Petty Cash Fund - We explain the operation of a petty cash...

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Petty Cash Fund Ethics Note Internal control over a petty cash fund is strengthened by: 1. having a supervisor make surprise counts of the fund to confirm whether the paid vouchers and fund cash equal the imprest amount, and 2. canceling or mutilating the paid vouchers so they cannot be resubmitted for reimbursement. As you learned earlier in the chapter, better internal control over cash disbursements is possible when companies make payments by check. However, using checks to pay such small amounts as those for postage due, employee working lunches, and taxi fares is both impractical and a nuisance. A common way of handling such payments, while maintaining satisfactory control, is to use a petty cash fund. A petty cash fund is a cash fund used to pay relatively small amounts.
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Unformatted text preview: We explain the operation of a petty cash fund in the appendix at the end of this chapter. A recent study by the Association of Certified Fraud Examiners found that two-thirds of all employee thefts involved a fraudulent disbursement by an employee. The most common form (28.3% of cases) was fraudulent billing schemes. In these, the employee causes the company to issue a payment to the employee by submitting a bill for nonexistent goods or services, purchases of personal goods by the employee, or inflated invoices. The following graph shows various types of fraudulent disbursements and the median loss from each. Source: Nation on Occupational Fraud and Abuse, Association of Certified Fraud Examiners, www.acfe.com/documents/200 6_rttn.pdf,...
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