Internal Audit - 25-09 Petty Cash

Perth and Kinross Council · 23 March 2026
Back to Audit and Risk Committee — 23 March 2026 and its agenda

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Internal Audit Report
All Services
PK 25-09 Petty Cash
March 2026
Final Report
(Report No. 26/70)
Legal and Governance
Strategy, People & Resources
Perth & Kinross Council
Council Offices
2 High Street
Perth
PH1 5PH

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25-09 Petty Cash
Contents by Section
1. Introduction
2. Executive Summary
3. Audit Background Information
4. Scope and Limitations
5. Assessment of the Control Environment
6. Summary of Findings
7. Conclusions
8. Acknowledgement
9. Action Implementation & Follow Up
10. Management Action Plan
11. Authorisation
12. Distribution
13. Assessment Definitions

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1. Introduction
1.1 The audit of 25-09 Petty Cash was undertaken as part of the Internal Audit
Plan for 2025-2026, which was approved by the Audit & Performance
Committee in June 2025. The period under review for the purposes of the
audit exercise was financial years 2024-2025 and 2025-2026.
1.2 The indicative scope for the audit was to review the appropriate use and
arrangement of Petty Cash within PKC.
1.3 The audit is not directly linked to any particular risk on the Strategic Risk
Register. Internal Audit team would like to acknowledge that the requirement
for the Petty Cash review was highlighted from a separate audit review,
performed prior to this, and as a result some of the related findings are
transferred to this Audit report.
2. Executive Summary
2.1 The audit has found that Limited Assurance can be placed on the Council’s
internal controls in relation to the Petty Cash arrangements currently in place.
2.2 There are 12 actions arising from the findings in Section 6. An action plan is
included at Section 10. Once these actions are completed, Internal Audit
should be able to place substantial assurance on the arrangements in place.
3. Audit Background Information
3.1 The strategy for Internal Audit is to deliver a risk based Internal Audit service
by designing planned activity around the key risks to the Petty Cash
Management and Operational Controls.
3.2 The Local Government (Scotland) Act 1973 requires the Council to have
proper arrangements in place for the administration of its financial affairs.
Cash management is a crucial aspect of financial regulations for local
councils. Cash is easy to lose or misappropriate. As such, Petty Cash and
cash operations are an area of risk, and therefore assurance is necessary that
adequate controls are present and effective.
3.3 Petty Cash advances may be used for making small payments or as a change
float. Purchases made through petty cash are restricted, in line with guidance
provided by the Chief Finance Officer. The administration, compliance and
control over Petty Cash is outlined in the Council’s Financial Regulations and
Petty Cash Procedure.
3.4 Responsibility for the administration of petty cash reimbursements was
transferred to the Customer Services Centre (CSC) in September 2024. Prior
to that, these operations were actioned by the Revenue & Benefits Team;
however, it is important to note that responsibility for the overall process
responsibilities still lay within Finance & Business Support.

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3.5 CSC team float manages all Council’s cash payment requests and serves as
a replenishment float for subsequent smaller Petty Cash Floats within the
establishments and teams in the Council. We would like to add that Criminal
justice does not fall under CSC team and has it’s own G4S service.
The Petty Cash float based in Pullar House is the largest and is independently
reconciled by a financial officer through the PKC financial systems, Integra. It
reimburses its remuneration amount with Secure G4S delivery service. The
rest of the Petty Cash floats, due to their lower value and the lack of access to
use Financial Control Systems, follow the cash collection procedure for
secure storage.
3.6 CSC Team petty cash float is additionally used as a cash request service
desk for the needs covering all services across the council, such as providing
funds for HSCP services under Section 12 and Section 22, under the Health
and Social Care Act, allowing to access client funds; DWP funds where PKC
is the appointee; child protection team funds and many more.
3.7 During 2025/26 financial year we noted a total of 48 Petty Cash active floats
with a total value of approximately £32,000. In the timeframe of the audit, 3 of
those floats are being phased out. During the audit review float holders have
identified that the use of the float is not required and creates additional
administrative tasks, cash not required and cash use being slowly phased out,
especially as a result of the COVID-19 pandemic, cash use has been
reduced.
3.8 We would like to highlight, that as the review of the petty cash Audit
progressed, there has been an incident of theft reported of one of the floats,
with an Imprest limit of £120, within the HSCP, which was therefore added as
part of the testing sample for further investigation.
4. Scope and Limitations
4.1 There were no limitations identified that would impact the Audit.  However, we
will not duplicate testing already undertaken in connection with other audit
work (namely Administration of a Social Care establishment).
4.2 The validation of the operational process was against the published Perth and
Kinross Financial Regulations (2024-27) and Petty Cash procedure (2014). All
relevant staff were interviewed, and a review of documentary evidence was
undertaken.
4.3 Total samples of 6 Petty Cash floats represent 12.5% of the PK Councils
active floats. Internal Audit Team covered services such as HSCP, Children
and Families, Finance and Youth and Employability Teams. The sample
selection was aimed to represent variety of floats with large, medium, and
small values.

