Cash Management and Cash Audit Procedures for Small Business Owners

Effective cash management and cash audit procedures will help businesses reduce the incidence of cash fraud through misappropriations and outright theft.  Every small business owner should have basic knowledge on cash management to enable them effectively keep an eye on the receipt and disbursement of cash within their business. Maintain a cash book (your cash book should have a cash at hand and cash at bank)

Tips for auditing cash transactions

1.       Perform a physical cash count and compare the amount to the balance in your cash book.

2.       Obtain all cash receipts and trace them to the cash book

3.       Obtain all bank receipts/tellers/cheques and trace them to the cash book

4.       Ensure all cash expenses were properly recorded and are represented in the cash book

5.       Ensure all expenses in the cash book were properly authorized

6.       Ensure the amounts on the receipts, tellers and expense vouchers tally with what is on the cash book.

7.       Add up all the amounts on the cash book to ensure it tallies with the cash book balance.

Tips to employ for effective cash management procedures

1.       Ensure no single individual is allowed to receive, record and keep custody of cash

2.       Always keep cash securely locked in the vault or cash safe

3.       Ensure the cash vault/safe requires at least 2 persons to open it

4.       Surprise cash counts should be done by independent/control personnel who are not involved in receiving or disbursing the cash

5.       A Bank reconciliation statement should be prepared regularly to keep track of bank cash

6.       Staff handling cash should be rotated regularly

7.       Any significant change in revenue or expenses should be promptly investigated.

8.       Employ the use of alternative payment systems such as pos, online payments, etc to reduce the receipt of cash

9.       Cash audit should be performed regularly.

10   Alterations on receipts, registers, cheques and expense vouchers should be investigated.

11   All cash items such as cash book, receipts, cheques and registers must be securely printed, numbered and locked from unauthorized persons. They must also be securely locked by persons currently using them.

Valentine Okolo
valentineokolo.blogspot.com