Verifying the petty cash book involves ensuring that the petty cash transactions have been accurately recorded, supported by appropriate documentation, and that the remaining cash balance in the petty cash fund is correct. Here are the steps to verify the petty cash book:
Review Petty Cash Policy: Familiarize yourself with the company's petty cash policy and procedures. Understand the maximum amount allowed for petty cash transactions, the frequency of replenishment, and the required supporting documents for each expense.
Obtain Supporting Documents: Gather all the supporting documents, such as receipts, invoices, and vouchers, for each petty cash transaction recorded in the petty cash book. These documents should provide evidence of the expenses incurred.
Check Date and Description: Verify that the date and description of each transaction in the petty cash book match the supporting documents. Ensure that the transactions are appropriately categorized and that the descriptions are clear and accurate.
Check Mathematical Accuracy: Ensure that all calculations in the petty cash book, including additions and subtractions, are correct.
Reconcile with Cash on Hand: Count the cash remaining in the petty cash fund. Compare the physical cash on hand with the ending balance of the petty cash book. The two should match. If there is any discrepancy, investigate and resolve the issue before proceeding.
Replenishment: If the petty cash fund is running low or has been exhausted, follow the company's procedures for replenishing the fund. Prepare a request for the reimbursement of petty cash and include the supporting documents for the expenses.
Approval: Ensure that all petty cash transactions have been properly authorized and approved by the appropriate personnel, as per the company's policies.
Periodic Verification: Perform periodic petty cash verifications regularly, such as monthly or quarterly, to ensure ongoing accuracy.
Sign and Date: After completing the verification, sign and date the verification statement or report to indicate that the petty cash book has been reviewed and found to be accurate.
File Documentation: Keep all supporting documents and verification records in a secure and organized manner for future reference and auditing purposes.
Verifying the petty cash book is an essential control procedure to prevent errors, misappropriation of funds, and ensure the accuracy of the company's petty cash expenses. It helps maintain transparency and accountability in handling small cash transactions within the organization.