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4.4 The details of the control objectives reviewed and Internal Audit’s assessment
of their strength of control in each area is contained within Section 5 of this
report.
5. Assessment of the Control Environment
5.1 The table below contains a summary of the findings against each control
objective and Internal Audit’s assessment of the adequacy and effectiveness
of the controls in place to meet each of the objectives agreed for this audit.
Further details, including any improvement actions, are set out in the
Management Action Plan in Section 10.
Action RatingNo. Control Objective
5 4 3 2 1
Control
Objective
Assessment
1 To ensure that there is a robust Petty
Cash Reimbursement process and
controls are in place to minimise the risk
of Petty Cash mismanagement.
2 1 Reasonable
Assurance
2 To review the adequate reconciliation of
all petty cash across all the services.
3 1 Limited
Assurance
3 To review the general controls, process
and procedures are in place for Petty
cash
2 3 Limited
Assurance
5.2 The auditor has assessed that limited assurance can be placed on controls
overall in relation to 25-09 Petty Cash from the audit. Meaning:
‘Significant gaps, weaknesses or non-compliance were identified.
Improvement is required to the system of governance, risk management and
control to effectively manage risks to the achievement of objectives in the
area audited”.
5.3 A summary of the key findings and actions are provided in section 6, please
note however, the following areas of good practice which have been
highlighted during the audit:
5.3.1 Since transferring the Petty Cash/ Cash Operations to the newly appointed
cash office team (CSC Team), this has improved the daily operations within
the petty cash/ cash office tasks. We have observed new electronic recording
sheets, cross checking with each PC transaction. Documents for each
transaction are shared on EDMS site, accessible within the team. There are
spreadsheets for cash records and daily monitoring for each transaction.

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5.3.2 Improved, however not yet fully implemented, PC financial systems
traceability process has been observed in the work of CSC Team. One of
these improvements is having a log list for the cash operations team, where
each designated officer, uses their own access for processing cash requests
from Pullar House.
5.3.3 CSC Team have taken the initiative and are currently taking the lead to
streamline the process since it has been transferred from the Revenues &
Benefits Team to the service and resulted in appointing meetings with finance
officers.
5.3.4 During the audit we have witnessed effective communication within the CSC
Team and the rest of the Petty Cash/ Cash float users. The CSC Team
responded quickly to all incoming enquiries, providing valuable advice and
support.
5.3.5 As a result of the changes, an updated draft of a new Petty Cash request form
has been created for wider service approval. This would simplify petty
cash/cash requests across the council and reduce the variety of Petty Cash
request formats that come to the CSC Team centre.
6. Summary of Findings
6.1 Below is a summary of key findings and actions, which are reflected in the
Management Action Plan, detailed in section 10.
6.2 Controls are in place to assure robust Petty Cash Reimbursement
process and minimise the risk of Petty Cash mismanagement.
6.2.1 The Financial Regulations stipulates the general controls relevant to the use
and management of a petty cash float. The Petty Cash Procedure supports
these. The audit examined whether the staff involved with cash/ petty cash
followed the outlined procedure; whether the council had sufficient controls in
place to provide the safeguarding of the cash should the float be stolen or no
longer needed, and is there continuous training
6.2.2 The current published Petty Cash Procedures were written in 2014. It was
noted this version did not reflect the recent changes in Pullar House, which is
now actioned by the Customer Services Centre Team and not the Revenues
Section, Housing & Community Care.
6.2.3 During our review, we requested the Petty Cash Operating Procedures
followed by each service to confirm consistency with Council requirements.
There were three areas that had their own related versions of Petty Cash
Procedures on the intranet which detracts from the centralised and consistent
approach across all services.

