Don’t Put Staff Expense Claims and Purchases into Petty Cash Claims!

I have noticed many of my clients are putting Staff Expense Claims & routine purchases into Petty Cash claims, and this is clearly improper governance !
Let me explain…
Staff Claims pertain to reimbursement to staff for their business travel, subsistence or other expenses incurred in the normal course of business.
Petty Cash Reimbursement pertain to small miscellaneous payments such as postage stamps, courier charges & stationery costs.
Purchasing is the formal process of buying goods & services.
The purchasing process usually :
* starts with a demand or requirements – this could be for a physical part ( inventory ) or a service
* A requisition is generated, which details the requirements (in some cases providing a requirements specification) which actions the procurement department
* A request for proposal (RFP) or request for quotation (RFQ) is then raised
* Only qualified Vendors will be put inside Approved Vendors List ( AVL )
* Only approved Vendors send their quotations in response to the RFQ, &
* a review is undertaken where the best offer (typically based on price, availability and quality ) is given the purchase order
Many times Staff Expense Claims & company routine Purchases are mixed up in Petty Cash Claims ! This is Bad internal control !
The review & approval process for the three (3) are obviously quite different :
1. Staff Expenses are to be approved by his direct superior & vetted through by the HR department to ensure fairness & compliance with company’s HR policies.
2. Purchases are to be approved via company’s Authorization Matrix, Purchases are to be made via Purchase Order (PO) in the purchasing system for proper subsequent matching with Vendor’s invoice and internal Goods / Services Receipt evidence, & then all payment must be made using company’s bank checks for audit trail and proper proof of payment.
3. Petty Cash expenses, as the name is evident by itself, are meant only for petty expense items. Reimbursement is based on strict adherence to company’s Petty Cash purchases policy, and Petty Cash float is only kept and maintained by Authorized Petty Cashier in the company. The latter is subject to “audit” by the company Accountant at regular intervals.
Hope above helps put your house a bit more in order.
Good Luck !
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