Cash count

What it means

A cash count is the physical counting of cash, stamps and vouchers and meal vouchers held in the cash desk and comparing the result with the balance in the cash book. It is a physical count that forms part of the mandatory stocktaking of assets and liabilities.

An entity must count its cash at least as at the date of the financial statements. In practice it is advisable to do so more often, for example monthly or whenever the cash desk is handed over to another person, so that errors and losses are discovered in good time.

The output is a count sheet listing banknotes and coins by denomination, the total, the book balance and any difference. The cashier and the stocktaking committee sign it, and it becomes an accounting record that has to be retained in the archive.

How it works in practice

The count should be unannounced and carried out in the cashier's presence. Before counting, all cash documents for the day are posted so that the book balance is up to date, and no receipts or payments may be made while the count is in progress.

If cash is short, the shortage is expensed and at the same time a claim is raised against the responsible employee if they signed an agreement on liability for entrusted assets. A surplus is booked to other income; both are a stocktaking difference.

In a foreign currency cash desk each currency is counted separately and translated at the ECB rate at the reporting date. The resulting FX difference is neither a shortage nor a surplus but a separate item that must be clearly distinguished on the count sheet.

What to watch out for

Repeated small differences usually point to sloppy cash handling, such as missing documents, unapproved payments or mixing private and company money. Look for the cause rather than just writing off the difference; in a tax audit the cash desk is a frequent focus.

A large cash balance is risky for another reason too: the law restricts cash payments, and the company may set a cash holding limit. Surplus cash is better paid into the bank account regularly than kept in the office.