The auditors should count small petty cash funds at year-end to make sure that balance is not overstated on the financial statements.

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Petty cash is a common type of imprest cash account that is used to pay for small, miscellaneous expenses that arise in the ordinary course of business. These expenses may include postage, office supplies, and employee meals or travel expenses. Because petty cash is a relatively small amount of money, it is often kept in a lockbox or drawer at the office, and employees are given the responsibility to manage and replenish the funds as needed.

As part of the financial statement audit, the auditor should verify the existence and accuracy of petty cash balances. This may involve physically counting the cash on hand, reviewing receipts and disbursements, and checking that the funds are being handled in accordance with established policies and procedures. Any discrepancies or irregularities should be investigated and resolved, and adjustments may need to be made to the financial statements to reflect the correct balance of petty cash on hand. By ensuring that petty cash is properly accounted for, auditors can help reduce the risk of fraud, errors, or misstatements in the financial statements.

The Auditors Should Count Small Petty Cash Funds at Year-End