Auditors say Memphis should scrap its petty cash program

The city of Memphis’ petty cash program is missing $17,144 and should be immediately terminated and rebuilt with new safeguards against fraud, according to an internal audit.

The petty cash funds at 72 percent of the city’s 53 service centers contained a total of $19,025 but should have contained $36,169, according to the audit released March 20.

Restructuring of service centers likely accounts for the discrepancies with 21 funds missing $11,367, auditors found. But the other 17 funds don’t appear to exist, raising the question of how the records show the offices received $5,507.

“The (petty cash) policy lacks guidance for timely replenishment, pertinent responsibilities, proper usage, record keeping and reporting requirements,” the audit concluded.

The audit, part of “ongoing fraud deterrent activities,” requested a “written corrective action plan” from new Chief Financial Officer Shirley Ford by April 5. If offices accept cash, the city should require that they reconcile the funds regularly, assign a custodian and safeguard the funds from “unauthorized access,” among other controls designed to prevent fraud.

Mayor Jim Strickland’s office didn’t immediately respond to an email seeking comment.

Reach Ryan Poe at poe@commercial appeal.com and on Twitter at @ryanpoe.