Petty Cash Problems...

Raging PineapplesRaging Pineapples Well-KnownRegistered Posts: 110
Hi All,

I need some help securing Petty Cash. The office staff manage the petty cash, which is stored in a lockable safe, and they take it in turns between them to reconcile it on a 'once-every-couple-of-days' basis.

Anyway, at present, everyone knows where the key is kept. I suggested we move it, but any time someone requests Petty Cash, they'll see where the cashier goes to get the key.

At the moment, the reconciliations are *always* out, and not always in a negative direction. What moved me to write this post is that for the last couple of days, Petty Cash has had £140 *too much* in it. It almost makes me wonder whether a member of staff is 'borrowing' funds and putting them back again at a later date, but I find that extremely hard to believe.

Another possibility, as this is a group of companies with separate Cash Boxes, is that sometimes someone might take cash from the wrong company, but there would be tangible evidences in the reconciliations. Indeed, the very fact that there's no apparent logic to these undocumented transactions is what rings alarm bells in my mind.

If someone miscounted, then the difference would expect to be back in the following reconciliation. If the amounts handed over to people by the cashier were too light, you would expect someone to have complained by now.

So any suggestions of what we can do? My main suggestion will be to put the key in one of those keysafe boxes (with a combination code) so the cashier can cover the code while they enter it at least.

Have you any other suggestions?

Comments

  • johnnyboy987johnnyboy987 Feels At Home Registered Posts: 36
    Here's a few suggestions:

    * Limit the number of people who have access to Petty Cash to as few as possible.
    * If possible, make it one person's responsibility to manage and reconcile PC on a regular basis
    * Reduce the float if necessary to a more manageable amount
    * A combination safe is more secure than a key safe as there's not a key "hidden" which can be found and abused
    * Write off any unders/overs and start afresh

    One person managing PC means that they will be more likely to spot an error as they know more or less what is going on and by taking responsibility for the function, it will be done properly as it's their "baby". I've always found that the more people who deal with petty cash, the more likely it is to go wrong. Petty Cash never likes to balance anyway but by putting more controls in place, you will be 14p out, not £140!
  • blobbyhblobbyh Font Of All Knowledge Registered Posts: 2,415
    for the last couple of days, Petty Cash has had £140 *too much* in it. It almost makes me wonder whether a member of staff is 'borrowing' funds and putting them back again at a later date, but I find that extremely hard to believe.

    I can think of at least three other explanations for this. I don't know your type of business so have made assumptions.

    Petty cash has to be topped up from somewhere so could someone have made a top up and not informed you?

    If you're trying to reconcile the physical cash count to the theoretical figure stated in your accounts software, bear in mind that misposts will always present differences so maybe you could check previous postings.

    If you're a cash business, could it be cash from a customer sale temporarily stored in the petty cash box for safe keeping?

    Fully agree with everything johnnyboy wrote. One person should have overall responsibility with all money signed in and out of the cash boxes: no-one should ever be in a position to help themselves based on trust alone. And make sure petty cash journals are always posted frequently and accurately with small differences written off each month.
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,069
    Petty cash never balances.

    Don't worry about it.

    :lol:
  • blobbyhblobbyh Font Of All Knowledge Registered Posts: 2,415
    Monsoon wrote: »
    Petty cash never balances.

    Don't worry about it.

    :lol:

    No it doesn't... but it should rarely be over by such a large amount!
  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,069
    blobbyh wrote: »
    No it doesn't... but it should rarely be over by such a large amount!

    I know that. Hush, I was only joking :lol:
  • SueSue Well-Known Registered Posts: 217
    I used to have the same problem somewhere I worked, although not by the same sort of values you were looking at.

    It turned out that directors lunches were being paid for out of petty cash each day but when they were being delivered lunches were also being delivered for other employees and all the lunches were on the same receipt. The person that looked after petty cash use to pay for the lunches in full out of petty cash and claim the full receipt, but then the employees use to reimburse petty cash and no record was made of this.
  • FingersanFingersan Feels At Home Registered Posts: 84
    I have a 'mad' situation where all my staff know where the key is to the petty cash, except me... one of the partners! How's that for effective control!!:ohmy:
  • jenny3549jenny3549 Trusted Regular Registered Posts: 472
    Fingersan wrote: »
    I have a 'mad' situation where all my staff know where the key is to the petty cash, except me... one of the partners! How's that for effective control!!:ohmy:

    Oh, I love that!!!

    Definitely agree with all above. Only one person should ever be in control of Petty Cash if there is to be any hope of it balancing. We have one person who actually keeps the key on his person so no-one can get at it without going through him. I do have a spare hidden away for emergencies (ie him being off sick/on holiday) but it rarely gets used.

    Are we very sad that ours always balances???
  • Raging PineapplesRaging Pineapples Well-Known Registered Posts: 110
    Thanks for all your comments.

    We never figured out exactly what it was, but it seems some money was drawn out of the wrong company's petty cash. There are two subsidiaries in the same office, and it seems this occured during the reconciliation process, so the rec showed one company up by 140 and the other reconciled, whereas in reality it was one company up by 140, the other down by 160. We never worked out exactly what transaction it was, so just split the difference and the resulting deficit between them.

    Presumably you'd have one person responsible for PCash and another for reconciling, right? I can imagine a world of problems if the same person performed both functions... ;)
  • blobbyhblobbyh Font Of All Knowledge Registered Posts: 2,415
    In AAT world, yes, in the real world you can have one trustworthy person happily doing both with the understanding that the Financial Controller, Director or someone of similar company standing can step in and perform a spot check audit at any time.
  • NileshladvaNileshladva Settling In Nicely Registered Posts: 22
    Hi,

    Petty cash is never really supposed to balance, but after reading what you have said i think you could make a few changes that would benefit you and the business.

    - Have minimal people given access to the petty cash box (less likely to go wrong)
    - Only have one person looking after the cash a month/week
    - Also as mentioned above, reduce the float to a more manageable amount

    Being £140 out is quite a significant amount and I do think you need to make some changes to manage the petty cash better.

    Cheers,

    NileshLadva
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