How do I fix a Petty Cash deposit that has been incorrectly recorded as income?

This article looks at the difference between petty cash that's income (for example, where you've received a cash donation, or reimbursement from an external person) vs. a petty cash deposit that's a transfer of your organisation's own funds (for example, money transferred from your organisation's current account).

If a transfer of your organisation's own funds has been wrongly coded as income (as described above), this article explains how to correct the error.

Any Petty Cash boxes or tins should be treated as their own Petty Cash account with their own balance. This balance will appear on your balance sheet as part of your cash-in-hand. Therefore, the funds within Petty Cash are already part of your organisation's accounts. 

Receiving income into Petty Cash

When money is received into your Petty Cash account, either by reimbursement from an external person or cash donation, you will need to record this as Income. Prior to this receipt, the money was not part of your church accounts, and now that it has been received, it is. 

Transferring money internally into / out of Petty Cash

If you withdraw cash from your church bank account to top up your Petty Cash, during bank reconciliation this needs to be recorded as a 'Withdrawal of Petty Cash'. When you do this, an internal transfer is created and a deposit entry will be created in the Petty Cash account. (Note that this is a transfer, not expenditure, as you're simply moving cash around inside your organisation's accounts.)

Similarly, if you pay into your bank account some of the cash from your Petty Cash account, this needs to be recorded as a 'Deposit of Petty Cash'. (Note that this is a transfer, not income, as you're simply moving cash around inside your organisation's accounts.)

How do I correct a transaction that has been double-counted? 

If you've incorrectly double counted a transaction (for example, by recording money paid from your bank account into Petty Cash as expenditure, or money paid into your bank account from Petty Cash as income), you'll need to correct this. To do this:

1. Find the matched transaction in the bank statement screen of the account where the funds have been deposited or withdrawn. Click the 'unmatch' button (shown below). This will remove the entry accounting for the cash as income or expenditure. 

2. In the match transactions screen, rematch the transaction according to the instructions in the Transferring money section of this article (i.e. match it as a Petty Cash transfer, rather than as Income or Expenditure).

Gift Aided donations

If in the process of recording the Petty Cash deposit incorrectly, you matched it as a Named Donation, this will mean it's been double counted as income, meaning you may have claimed Gift Aid twice on the same income. In this situation, you can't just unmatch and correct this. Instead, please follow these steps:

1. Manually upload to your bank account two transactions for the donation amount (one paid in, and one paid out). For example for a donation of £125, you'd upload a paid in transaction for £125, and a paid out transaction for £125. You can do this by clicking Upload Transactions and, in the pop-up that appears, select the Upload Transactions Manually option at the bottom of the pop-up. The date of these two transactions should be the date the bank deposit hits your statement (the date for which you wrongly matched the Petty Cash transaction as income). Adding the two transactions in this way won't affect your bank statement balance.
2. Next, reconcile these two newly uploaded transactions in the following way:

• Match the paid in £125 you've uploaded as a 'Deposit of Petty Cash', and this will fix your Petty Cash balance issue.
• Match the paid out £125 as a 'Donation Refund' and select the relevant donor - this will create a negative income transaction i.e. reverse out the duplicate income transaction wrongly created.

3. If Gift Aid has been incorrectly double claimed, then when you create your next Gift Aid claim, you should see that a Gift Aid adjustment has been added to reverse the previous Gift Aid wrongly claimed. If not, you can use the 'Adjustment' box to correct for the Gift Aid on the (e.g.) £125 that has wrongly been claimed. This is applicable if you process your Gift Aid claims within ExpensePlus. A similar process also exists within the ChurchSuite system. 

To help you better understand the Petty Cash module as a whole, please visit the module overview page here.