Petty Cash reconciliation can be very time consuming. However there are a number of reasons why it is important to keep on top of your petty cash, not the least of which is that a significant amount of GST can be re- claimed if the documentation is done correctly.
Also it might be important in your organisation to allocate petty cash expenditure to the correct line item. If you get in the habit of managing your petty cash regularly, it will not get out of control. Here is one suggestion:
Determine what is an appropriate and safe level of petty cash you need to keep in the office (e.g. $200). Cash a cheque for that amount and record it as Petty Cash, place the cash in an envelope, record the details on the front of the envelope and calculate the new balance.
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Date
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Purpose
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GST
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Amount
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Balance
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Every time you need to draw petty cash out, record the details on the front of the envelope, and calculate the new balance. When the balance gets low, draw a cheque for Petty Cash to top up the amount to the agreed level (e.g. with a float of $200, a balance of $23 means drawing a cheque for $177).
If you want to keep a more accurate check and you have access to a
computer, and can use a spreadsheet set up a program to use. Try this template.
For your own security, and to comply with auditing and tax requirements, you must ensure a receipt or docket is used for every petty cash draw. Place the receipt in the envelope where the Petty Cash is kept.
NB: keep the cash in a safe, locked place. Only one person should be responsible for accessing and dispensing the petty cash.