Petty cash book:
It is usually kept on the imp rest system. The auditor should ascertain that the system of petty cash is maintained on the imp rest system and note the amount of imp rest should be consistent and in line with the requirements of the company although it should not necessarily be rigid.
After examining the adequacy or otherwise of the system of internal check, the following should be performed for vouching the petty cash book.
1. Checking of amount drawn:
Checking the amount drawn for petty cash with reference to cash book or bank statement.
2. Casts & carry forward:
Check the cast, cross forwards of the petty cash book.
3. Check of vouchers:
Tests check the petty cash vouchers with the supporting evidence.
4. Signature:
It should be seen that the petty cash book has been signed by cashier at the end of the month.
5. Pasting:
Pasting should be checked in to the general ledger.
6. Surprise/physically counting:
A surprise count of the cash kept with the petty cashier is also suggested. At the end of financial closing the cash in hand must be physically counted.
7. Allocation:
Expenditure Allocation should be properly verified.
8. Authorization of payment:
It should be seen that payment vouchers are properly authorized.
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