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Commentary
At a minimum, these controls should include:
a. Separate duties, where possible, so the same person is not responsible for all parts of a
financial transaction.
b. Clear authorization for all expenditures and other obligations in the minutes, with
approval date noted on bills/invoices.
c. Routine and complete recording of financial information--use of pre-numbered receipts,
for example.
d. Limited access to assets: Make daily deposits, lock-up check signature stamp and any
cash in a safe.
e. Confirmation of records against each other from time to time. For example, duplicate
copies of receipts for comparison with bank deposit slips.
4. The governing body has, by formal action, adopted policies and procedures governing
the establishment and use of petty cash accounts within the general, or other
appropriate fund. At a minimum, these policies and procedures: fix administrative
responsibilities for these accounts, determine amounts of cash to be maintained in
various accounts, identify types of records and documents to be maintained for these
accounts, and designates uses of these accounts.
Commentary
Almost every local government requires petty cash to handle small disbursements when it is
impractical to require the formality usually associated with purchases. Nevertheless, since it is
public money that is involved, the petty cash account must be managed in a manner that will
establish accountability for control.
FACTOR:
MUNICIPAL AUDITING
Standards
1. The annual audit is conducted by an independent, professional auditor or auditing firm
in accordance with generally accepted governmental auditing standards. Local
governments whose annual expenditure programs are less than $300,000 should have
professional audits at least once in every five years. Audits for such municipalities,
conducted by elected auditors, are to be made in the intervening years.
Commentary
The primary objective of the audit is to receive an independent opinion as to the fairness of
presentation of the financial statements and results of operations according to generally accepted
accounting principles. In addition, a significant objective of governmental auditing is to determine
whether a governmental unit has complied with applicable legal requirements in obtaining and
spending public monies.
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