Cash is harder to trace than electronic payments and can create significant grant risk when controls are weak. NGOs that use petty cash or field cash should have clear limits, regular counts and timely reconciliation so balances do not remain unexplained.
Define when cash is allowed
Use cash only where it is practical and permitted. Set transaction limits and require electronic payment for larger purchases where possible. Donor rules may impose additional restrictions.
Assign a custodian
One person should be responsible for each cash float. The custodian should not approve their own replenishment or independently reconcile the same balance without review.
Perform surprise and routine counts
Count physical cash and compare it with the cashbook and supporting vouchers. Routine counts support normal control, while occasional unannounced counts can help identify weaknesses earlier.
Reconcile field advances promptly
Cash issued for travel or activities should be cleared within the organization’s required period. Outstanding balances should remain visible and should not automatically roll into the next activity.
Keep evidence for every movement
Cash withdrawals, replenishments, expenses and returns should have appropriate documentation. See supporting documents for grant expenses.
Practical cash-control checklist
- Approved float limit.
- Named custodian.
- Transaction limit.
- Sequential vouchers.
- Regular reconciliation.
- Independent review.
- Documented cash count.
- Outstanding advances tracked.
Example
A field office holds a USD 500 float. The cashbook shows USD 180 remaining, but the physical count finds USD 150. The difference should be investigated immediately rather than carried forward. The reconciliation should show what caused the shortage and how it was resolved.
Reduce dependence on cash over time
Where mobile money, bank transfer or controlled payment cards are practical, reducing cash use can strengthen traceability. The right method depends on local context, transaction size and donor requirements.
What to do next
Use the Funding Readiness Self-Check to identify financial-control gaps that may affect donor confidence.
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Use a cash-count form
A standard form can record denominations counted, expected balance, actual balance, difference, explanation, custodian and reviewer signatures. This creates consistent evidence across field offices and makes unusual shortages or overages easier to follow up.
Separate replenishment from reconciliation
Do not automatically top up a cash float simply because the balance is low. First reconcile the existing float and confirm that previous spending is supported. Replenishing an unreconciled float can allow unexplained differences to accumulate.
Escalate repeated discrepancies
Small one-off differences may be clerical, but repeated shortages, missing vouchers or delayed reconciliations require stronger review. Consider changing the custodian, reducing the float, increasing count frequency or shifting more payments to traceable electronic methods.
Reconcile cash before grant reporting
Any petty-cash or field-cash balance included in the reporting period should be reconciled before the donor report is finalized. Unsupported vouchers, shortages or outstanding advances can otherwise distort expenditure and become much harder to resolve after the reporting period closes.
At closeout, return or properly transfer unused cash and document the final balance. The grant should not be archived with an unexplained float still appearing in the records.
Keep cash holdings as low as operationally practical. A smaller float reduces loss exposure and makes counts easier, provided staff can still carry out legitimate field activities without repeated emergency withdrawals.
For remote field locations, document how cash is transported, stored and handed over between staff so custody remains clear throughout the activity.
Cash controls are strongest when they are routine and predictable. Staff should know when counts occur, what evidence is required and how differences are escalated, while management still retains the ability to perform additional spot checks when risk increases.
Frequently asked questions
What should a grant cash count control include?
It should cover custody, count frequency, surprise checks where appropriate, reconciliation to records, approval, and documentation of any difference.
Who should perform cash counts?
Use an authorized person who is sufficiently independent from daily cash custody where possible, with results reviewed by finance management.
How often should cash be counted?
The frequency should reflect cash volume and risk. High-risk field cash may need more frequent counts than a small petty-cash float.
What should happen when a difference is found?
Document the variance, investigate promptly, correct records where justified, and escalate repeated or material differences.
Why do donors care about cash controls?
Cash is inherently vulnerable to error and misuse, so strong controls help demonstrate that donor funds are safeguarded and traceable.
Conclusion
Cash controls should make every balance explainable. Your organization should combine custody rules, independent counts, timely reconciliation, and documented follow-up so small differences do not become recurring grant risks.