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6.2.4 In the current Cash/PC Procedure it is referred to as petty cash usage and
reimbursement. The same is applicable for establishments which hold Petty
Cash floats and have established limits. However, no clear reference was
made for processing on Cash requests for the CSC Team in Pullar House
office, instead the procedure referred to Petty cash expenses. Therefore, we
found that cash withdrawals, although validated with budget holder approval,
were not always supported by receipts confirming the expenditure. The audit
team acknowledges the fact, that on some occasions receipts are not
available, based on type of transaction. However, follow up action on receipts
was inconsistent.
[Action Point 1]
6.2.5 Reimbursement for petty cash is initiated by submitting a template form. This
form includes an authorisation section requiring approvals from both the
budget holder and the payment support assistant. However, we have
identified that the reimbursement process lacks standardisation. The
approvals are inconsistently documented. They vary from typed names and
forward emails from budget holders to inserted signatures within the Word
document.
[Action Point 2]
6.2.6 There have been a variety of forms identified that have been used to request
cash/ petty cash reimbursement. Although, there is one approved template
attached to the procedure, we have identified an additional four types of form
used for a variety of requests. To ensure consistency and compliance with
established procedures, it would be recommended to use one approved
cash/petty cash reimbursement template across all Services. All other
versions of cash request forms should be discontinued.
[Action Point 3]
6.2.7 During the audit of petty cash reimbursements, two floats within the HSCP
Service were evaluated by the auditor. Our observations confirm that although
approved by the budget holder, where possible, some of the cash and petty
cash requests had been administered without adequate checks. Additionally,
there is no central point of contact for managing the requests within the
HSCP, which contributes to a lack of accountability and consistency in the
process.
6.3 Controls are in place to assure the adequate reconciliation of all petty
cash done across all the services.
6.3.1 According to the PKC Financial Regulations, regular reconciliation for cash
balances should be performed and recorded. During the audit process, we
could not identify consistent information nor a template form that is used
across all the 48 floats.

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3 out of 6 Imprest Floats (CSC Team, and Children and Families and one
HSCP service) presented recorded evidence of using a template, where the
form was clearly signed and dated, although reconciliation was not done
regularly. The other 3 holders were not aware of specific form (2 x HSCP,
Children and Families- Youth and Employability), although the staff were
aware that reconciliation checks should be performed, guidelines were not
available. It is advisable that all required forms according to the PC procedure,
to be attached as Appendix for consistent and convenient use.
[Action Point 4]
6.3.2 As part of the verification process on the Imprest/ Float account holders, we
requested a list of all floats within PKC for year end of 2024/2025. It was
noted that the paperwork supporting the balance in Pullar House newly
inherited CSC Team float was submitted in July 2025 instead of 31/3/25
accounting year end in April 2025. Additionally, there was a discrepancy (of
£100) between the total amount of the of Imprest from the Accounts list and
the amount submitted on the form.
[Action Point 05]
6.3.3 According to Financial Regulations 10.3, each petty cash float must have an
assigned account holder. However, a consolidated list of all floats and their
respective account holders was not available but provided in separate emails.
The names of two Imprest floats did not match the Imprest received by the
Accounts team (CSC & Youth Employability float). While some floats were
listed individually with responsible officers, others were grouped together
(e.g., Children and Families, HSCP), and a few included multiple names or
lacked a designated account holder entirely.
[Action Point 06]
6.3.4 During the audit, we have reviewed the need of the Petty Cash Floats. We
have identified that 4 Teams no longer use Petty Cash and have enquired to
close the cash. The note for closing the account was highlighted during the
final accounts process at year-end in April 2025, however no steps have been
taken yet to support the action. Using the available Standard Operating
Procedure, Audit team could not identify such instruction.
[Action Point 7]
6.4 Controls are in place to assure processes and procedures are in place
for Petty cash, including budget monitoring.
6.4.1 The CSC Team in Pullar House is responsible for verifying authorisations and
ensuring that approved ledger codes are used for the claims. However, they
do not review the underlying reasons for cash withdrawals.
Additionally, in HSCP floats ledger codes are being entered by a clerical
assistant and approved by the budget holder. The possible budget
overspends, and misallocation of funds was checked at a later stage during
revenue monitoring, and not at the time of payment of expenses.
However, the value of the Petty Cash floats is not material and there is no
requirement to be included at that stage.

