitherto unsuspected laws of accounting that explain the missing cash, maybe that money in a locked box can magically disappear?No, I hope you would agree that this is an absurd claim. It would be confusing knowledge of accounting with the knowledge of a particular account.In fact, you could make the opposite argument, that knowing that the petty cash was missing, or that there was “dark matter” in the universe, is something that is only detectable against a backdrop of science and knowledge, to a degree that “almost all” is explainable by conventional theory.

By keeping post-reimbursement fixed, say $500, you create a checksum, a fundamental accounting control. Each cash withdraw from the petty cash box is offset by a paper "chit" with info written on who, what, how much $ were withdrawn. At any time then, a simple control audit can be taken where cash total + chit total = $500 the checksum aka the fixed funding level for the petty cash box.