The ‘Imprest System’ of maintaining petty cash book implies periodical reimbursements of the amount actually expended by the petty cashier. Actual cash in hand with the petty cashier plus the total vouchers for payments made since the date of last reimbursement shall not exceed, at any time, the amount of the imprest. This system ensures maintenance of petty cash book regularly and up to date. Possibilities of cash defalcations will also be kept limited to the extent of the amount of total petty cash.
An Auditor shall conduct the vouching of the petty cash book according to the following audit programme:
1) Auditor will commence his work by ascertaining the name of the petty cashier, the amount of the imprest, by whom it was fixed and when. He should also ascertain as to who handles petty cash during the absence of the petty cashier.
2) Auditor will require all the voucher to be numbered consecutively and filed in that very order. He will also ascertain the name of the person who is authorised to approve vouches for payments out of petty cash and also the replenishment of the imprest.
3) Auditor should carry out surprise counting of petty cash in the hands of the petty cashier and reconcile it with the balance shown by the petty cash book. All petty cash books, if more than one are used, must be produced at the same time. Costs and cross costs and also the postings of the total to the impersonal ledger must be thoroughly checked.
4) Auditor should also compare a few of the entries for petty cash cheques drawn with the entries in the petty cash book, with special reference to the dates.
5) All vouchers over a certain amount must be thoroughly examined by the auditor. Posting of the totals of the impersonal ledge must also be checked.
6) Auditor should also inspect the postage books to see that they are regularly balanced and the expenditure appears to be reasonable. Stamps in hand must also be counted.
7) If the audit takes place sometime after the date of the balance sheet auditor must check the petty cash transactions to the date of audit and verify the petty cash balance on that date.
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