A petty cash shortfall should be recorded as an unexplained difference until the count and cash movements have been checked. Count the physical cash, list the supporting vouchers and reconcile both to the expected fund. Do not create an invented expense receipt to force the balance to agree.
Establish a clear count point
Record the date, time, custodian and people present for the count. Separate notes and coins from receipts, advances and informal IOUs. Where possible, have another authorised person witness the count. Keep access controlled while the reconciliation is prepared so later movements do not obscure the position.
Identify the starting fund, replenishments, authorised payments and any cash returned. A replenishment request is not proof that cash was actually received. Match the relevant movement to its supporting record.
Review vouchers and outstanding advances
Check for duplicate vouchers, missing approvals, arithmetic errors and expenses already reimbursed by bank transfer. Ask holders of outstanding advances to provide the required evidence or return unused cash. Do not automatically treat an IOU as an approved business expense.
Example: a receipt was reimbursed twice
A staff member was repaid through payroll, but the same receipt was also included in a petty cash claim. Preserve both records and trace the actual payments. Resolve the duplication through the company’s approved process rather than discarding one receipt and leaving the unexplained cash shortage behind.
Escalate without making accusations
Describe the facts, amount and steps checked. A shortfall may arise from error, an unrecorded movement or another issue. Give the responsible manager the evidence and obtain instructions. Avoid labelling a person dishonest before the investigation establishes what happened.
Record the authorised outcome
Ask the accountant how the unresolved or resolved difference should be recorded. Keep any recovery, approved write-off or correction linked to the reconciliation. IRAS recordkeeping guidance requires transactions to be explainable; an unsupported balancing figure weakens that explanation. Review custody and approval controls after resolving the immediate gap.
Related practical guidance
For the surrounding records and responsibilities, see bookkeeping basics, company records to keep, bookkeeping and accounting.
Official guidance: IRAS official guidance.
Help with your company records
For accounting, bookkeeping and related compliance support, contact Raffles Corporate Services at [email protected] or WhatsApp +65 8501 7133. Tell us which records or process need attention so we can discuss the relevant next steps.
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