THE EFFECT OF IMPREST SYSTEM ON CASH MANAGEMENT


THE EFFECT OF IMPREST SYSTEM ON CASH MANAGEMENT   

ABSTRACT

The imprest system of cash management has not being given greater consideration in the accounting process of cash management in many organizations due to the nature of the purpose for which the cash is provided for. This study examined the effect of imprest system on cash management, determined how effective the imprest system is, and found out the challenges of the imprest system.

Simple random sampling with proportionate representation was used to determine sample size 50 from the management staff of Unilever Nigeria PLC. Structured questionnaire was used for data collection and this was supplemented with interview of key informants. Data were analyzed using Chi-square statistical tool. Results showed that the effect of the imprest system on cash management include but not limited to the fact that it relieves the cash book and the chief cashier of the burden of recording tiny and frequent payments. 

In conclusion, the imprest system in the firm is very effective. It was recommended that the imprest system should be greatly encouraged since it has much positive impact on cash management in the firms. That innovative spirit should be imbibed by the management of Unilever on the best was to reduce fraud in the imprest system.  

TABLE OF CONTENTS 

Title Page - - - - - - - - - i

Approval Page - - - - - - - - ii

Declaration - - - - - - - - iii

Dedication - - - - - - - - - iv

Acknowledgement - - - - - - - v

Abstract - - - - - - - - - vi

Table of Contents - - - - - - - vii

CHAPTER ONE – INTRODUCTION

1.1Background of the Study-----

1.2Statement of General Problem----

1.3Objective of the Study------

1.4Research Questions------

1.5    Hypothesis   -      -      -      -      -      -      -        -        -        

1.6Significance of the Study-----

1.7Scope of the Study------

1.8Definition of Terms------

CHAPTER TWO – REVIEW OF RELATED LITERATURE

2.1 Introduction - - - - - - - - -

2.1 THEORETICAL CONCEPT OF CASH MANAGEMENT - - 

2.2 CONCEPTUAL CLARIFICATIONS- - - - - -

2.3 EMPIRICAL EVIDENCE    - - - - - - -

2.4 KEY INDICATORS IN CASH MANAGEMENT- - - -

2.5 CASH MANAGEMENT MODELS- - - - - -

2.6 ADVANTAGES OF IMPREST SYSTEM OF PETTY CASH BOOK

- - - - - - - - -       - - - -

2.7 FACETS OF CASH MANAGEMENT- - - - - -

2.9 FUNDAMENTAL PRINCIPLES INVOLVED IN MANAGING THE BIG THREE OF CASH MANAGEMENT (ACCOUNTS RECEIVABLES, ACCOUNT PAYABLES AND INVENTORY) - -

2.10 PUBLIC SECTOR CASH MANAGEMENT AND AUDIT OF PUBLIC AUTHORITIES- - - -       - - - -

 SUMMARY OF LITERATURE- - - - -        - - -

CHAPTER THREE – RESEARCH METHODOLOGY

3.1 Introduction - - - - - - - - -

3.2 Research Design - - - - - - - -

3.3 Area of the Study - - - - - - - -

3.4 Population of Study - - - - - - - -

3.5 Sample size and Sampling Techniques - - - - -

3.6 Instrument for Data Collection - - - - - -

3.7 Validity of the Instrument - - - - - - -

3.8 Reliability of the Instrument - - - - - -

3.9 Method of Data Collection - - - - - - -

3.10 Method of Data Analysis - - - - - - - 

CHAPTER FOUR – DATA PRESENTATION AND ANALYSIS

4.0 Introduction - - - - - - - - -

4.1 Data Presentation and Analysis - - - - - -

4.2 Characteristics of the Respondents - - - - -

4.3 Data Analysis - - - - - - - - -

4.4 Testing Hypothesis - - - - - - - -

4.5 Summary of Findings - - - - - - - -

4.6 Discussion of Findings - - - - - - -

CHAPTER FIVE – SUMMARY, CONCLUSION AND RECOMMENDATION

5.0 Introduction - - - - - - - - -

5.1 Summary - - - - - - - - - -

5.2 Conclusion - - - - - - - - - -

5.3 Recommendations - - - - - - - -

References ----------

Appendix - - - - - - - - - -

CHAPTER ONE

1.1 Background to the Study

Petty cash imprest system is an accounting system which provides for the replenishing of money spent for petty expenses in the organization. The imprest system provides that a specified amount of money be provided to meet petty expenses in the office at a specified period of time referred to as the float. The expenses so incurred are recorded in the petty cash record. At the end of the specified period an amount is issue to cover the expenses so incurred to bring the balance back to the original amount. The replenishment is credited to the primary cash account, usually a bank account (Dr - Petty Cash a/c, Cr - Bank a/c) and the debits will go to the respective expense accounts, based on the petty cash receipt dockets (Dr - Expense a/c, Cr - Petty Cash a/c). The amounted requested for the replenishment of the imprest is documented in the petty cash dockets and their associated receipts or invoices. The documentation facilitates the records of the expenses to be checked against the float to know what is left as balance; WEB EXPENSE (2016). The research therefore seek to investigate the effect of Imprest system on cash management.

