THE EFFECT OF IMPREST SYSTEM ON CASH MANAGEMENT
ABSTRACT
Because of the nature of the purpose for which the cash is provided, the imprest system of cash management has not received adequate consideration in the accounting process of cash management in many organisations. This study investigated the influence of the imprest system on cash management, established its effectiveness, and identified its problems. The sample size of 50 from the management team at Unilever Nigeria PLC was determined using simple random sampling with equitable representation. We collected data using a structured questionnaire and supplemented it with interviews with key informants. The data were analysed using the Chi-square statistical technique. The results revealed that the impact of the imprest system on cash management includes, but is not limited to, relieving the cash book and chief cashier of the duty of recording small and frequent payments. In conclusion, the firm's imprest technique is highly effective. It was suggested that the imprest system be strongly encouraged because it has a significant favourable impact on cash management in organisations. The best way to reduce fraud in the imprest system is to instill that inventive spirit in Unilever management.
TABLE OF CONTENTS
Title Page – – – – – – – – i
Approval Page – – – – – – – – ii
Declaration – – – – – – – – iii
Dedication – – – – – – – – iv
Acknowledgement - - - - - v
Abstract – – – – – – – – vi
Table of Contents – – – – – – – vii
CHAPTER ONE – INTRODUCTION
1.1 Background of the Study-----
1.2 Statement of General Problem----
1.3 Objective of the Study------
1.4 Research Questions------
1.5 Hypothesis - - - - - - - - -
1.6 Significance of the Study-----
1.7 Scope of the Study------
1.8 Definition 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 petty cash record keeps track of the incurred expenses. At the end of the specified period, an amount is issued to cover the expenses incurred so as 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 amount 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 a balance (Nguyen & Tran, 2021). The research, therefore, seeks to investigate the effect of the 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 petty cash record documents the incurred expenses. At the end of the specified period, an amount is issued to cover the expenses incurred so as 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 petty cash dockets and their associated receipts or invoices document the requested amount for the replenishment of the imprest. The documentation makes it easier to compare the expense records with the float and determine the remaining balance.
The imprest system of cash management has not been given greater consideration in the accounting process of cash management in many organisations due to the nature of the purpose for which the cash is provided. Just as the name implies proper checks and balances are not conducted before the expenses are replenished to continue with the next imprest period. Therefore, many organization suffer huge losses from the imprest system for sources considered insignificant in the accounting process of the organization.
Much of the petty cash funds have been diverted for personal uses and left unaccounted for, thereby increasing organisational costs. 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 scrutinised, 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 the advent of modern technology, there has been a push for the use of digital processes to improve policy-based implementation of the imprest system. 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 the 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 the 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 enlarged 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 been given greater consideration in the accounting process of cash management in many organisations due to the nature of the purpose for which the cash is provided. Just as the name implies proper checks 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 factors.
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 petty cash record documents the incurred expenses. At the end of the specified period, an amount is issued 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.
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