True or False: A petty cash system is not a control procedure for safeguarding cash.

The statement is FALSE.

Any transactions associated with a petty cash fund should be monitored and detailed in a formal report, which ensures that cash receipts and cash disbursements are reported consistently. Even though the available fund for a petty cash fund is small, it still needs to be under a proper management, which means only authorized person can access to that fund.

The balance of a petty cash fund should agree with its cash receipts and cash disbursements. Its transactions will be accounted directly in the income statement, in which the petty cash system should be a part of safeguarding cash procedure.