Sunday, June 7, 2009

Control the Use of Petty Cash

What is the Risk?

The risk is that someone claims personal expenses through petty cash or makes fraudulent petty cash claims.

How to Mitigate the Risk

While petty cash may only be a small amount when compared to other assets, it is an easy target for a person contemplating committing fraud for the first time. If the person is able to easily defraud the organisation of petty cash, it may encourage the person to continue to commit fraud.

Steps to reduce the likelihood of petty cash fraud occurring includes:

  • Develop a policy that clearly sets out what can be claimed through petty cash with a limit on the monetary value able to be claimed;
  • All claims that are made should have source documents clearly stamped with “Paid” to ensure that they can not be used in a future claim;
  • All claims made should contain supporting documents (eg. receipts and invoices) of items that have been purchased;
  • Petty cash should have adequate physical security (eg. locked in a safe);
  • Put procedures in place to regularly reconcile cash, claims and source documents.

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