Petty Cash

Take the following steps to reconcile petty cash:

★ Ascertain stated balance

★ Obtain reconciliation form

★ Calculate withdrawn cash

★ Summarize vouchers

★ Investigate variances

It is useful to charge unexplained differences to an expense account set aside for that purpose. By doing so, it is much easier to track the cumulative amount of undocumented losses over time. Also, consider having a policy that requires the internal audit staff to be notified if the amount of an unexplained shortage in a petty cash fund exceeds a certain amount.

If the company uses a formal reconciliation form, obtain a blank copy and use it to document the following steps.