In the grand scheme of things – yes, it’s small change, but petty cash accounts are easy to mishandle and manipulate without proper oversight and controls. What controls are currently in place and are they followed? This is the primary focus of an internal audit of the petty cash funds.

Review the written policies governing petty cash accounts; looking specifically for what types and amounts of transactions will be reimbursed from petty cash, as opposed to a disbursement paid by check.

As with all expenditures, a voucher or request form should be completed and include the place, amount, and purpose along with the original receipt (dated within 60 days of the request). Review the general ledger and note the expenses accurately recorded and the funds replenished appropriately

Finally, count it. Make sure the cash and the receipts make up the total listed on the general ledger.

How many petty cash accounts does your organization maintain? Have you developed stronger controls than these to help ensure the integrity of your funds?

— Lisa Chapman is an auditor specializing in church accounting with PSK LLP.