About a policy brief of Petty Cash. Mention the policy background, its objectives, the rationale and who are affected by it. Below are the policy and procedures. Policy briefing of below details.

Petty Cash Policy and Procedures

This policy shall establish the proper use and administration of the petty cash fund.

Basic Policy Information

The policy on petty cash is administrative and includes the use and administration of the fund. The Petty Cash Custodian shall be held accountable for the management of the petty cash fund. The policy was initially approved on May 5, 2017 by the Vice President of Finance and Administration and the Controller.

Policy Statement and Purpose

Purpose

The Petty Cash Fund Policy is created to provide guidelines for the proper establishment, use and accountability of such. Procedures are established to have an effective administration and internal control of cash handling operations throughout the business.

A petty cash fund provides a convenient way to pay for small expenses. This policy provides procedures to mitigate risks of misuse or theft.

Conditions and Restrictions

Requests for petty cash disbursements will only be processed for payment if the following criteria is met:

1.Voucher form is completed.

2.Supporting documentation is provided.

3.Purchase is under $200.00 (except for the replenishment of the petty cash fund).

4.Transaction occurred within 30 days of the petty cash request.

Restrictions include:

The petty cash fund is to be maintained on an imprest basis, which means the amount of the fund remains constantWHICH MEANS there is a fixed amount is reserved. Currency and coins plus petty cash vouchers and receipts in the fund should always equal the authorised amount of the fund.

The fund belongs to the business and should be kept on business property at all times. As such, the fund can be subject to surprise counts by the controller and internal and external auditors during normal business hours.

No money may be lent or borrowed from the fund for personal use.

The fund may not be used to cash personal cheques.

The petty cash fund must not be used to circumvent purchasing procedures.

The following expenditures from petty cash accounts are prohibited:

Travel-related expenses (e.g., parking)

Sales Tax

Alcoholic Beverages

Donations

Tips or Gratuities

A petty cash fund may be revoked at the discretion of the controller.

The amount of the petty cash fund may be reduced or increased at the discretion of the controller.

Mishandling of funds may result in dismissal and/or prosecution of involved employees and/or relinquishment of the fund by the business.

Noncompliance and Disciplinary Actions

The inappropriate use of the petty cash fund may result in suspension of the petty cash fund, a reduction in authorised balances, revocation of the fund or other appropriate action, up to and including disciplinary action in accordance with business policies and applicable state laws, rules and regulations.

Table of Contents

Who Should Know This Policy

This policy applies to all employees of the business.

Definitions

The petty cash fund is the amount established to pay for petty cash expenses. The amount in the petty cash fund should be enough to cover petty cash expenses for a minimum two-week period. This amount is at $200. The Petty Cash Custodian controls this fund.

A Petty Cash Voucher is a form completed by an employee who wants to be reimbursed for an organisation-related expense or who wants an advance to pay for such an expense it is also co-signed by the Petty Cash Custodian.

A petty cash advance is an amount issued from petty cash to allow an employee to pay for an organisation-related expense.

The Petty Cash Book is used to record all Petty Cash Vouchers and is balanced fortnightly, or as necessary.

The petty cash box is a locked container which contains the cash for the petty cash fund.

The Petty Cash Custodian is the employee who is responsible for maintaining the petty cash fund and petty cash records. This person is usually the Administration Officer.

The Authorised Officer is the person in the organisation who is given the job of checking that documentation is correct before payment is made. This person could be the manager but not the bookkeeper.

Contacts

Petty Cash Custodian

Responsible for disbursing cash from the petty cash account, documenting expenditures and keeping receipts, replenishing the account when it runs low, and safeguarding the fund.

Custodian Supervisor

Responsible for reviewing the requests for reimbursements, the monthly reconciliations and the annual petty cash review.

Manager

Responsible for ensuring that all employees abide by the policy and the accompanying procedures. The manager is the approving authority for the creation or termination of a petty cash fund.

Controller

Responsible for tracking the petty cash fund, reviewing disbursements for policy and procedural compliance, adding the custodian to the vendor file in MYOB, making changes to designated custodians, setting up new petty cash accounts and making changes to and closing existing accounts. The controller may conduct reviews of the petty cash fund at their discretion.

Policy Specifics and Procedures

The fund should be used only when cash is considered as the most cost-efficient method of payment. The petty cash fund is set up to cover small and frequently re-occuring expenses such as non-routine office supplies, postage, miscellaneous decorations, miscellaneous food items or out-of-pocket expense reimbursement for local/regional transportation expense. The petty cash fund should not be used for travel expenses, consulting or professional services, awards and contracts. The reimbursements should not exceed $200.