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6.4.2 In our review, we acknowledge the fact that the Financial System used in P&
K Council, controls the authorisation limits database and it is a manged
process. The limit is set per management level and not type of expenditure.
6.4.3 Petty Cash/ cash reimbursement was transferred to the new team in
September 2024. As part of every change and process implementation,
individual training is essential. Meanwhile, we could not see evidence of any
training records providing assurance on understanding and following financial
procedures for the CSC team during the transition. Additionally, there is no
evidence on training for new starts on these financial Operations.
[Action Point 8]
6.4.4 As part of the Petty Cash Procedure ‘Services should ensure independent
checks are carried out on petty cash records on an ad hoc basis to ensure
appropriate controls are being adhered to’. There was no clear awareness on
what controls and checks are referred to, nor that those checks are still
adhered to. There was no clear awareness on what controls and checks are
referred to, nor that those checks are still adhered to.
[Action Point 9]
6.4.5 During the testing process, firstly we identified 1 out of 58 vouchers on the PC
Float, where the receipt was dated November’24 then reimbursed in June’ 25,
5 more dated from April ’25 and reimbursed in June. According to the PC
Procedure ‘No retrospective payments, etc, will be made for the previous year
once the Petty Cash books have been closed’. There is no clear time frame for
claiming reimbursement of receipts within the Petty Cash Procedure.
Additionally, the year-end requirements were not followed.
[Action Point 10]
6.4.6 Secondly, one of the 58 reviewed items was approved based on an invalid
receipt, which consisted only of a screenshot showing an online basket total.
The purchase included items that are not permitted under petty cash
procedures and should have been processed via a credit card transaction
instead. Similar identification was seen in HSCP float transactions, where
majority of cash payments could have been progressed through usual PECOS
purchasing.
[Action Point 11]
6.4.7 The auditor examined 30 receipts in one of the Children and Families petty
cash floats. Of these, 21 were paid using personal cards and 9 were paid in
cash. As per the given Children and Families PC procedure ‘Use of personal
cash, debit, or credit cards in anticipation of retrospective authorisation is not
permitted’. This indicates a procedural gap that should be addressed in the
PKC Petty Cash Procedure to ensure compliance and clarity.

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6.4.8 During the audit, an incident involving theft of a petty cash float. The fact that
cash has gone missing (float with Imprest limit of £120), highlights a
weakness in the current cash handling and security arrangements. As part of
the audit testing, we found that 2 of the petty cash float holders were not
following the outlined guidelines for secure key storage.
Immediate improvements are required to strengthen safeguarding measures,
enhance accountability, and ensure compliance with financial procedures to
prevent recurrence. Security of cash is at risk.
[Action Point 12]
6.4.9 Secure cash storage arrangements are outlined in the existing Petty Cash
Procedure. However, this procedure was originally written in 2014, when PKC
operated under more traditional working arrangements, including closed office
spaces. Since 2024/2025, and particularly following the COVID-19 pandemic,
PKC has adopted flexible working practices, including hot-desking and open-
plan office layouts. As a result, teams responsible for managing petty cash
floats are now situated in open workspaces, which introduces increased risks
related to cash storage and accountability. There is an increased need of
Process review, and the Audit team wants to emphasize the need of reduction
of the Petty Cash floats where possible.
7. Conclusion
7.1 The Internal Audit review is able to place Limited Assurance on the overall
control environment for the Internal Petty Cash/ Cash operations. The agreed
actions, once implemented, should enable Internal Audit to place Substantial
assurance on these.
8. Acknowledgements
8.1 Internal Audit would like to thank all officers who were involved in this audit:
Liz Colledge, Service Centre Manager, Customer Service Centre
Alison O’Brien, Manager CDS - Accountancy
Shona Welsh, Finance & Governance Team Leader
Alison Stewart, Finance Administrator, Finance & Governance
Jamie Ridgway, Senior Incomes Officer
Craig Robertson, Central Services Manager, CDS – Accountancy
Claire Palmer, Finance and Governance Service Manager
Lorraine Kelly, Business & Management Officer, Finance & Business Support
Almondbank House
Kathryn Devine, Youth Employability Co-ordinator
Lorna Davage, Team Leader, HSCP - Mental Health
Elaine Mudie, Finance Officer, Children and Families - Finance & Governance
Bunjan Phimjaras, Payment Support Assistant
Hazel Rylance, Supply Payment Support Assistant

