Question

We can certainly see that a need exists to limit the use of the petty cash fund to small purchase, let's call it $250. However, there would also need to be a limit on monthly spending... I heard of an interesting story of a small office that did maintain a small petty cash fund balance (using the same value as the prompt $250), however, the office manager was replenishing the fund on a weekly basis... using up all of the funds for office luncheons and breakfasts during the week. While not fraudulent, and all receipts provided a good accounting of funds spent, there was concern that this department was using 'emergency' cash funds for personal gain (meals) on such a regular basis.

What would you consider appropriate usage for petty cash funds? Should it be more 'discretionary' or strictly controlled?

Answer 1

Petty cash Fund - Discretionert or Strictly Controlled

Petty cash fund should be strictly controlled. Petty cash fund is maintained in small businesses to cater to the needs of daily requirements of small cash transactions. The fund limit is fixed for every month.

At the start of each next month, Balance is added to fund to make the fund up to the fixed limit or vice versa.

While such fund needs to be strictly controlled to avoid any wrong usage.

making fund discretionery gives more power to people of organisation to spend the fund for their personal needs which can be crucial for the organisation like spending on meals, telephone, Forged conveyance and food expenses can be claimed from fund by the people of organisation.

Hence strict control and cross check of usage of fund will tackle to such wrong usage of fund and will add value to the organisation