Can anyone suggest a fool-proof system for controlling and accounting of cash advance given to employees?
Example: An employee " A' takes an advance of Rs.10000/- today.and he submits his expenditure statement after a month....How to check the cashier and control the advance .........
The One Says:
The key to any good system of Internal Control is seggregation of duties. So, for eg.
"The sanctioning of advance is done by a [b]person other than the Cashier[/b] preferably Accounts and HR Department should be involved (for a small enterprise the immediate supervisor of the person requesting advance). This would ensure that only valid employees are given advance as per company policies/rules and there is a seperation of sanctioning authority and actual dispersal of Cash while simultaneously accounting records are updated. Cashier should ensure only valid and approved advances are forwarded and send a weekly/montly/quarterly/yearly report of advances (depending on size of the company) to the Accounts department."
The Empolyee submits a detailed report after a month or prior to taking further advance (I assume this is a Company Policy/Rule) to the Accounts Department and copy to HR Department so that the records are updated and amounts are adjusted from further Salary Payments.
The Internal Audit Department should check for the [b]compliance [/b]of these procedures.
Hope this is useful
CAclubindia
