How make sure your petty cash is safe

  • Have Accounts Payable, Accounting, Finance or Personnel handle the petty cash box.
  • Keep the key in a location known only to you and perhaps one other employee. Put it where it will not be found unless someone is specifically looking for it—i.e., behind a book in a manager’s office rather than in your upper righthand desk drawer.
  • Keep the box in a safe used only by one or two individuals in the company.
  • Set up a system where every transaction, no matter how small, is recorded in a book with the amount, date and purpose of all withdrawals.
  • Require any employee who receives cash to sign the book.
  • Have whomever makes audits include petty cash each time to make sure that there is a correct balance and that all entries have been made.
  • Make it a strict rule that no employee can obtain a loan from petty cash, even if they sign for it or leave an IOU.
  • Do not accept an employee’s personal checks in return for cash.
  • Make sure that the person handling petty cash is completely disciplined about recording a journal entry for each replenishment, debiting Petty Cash (or Office Supplies, or Miscellaneous, etc.) and crediting Cash every time.

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Reed Tinsley, CPA