Petty expenses defined as small expenses incurred in the course of your work or studies, Petty cash is a small amount of discretionary funds in the form of cash used for small business needs as the expenses to be covered are for small amounts.

1.       INTERNAL CHECK SYSTEM: The auditor can examine the
internal check system relating to petty expenses. The proper
system can be helpful for eliminating errors and frauds in petty
2.       CHEQUE DRAWN: The auditor can vouch the cheque drawn for
petty expense. The amount is debited to petty cash book and credited to bank account in main cashbook. The cheque drawn but
not recorded may be examined.
3.       IMPREST SYSTEM: The auditor can examine that imprest system
of petty cash is in operation. The amount spent every month is refunded to the petty cashier at the start of every month for proper
4.       VOUCHERS NUMBERING: The auditor must examine the petty
cash expenses with the help of vouchers. The vouchers must be serially numbered. The auditor can vouch that all vouchers have
been duly approved.
5.       VOUCHERS APPROVED: The manager must approve the petty
expenses vouchers. The signature of such manager must be there on every voucher. The auditor can vouch that all vouchers have
been duly approved.
6.       PETTY CASH COUNTING: The auditor can count the petty cash
at any time during audit. He must see that cash in hand must tally
with the petty cash book.
7.       NO LOAN FROM PETTY CASH: The auditor must vouch petty
expenses. The loan cannot be granted to any employee out or petty cash fund. Thus the auditor can ensure that petty cash is
used for petty expenses.
8.       EXAMINE TOTALS: The auditor can examine totals, subtotals,
case and carry forward of petty cash balance. In this way he can determine that there is no misuse of petty cash for personal
9.       CHECK POSTING: The auditor can check the posting of petty
expenses to their respective heads. The amount in petty cash book must be the same as stated in the account. In case of
difference through checking should be made.
10.    YEAR END PETTY BALANCE: The auditor must count the year­end petty cash to reconcile the balance. When cash counting is not possible he can ask the management to deposit such balance into
the bank account.

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