Certified Internal Auditor (CIA) Part 2: Practice of Internal Auditing — Question 230

The internal audit activity noted there were minimal controls in place over the petty cash fund. Which of the following recommendations would be the most appropriate?

Answer options

• A. Eliminate the petty cash fund and require all expenses to be reimbursed through an expense report.
• B. Recommend that surprise cash counts be performed by another independent employee.
• C. Advise management to purchase a vault along with security cameras to monitor the movement of cash.
• D. Institute a monthly reconciliation process with reimbursement through a miscellaneous expense account.

Correct answer: C

Explanation

The correct answer is C, as purchasing a vault and installing security cameras would significantly enhance the security and control over the petty cash fund. Option A removes the petty cash fund entirely, which may not be practical for small expenses, while B suggests an operational control that may not be sufficient without the physical security measures. Option D proposes a reconciliation process but lacks immediate physical security enhancements.