Petty Cash

Petty Cash

Having petty cash is not advisable considering risk of bad management. Employee takes less responsibility in preserving receipts and invoices when petty cash arrangement is provided. Hence, many mishandled settlements occur leading to adjustments during tax audit. Obviously, employee takes better ownership of receipts and invoices when expense reimbursement system is in place. If circumstance of providing petty cash must be met, please consult with your tax accountant in what kind of reconciliation procedure must be in place to satisfy the tax authorities during tax audit. In addition, it is always good to confirm with your tax accountant how to deal with situation when receipt and invoice are not provided in certain transactions.