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9. Action Implementation & Follow up
9.1 Responsibility for the maintenance of adequate and effective controls rests
with management. Where the audit has identified areas for management
action, these are identified in the Management Action Plan. Where a decision
is taken by management not to act in response to finding from this review, it is
the responsibility of management to assess and accept the risk arising from
non-implementation.
9.2 Achievement of the agreed actions is monitored through Internal Audit’s
‘follow up’ arrangements

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10. Management Action Plan 
Acti
on
Poin
t
Para.
No Finding Risk
Rating Agreed Action & Evidence Action Owner
Target
Completion
Date
1. 6.2.2
6.2.3
6.2.4
The current published PKC Petty
Cash and Cash request Procedure
were written in 2014:
It was noted this version did not
reflect the recent changes in Pullar
House Encashment office, which is
now actioned by the Customer
Services Centre Team and not the
Revenues Section, Housing &
Community Care.
There were three areas that had
their own related versions of the
Petty Cash Procedures on the
intranet which that detracts from
the centralised and consistent
approach across all services.
Follow up action on receipts was
inconsistent.
3 Agreed action:
 New procedures to
be prepared
 once completed
these additional
versions will be
removed.
Agreed evidence:
1. New procedures
2. If there is
supplementary
guidance it will be
identified as such.
J. Jennings
Senior Accountant
March 2026

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2. 6.2.5 We have identified that the
reimbursement process lacks
standardisation. The approvals are
inconsistently documented. They
vary from typed names and
forward emails from budget
holders to inserted signatures
within the Word document.
3 Agreed action:
New procedures to be
prepared
Agreed evidence:
New procedures
L. Colledge,
Service Centre
Manager
J. Jennings
Senior Accountant
 March
2026
3. 6.2.6 To ensure consistency and
compliance with established
procedures, it would be
recommended to use one
approved cash/petty cash
reimbursement template across all
Services. All other versions of cash
request forms should be
discontinued.
1 Agreed action:
New procedures to be
prepared.  There will be
separate forms for petty
cash float reimbursement
and a petty cash payment.
Agreed evidence:
All forms will be on integra
and reports can be pulled
to ensure that these match
any outlays. 
J. Jennings
Senior Accountant
March 2026
4. 6.3.1 According to the PKC Financial
Regulations, regular reconciliation
for cash balances should be
performed and recorded. During
the audit process, we could not
identify consistent information nor
a template form that is used across
all the 48 floats.
3 Agreed action:
New procedures to be
prepared
Agreed evidence:
New procedures
J. Jennings
Senior Accountant
March 2026

