Cash Advance given to employees of a corporate

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

The One Adds:

As for the Cashier,

There must be regular and surprise checking of Cash Balances with him/her and the Company should introduce (if not already in place) a system whereby the Cashier has to take a compulsory leave during the year. This will ensure uncovering of any frauds.

[color=blue]My dear friend,

                    There must be a full proof system for cash advances to the employees if the service warrants such advances.  As it is interest free advance it can not be misued by the employees for their personal purposes.  Hence the submission of bills and repayment of advance should be immediately after completing the job for which it is assigned. There is no need to keep the same pending for a month or more.  As it is a costing to the company, there should be a thorugh check and control such type of advances.

Bye,
Y S RAO[color=blue][/color][/color]

The One Says:

Mr. Y.S. Rao The One agrees with you, The One requests you to add any controls to the ones suggested by The One.  :)

HI,

  There must be accounting package & system in which paritcular options to be available to check the

advances given on monthly basis, the cashier or any person before giving fresh advances has to check

in the particular system whether the concerned person already got any advances and he/she  have

cleared his/her old balances in the above accounting package .

We can create an a/c called "Advance for Expenses" and debit the same as and when amount paid . At the time of refund/submission of expenses we can pass the following entries.

Expenses (Headwise)  a/c .. Dr

Advance for Expenses a/c .. Cr

At the end of the month also we can take a list of outstanding of advances paid and a/c (tobe submitted) employee wise.