Managing Petty Cash And Employee Expense Claims Effectively

Petty cash may seem minor—but poor management can trigger major compliance issues. Missing receipts, undocumented reimbursements, and personal use of funds are red flags during CRA and Revenu Québec audits. Mackisen CPA Auditors Montreal helps businesses establish strict petty cash controls and transparent employee expense systems that ensure every dollar is tracked, justified, and audit-proof.

Legal and Regulatory Framework
Income Tax Act (Canada) Section 67: Permits only reasonable, documented business expenses.
CRA Policy IC78-10R5: Allows digital copies of petty cash receipts if auditable.
Taxation Act (Quebec) Section 34: Requires detailed expense logs for QST compliance.
CPA Canada Handbook Section 5050: Establishes best practices for internal control over cash handling.
PIPEDA: Protects employee financial and personal reimbursement data.

Key Court Decisions
Beaudoin v. The Queen (2020): Denied deductions for undocumented petty cash expenses.
Lincora Group v. Quebec (2019): Penalized lack of internal cash controls.
Tremblay Holdings v. The Queen (2021): Required proof of every reimbursement for audit acceptance.
Simard Beaudry Construction v. Canada (2019): Validated digital petty cash systems with CPA oversight.
Royal Bank v. Canada (2019): Recognized CPA-audited expense management as valid documentation.

Why CRA Targets / Issues / Enforces
CRA examines petty cash and expense claims closely because they’re often misused. When records are incomplete, CRA reclassifies payments as personal benefits or disallowed expenses. Mackisen CPA Auditors Montreal implements transparent control systems to maintain compliance and accuracy.

Mackisen Strategy
Petty Cash Policy Design — Define approval limits and documentation requirements.
Digital Expense Systems — Implement apps for receipt capture and real-time tracking.
Reconciliation — Match all petty cash withdrawals and reimbursements with receipts.
Employee Expense Audits — Review claims for policy and tax compliance.
GST/QST Integration — Ensure recoverable taxes are properly claimed.
CPA Oversight — Monitor all cash accounts for accuracy and fraud prevention.

Powering Client Needs and Control
A Montreal marketing firm reduced cash loss by 90 percent after adopting Mackisen’s digital expense policy. A Quebec construction company avoided reassessment after implementing monthly petty cash reconciliation. A Toronto distributor simplified reimbursements with an automated approval workflow.
How Mackisen Clients Benefit

• Complete control of petty cash and expenses

• Automated digital tracking systems

• Audit-ready expense documentation

• GST/QST refund optimization

• Reduced risk of internal fraud

Common Questions
How much petty cash should I keep? Only enough for daily minor expenses.
Can CRA audit petty cash? Yes, they often request full records.
Do I need receipts for every transaction? Absolutely.
Can Mackisen install tracking apps? Yes, we implement and manage expense software.
Should petty cash be part of accounting software? Always—Mackisen integrates it with your main books.

Why Mackisen
Mackisen CPA Auditors Montreal transforms petty cash and expense management into a compliant, transparent, and efficient process. Our CPA systems protect your business from errors, audits, and unnecessary losses.