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5. 6.3.2 As part of the verification process
on the Imprest/ Float account
holders, we requested a list of all
floats within PKC for year end of
2024/2025. It was noted that the
paperwork supporting the balance
in Pullar House newly inherited
CSC Team float was submitted in
July 2025 instead of
31/3/25accounting year end in
April 2025. Additionally, there was
a discrepancy (of £100) between
the total amount of the of Imprest
from the Accounts list and the
amount submitted on the form.
2 Agreed action:
An annual list will be
agreed as part of the
schedules returned during
the Final Accounts
process.
The year end guidance
states that return must be
submitted in April each
year.
Agreed evidence:
Annual List
Schedules returned in line
with year end guidelines
C Robertson,
Central Accounting
J Ridgway
Senior Incomes
Officer
June 2026
6. 6.3.3 The names of two Imprest floats
did not match the Imprest received
by the Accounts team (CSC &
Youth Employability float). While
some floats were listed individually
with responsible officers, others
were grouped together (e.g.,
Children and Families and
Children’s Services, HSCP), and a
few included multiple names or
lacked a designated account
holder entirely.
3 Agreed action:
Finance Business Partners
will ensure there is a
designated person
recorded on the forms for
each float at Final
Accounts.   This will be
added to the updated
procedures.
Agreed evidence:
C. Robertson,
C. France,
C. Palmer
Finance Business
Partners
M. Grant
J. Jennings
Senior Accountant
June 2026

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Updated guidance and
Imprest final accounts
returns forms.
7. 6.3.4 During the audit, we have reviewed
the need of the Petty Cash Floats.
We have identified that 4 Teams no
longer use Petty Cash and have
enquired to close the cash. The
note for closing the account was
highlighted during the final
accounts process at year-end in
April 2025, however no steps have
been taken yet to support the
action. Using the available
Standard Operation Procedure,
Audit team could not identify such
instruction.
3 Agreed action:
New procedures to be
prepared with such
addition.
Agreed evidence:
New procedures
J. Jennings
Senior Accountant
March 2026
8. 6.4.3 Petty Cash/ cash reimbursement
was transferred to the new team in
September 2024. As part of every
change and process
implementation, individual training
is essential. Meanwhile, we could
not see evidence of any training
records providing assurance on
understanding and following
financial procedures for the CSC
team during the transition.
Additionally, there is no evidence
3 Agreed action:
Once new form launched
and policy and procedure
agreed, training will be
carried out.  
Agreed evidence:
Confirmation from staff
member that they have
read, understood and
L. Colledge
Service Centre
Manager
April 2026

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on training for new starts on PKC
financial Operations.
agreed that sufficient
training has been
undertaken, and a log kept
of this.
9. 6.4.4 As part of the PK Petty Cash
Procedure ‘Services should ensure
independent checks are carried out
on petty cash records on an ad hoc
basis to ensure appropriate
controls are being adhered to’.
There was no clear awareness on
what controls and checks are
referred to, nor that those checks
are still adhered to.
3 Agreed action:
New procedures to be
prepared
Eform process will fill this
need
No requirement to check
on ad hoc basis this will be
removed from the
guidelines
Agreed evidence:
New procedures
J. Jennings
Senior Accountant
March 2026
10. 6.4.5 According to the PC Procedure ‘No
retrospective payments, etc, will be
made for the previous year once
the Petty Cash books have been
closed’. There is no clear time
frame for claiming reimbursement
of receipts within the Petty Cash
Procedure. Additionally, the year-
end requirements were not
respected.
3 Agreed action:
New procedures to be
prepared
Agreed evidence:
New procedures
J. Jennings
Senior Accountant
March 2026

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11. 6.4.6 The purchase included items that
are not permitted under petty cash
procedures and should have been
processed via a credit card
transaction instead. Similar
identification was seen in HSCP
float transactions, where majority
of cash payments could have been
progressed through usual PECOS
purchasing.
4 Agreed action:
New procedures will make
this clear that it is the
Budget Holders
responsibility to purchase
through the appropriate
route.
Eform will allow Finance to
identify issues and raise
this with Budget Holders.
Agreed evidence:
New procedures
J. Jennings
Senior Accountant
March 2026
12. 6.4.8 The fact that cash has gone
missing (float with Imprest limit of
£120), highlights a weakness in the
current cash handling and security
arrangements. As part of the audit
testing, we found that 2 of the petty
cash float holders were not
following the outlined guidelines for
secure key storage.
4 Agreed action:
Updated guidance will be
completed and will be
circulated to Budget
Holders
Agreed evidence:
Email to budget holders
J. Jennings
Senior Accountant
(Updated Guidance)
C. France
C. Palmer
C. Robertson
M. Grant
Finance Business
Partners
March 2026