Statement of the Problem

Petty cash imprest system is an accounting system which provides for the replenishing of money spent for petty expenses in the organisation. The imprest system provides that a specified amount of money be provided to meet petty expenses in the office at a specified period of time referred to as the float. The expenses so incurred are recorded in the petty cash record. At the end of the specified period an amount is issue to cover the expenses so incurred to bring the balance back to the original amount. The replenishment is credited to the primary cash account, usually a bank account (Dr - Petty Cash a/c, Cr - Bank a/c) and the debits will go to the respective expense accounts, based on the petty cash receipt dockets (Dr - Expense a/c, Cr - Petty Cash a/c). The amounted requested for the replenishment of the  imprest  is documented in  the petty cash dockets and their associated receipts or invoices. The documentation facilitates the records of the expenses to be checked against the float to know what is left as balance.

The imprest system of cash management has not being given greater consideration in the accounting process of cash management in many organizations due to the nature of the purpose for which the cash is provided for. Just as the name implies proper check and balances are not conducted before the expenses are replenished to continue with the next imprest period. Therefore, many organization suffer hugh losses from the imprest system for sources considered insignificant in the accounting process of the organization.

Much of petty cash funds have being diverted for personal uses and unaccounted for thereby increasing organizational cost. The principal reason is that in may organization petty cash accounting is not included in the main accounting policy framework of the organization as a result when other accounting records are  checked and scrutinized  the petty cash records are not included in  the scheme. Consequently, the neglect of management in overseeing the imprest system has constituted a major reason for the regular mismanagement and fraud in the imprest system of cash management. However with modern technology advocate for the application of the digital process to enhance a policy based implementation of the imprest system has been made. Therefore, the problem confronting the research is to determine the effect of the imprest system on cash management.

1.2 Objectives of the Study

i. To find out the effect of imprest system on cash management.

ii. To determine how effective the imprest system is.

iii. To find out the challenges of the imprest system.

1.3 Research Questions

i. What is the effect of imprest system on cash management?

ii. How effective is the imprest system? 

iii. What are the challenges of the imprest system? 

1.4 Significance of the Study

The study proffers the need for an enlarge accounting policy framework which will cover the presentation of accurate accounting records and cash management for the imprest system. The imprest system of cash management has not being given greater consideration in the accounting process of cash management in many organizations due to the nature of the purpose for which the cash is provided for. Just as the name implies proper check and balances are not conducted before the expenses are replenished to continue with the next imprest period. Therefore many organization suffer hugh losses from the imprest system

1.5 Research Hypothesis 

Ho: The effect of imprest system on cash management is not effective

Hi: The effect of imprest system on cash management is effective

1.6 Scope of the Study

The study focuses on the appraisal of The effect of imprest system on cash management

1.7 Limitations of the Study

The study was confronted by some constraints including logistic and geographical factor.

1.8 Definition of Terms

IMPREST SYSTEM DEFINED

Petty cash imprest system is an accounting system which provides for the replenishing of money spent for petty expenses in the organisation. The imprest system provides that a specified amount of money be provided to meet petty expenses in the office at a specified period of time referred to as the float. The expenses so incurred are recorded in the petty cash record. At the end of the specified period an amount is issue to cover the expenses so incurred to bring the balance back to the original amount. The replenishment is credited to the primary cash account, usually a bank account (Dr - Petty Cash a/c, Cr - Bank a/c) and the debits will go to the respective expense accounts.

REFERENCES

Alan Trenerry (1999). Principles of Internal Control. UNSW Press. pp. 125–

 Diane Canwell; Jon Sutherland (2005). BTEC First Business. Nelson Thornes. pp. 105–

Peggy M. Jackson (28 November 2006). Sarbanes-Oxley for Small Businesses: Leveraging Compliance for Maximum Advantage. John Wiley & Sons. pp. 101–.

P. Hosein (29 July 1988). Principles of Accounts (Cxc). Heinemann. p. 92.

WEB EXPENSE (2016) Why there’s nothing petty about petty cash problems

.

THE EFFECT OF IMPREST SYSTEM ON CASH MANAGEMENT



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