Key Requirements

A properly completed voucher and any supporting documentation is required for cash reimbursement. Proper documentation can be the following:

Original numbered receipt with company name and address imprinted, which includes an itemised listing or description of the items purchased or services availed of.

Cash register tape that has the company's name and date of purchase at the top of the tape and items are marked and described by the individual seeking reimbursement.

Transaction occurred within 30 days of the petty cash request.

Duties of Petty Cash Custodian

The petty cash fund has an approving custodian to approve and document outlays, keep receipts and safeguard the fund. The custodian has the exclusive access to and control of the fund. In carrying out the duties assigned, it is the custodian's responsibility to understand and follow the procedures below:

1.Petty cash funds must be properly safeguarded. The custodian is personally responsible at all times for the appropriate and adequate safekeeping of these funds. The money should be kept in a secured, locked location and must never be commingled with an individual's personal funds or any other funds. Only the custodian and the manager should have access to the keys or safe combination.

2.The custodian is responsible for keeping accurate records of the fund. A Petty Cash Book must be maintained. Each time monies are withdrawn from the fund, a Petty Cash voucher is to be appropriately completed. This form shows the amount withdrawn, the individual who has been given the money, the purpose, the date, a signature of the individual who has the money, and custodian approval.

3.Once a purchase has been completed, the individual must return the paid sales receipt and any change to the custodian. The Petty Cash Receipt Form should be attached to the sales receipt and maintained in the safekeeping area for proper accountability of the funds. Please note, the sales receipt should always include the vendor's name. Adding machine tapes and scrap pieces of paper will not be accepted as proper documentation.

4.Custodians are required to reconcile daily, weekly, or monthly, depending upon the amount of activity involved and the dollar amount of the fund.

5.The custodian must maintain appropriate records on a daily basis, as this petty cash fund is subject to audits at any time by the controller and internal and external auditors.

6.The custodian will be personally accountable for the Petty Cash Fund until all of the funds and/or receipts have been submitted to the controller's office and the account closed.

Establishment and Replenishment of the Fund

To establish a petty cash fund, the following steps are undertaken:

1.Petty Cash Account Certification Form to identify the type of petty cash account requested and other necessary information such as custodian, requested amount and account number.

2.Forward the form to the controller for approval.

3.Once reviewed and approved by the controller, a check is issued to establish the petty cash fund.

4.The custodian is notified when the check is available for pick-up.

If the petty cash fund is depleted and needs to be replenished, the following steps are undertaken:

1.The custodian completes a Petty Cash Reimbursement Request and attaches all receipts and forwards it to the controller.

2.The receipts will be audited and the expenses recorded.

3.A replenishment check will then be issued to the custodian for the amount of the receipts.

Overages and Shortages

All overages and shortages should be noted and tracked by the custodian and reviewed and certified by the supervisor. Significant amounts and all necessary disclosures should be immediately reported to the manager and the controller.

Changing the Petty Cash Custodian

To change the custodian of a petty cash fund, the supervisor must submit an updated certification form to the controller with a memo stating the reason for the change.

Closing a Petty Cash Fund

If a petty cash fund is determined to be no longer needed, the custodian must close the fund. The remaining cash, if any, a Petty Cash Account Certification Form (for closure), and all receipts should be submitted for deposit. Supporting documentation will be forwarded to the controller for reconciliation.

Forms

Petty Cash Account Certification Form

Petty Cash Receipt Form

Petty Cash Reimbursement Request Form

The petty cash custodian is accountable for maintaining forms.

Related Documents

Petty cash register

Petty cash voucher

Receipts

These are the documents and supplemental attachments that are critical to the development of the policy and procedures.

Revision History

5.5.2017: Final produced following assessment and approval.

FAQs

1.What is petty cash used for?

2.When travel expenses are incurred, what is the appropriate method to get reimbursed?

3.I am planning to provide food at a meeting. How should this reimbursement be processed?

4.I have incurred an expense that is over the $200.00 petty cash limit, but it was for something needed immediately. Can I submit that expense for reimbursement via petty cash?

5.The original receipt is lost and I have a copy. Can I get approval to have it processed as the original?

6.What is the dollar threshold for petty cash transactions?

7.How do I ensure I have appropriate approval on my petty cash voucher?