The current thinking on maintaining a petty cash fund is that it ispractically obsolete and should be eliminated, if possible, due to the availability of more efficient and secure alternatives, such as payment cards or electronic reimbursements. Petty cash funds are prone to mismanagement, theft, and lack of oversight, and modern AP practices favor digital solutions for small transactions.
The web source from SAP Concur states: “Petty cash funds are increasingly considered obsolete, as payment cards and electronic reimbursements offer more secure and trackable alternatives for small transactions.” This directly supports Option A. The other options are incorrect:
Option B: Requiring three individuals to sign off is excessive and not a standard practice.
Option C: Petty cash is not considered a best practice, even in service or consulting businesses.
Option D: Petty cash is typically managed by AP or administrative staff, not treasury executives.
The IOFM APS Certification Program covers “Internal Controls,” including best practices for managing small transactions. The curriculum’s focus on “peer-tested best practices” aligns with the trend toward eliminating petty cash in favor of modern payment methods.
[References:, IOFM Accounts Payable Specialist (APS) Certification Program, covering Internal Controls, SAP Concur: “Petty cash funds are increasingly considered obsolete, as payment cards and electronic reimbursements offer more secure alternatives”, ]
