Internal control for petty cash(new)
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Transcript of Internal control for petty cash(new)
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SaSa Fashion Company
*Internal Control For Petty Cash
LECTURER: CHHUN RADYGROUP 7
Economics and Finance Institute
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I. Introduction
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*Introduction
*The three primary objectives of effective
internal control:
*Reliability of financial reporting
*Efficiency and effectiveness of operations
*Compliance with laws and regulations
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* Introduction
*The method use:
*Narrative
*Flow chart
*Internal control questionnaire
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II. Policy and Procedures
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1. Introduction
Petty Cash Policy and Procedures document:
is issued on 1st August 2009
supersedes all other policies and procedures relating to petty cash currently in issue
is applicable to all employees of the company
Petty cash claims will not be reimbursed to self-employed persons
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2. Policy
Petty Cash may be used to reimburse for small
items of incidental expenditure only
The maximum amount that may be claimed is
$500
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2. Policy
The following items cannot be reimbursed via
petty cash:
• Travel and subsistence
• Hospitality or entertaining
• Uniforms
• Telephone costs
• Equipment
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3. Procedure
Petty cash fund
• The Manager should often review
the amount in the fund to ensure
that the amount is adequate
• The money should be kept in a
locked petty cash box under the
control of the Petty Cashier
The working flow in the company is listed below:
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3. Procedure
Petty cash expenses
• Petty cash expenses must be related
to legitimate company activities
• The maximum limit for petty cash
expenses is $500. Expenses over this
amount must be paid by cheque
• Casual wages are not paid out of the
petty cash fund
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3. Procedure
Employees:
• Keep all dockets and/or receipts for
petty cash expenses as proof of
payment
• Attach dockets and/or receipts to the
back of the Petty Cash Voucher
• Check at the point of purchase that
dockets/receipts are clear and correct
Documentation required
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3. Procedure
Employees:
• Complete a Petty Cash Voucher
• Attach relevant dockets/receipts to
the back of the Petty Cash Voucher
• Obtain the supervisor’s authorization
for amounts over $350
Claims process
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3. Procedure
Claims process
• Submit all claims to the Petty
Cashier within seven (7) working
days
Petty Cashier:
• Check the claim and reimburse the
employee from the petty cash fund
for the amount spent within two (2)
days of the claim
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3. Procedure
Petty cash advancesEmployees:• Complete a Petty Cash Voucher if money is needed, in advance, to pay a company-related expense• Get the Manager’s approval for the advance• Give the Petty Cashier a docket/receipt for the money spent, as well as any change from the advance, within five (5) working days of receiving the money
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3. Procedure Security
Petty Cashier:
o Keep the petty cash fund secure by:
• not allowing other persons access to the petty
cash box
• locking the petty cash box when it is not being
used
• putting the petty cash box in a locked desk
drawer during working hours
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3. Procedure
Security
Petty Cashier:
• putting the petty cash box in a safe place
overnight
o Do not issue funds from the petty cash fund
unless a Petty Cash Voucher has been
processed, in accordance with the above
guidelines
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3. Procedure
Petty cash expenses
Petty Cashier:
• Check all Petty Cash Vouchers against
dockets/receipts for accuracy
• Check that all claims are related to the
company’s business
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3. Procedure
Petty cash expenses
Petty Cashier:
• Check that all claims over $350 have been
authorised by the employee’s supervisor
• Pay approved petty cash claims promptly and
accurately
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3. Procedure
Petty cash expenses
Petty Cashier:
• Keep all Petty Cash Vouchers in the petty
cash box until recorded
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3. Procedure
Petty cash advances
Petty Cashier:
• Check that all petty cash advances
are authorized
• Pay out petty cash advances
• Follow up petty cash advances if the
docket/receipt for the expense is not
submitted within five (5) working
days
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3. Procedure
Petty Cash Book
Petty Cashier:
• Record all Petty Cash Vouchers in the Petty
Cash Book at least weekly
• Balance the Petty Cash Book fortnightly or when
funds are running low
• Check the balance in the Petty Cash Book
against the amount remaining in the petty cash
box
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3. Procedure
Petty Cash Book
Petty Cashier:
• Submit the Petty Cash Book and Petty
Cash Vouchers to the Authorised Officer
fortnightly and advise of any problems
• Advise the Authorised Officer of how
much money is required to reimburse
the fund
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3. Procedure
Petty Cash Book
Petty Cashier:
• Advise the Authorised Officer when the amount
in the petty cash fund needs to be increased
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*IntroductionEffective internal control = Design and operate the policies and the
procedures effectively
Defi ciency and type of control activities
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Deficiency Type of control activities should be
strengthenOn last day of January, a copy purchase office supply receipt was use to reimburse petty cash from petty cashier.
Adequate documents and records
Accountant, did the petty cash fund requesting instead of petty cashier who are responsible in preparing this requesting to petty cash coordinator.
Proper authorization of transaction and activities.
On the surprise cash control of petty cash fund, the financial manager find the wrong amount between the remaining cash and the record-balanced because the petty cashier recorded the wrong number of one receipt payment.
Physical control over assets and record
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A Voucher that reimbursed to employee on the last day of February was signed by financial officer.
Proper authorization of transaction and activities.
Petty cashier confused to reimburse twice to one receipt in March 23rd.
Physical control over assets and record
Due to the short of petty cash, financial officer agree to the requesting $400 from petty cashier. But the remaining of petty cash at that time was $168. So, the petty cash will be up to $568.
Physical control over assets and record
Independent checks on performance
One receipt was found that an expense item was English Grammar Book, not involve with the company operation. As a result, one staff used petty cash for his personal expense.
Independent checks on performance
Adequate documents & records
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*IV. Comments
*Require original receipts in order to disburse petty cash. Maintain the receipts in the petty cash fund box for reconciling.
*The person to be reimbursed should indicate on the original receipt what was purchased, the business purpose, and account and fund to be charged.
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*IV. Comments (con’t)
*The original receipts should be approved and
signed by an appropriate authorized individual.
*The petty cash fund should not be used for
personal benefit.
*The Manager is responsible for regularly
reconciling the petty cash fund
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*IV. Comments (con’t)
*A petty cash fund remains open on the records
of the Accounting Services Department until you
request it be closed. The Accounting Services
Department performs an annual written
confirmation of the petty cash account balances.
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*IV. Comments (con’t)
*Decide if you really need a petty cash fund. If
not, contact the Accounting Services Department
to close the fund.
*Provide the enough documents and reasons for
the shortage of petty cash fund.
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*IV. Comments (con’t)
*Return the petty cash fund to the financial
official in case that the reimbursement amount is
over the petty cash set ($500).
*The petty cashier should be more independent
on his or her obligation.
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V. References
*Ms. Chea Yana, Manager of Lux Fashion Company
Email: [email protected]
Tel: 012 348 999
* Auditing and Assurance Services, Prof. Elder/ Beasley/ Arens, 12th Edition, Publish in 2008
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*Thanks for Your
Attention!