The Petty Cash Fund is a fund that is part of the total Imprest Cash Funds, yet segregated and used for the purpose of paying small invoices and emergency purchases. The petty cash fund should be separately maintained and not commingled with the vault funds.
Expenditures from the Petty Cash Fund are to be limited to small expenses, not to exceed $100, such as:
- office supplies
- C.O.D. shipments
- postage
- emergencies, where cash is required for some product or service and there is not time to wait for a check from the Support Center.
Expenditures from the Petty Cash Fund are not to be used for:
- Items in excess of $100
- Customer refunds
- Travel and entertainment expenses
- Recurring expenses that can be handled by the normal accounts payable cycle.
- Payment of wages
- Cashing of payroll or personal checks
- Travel or other advances
Approval Process
The establishment of the Petty Cash Fund and increases and decreases to the Fund must be reviewed and approved by the General Manager. The custodian of the fund should be the General Manager or the operation’s Controller or Office Manager. Petty cash should be counted and reconciled each period end and included on the Imprest Cash Fund Count sheet submitted to the Support Center. Also an employee independent of the custodian should perform periodic surprise petty cash audits. These audits should be documented and retained for a minimum of one year. The General Manager should review and approve all petty cash expenditures no less than at the time of Account Payable reimbursement.
Documentation Process
A Petty Cash Voucher (Exhibit A) must be completed for each item submitted for reimbursement. The information required includes:
- No: – Enter a number based on numerical sequencing. It is recommended that the following numbering system be used: the first four digits in the number would represent the accounting period and year. The next numbers would start with ‘01’ and continue in numerical sequence until the end of an accounting period. An example of this numbering system would be the 10th voucher in Period 02 of 2005 would be entered on the No. line as 02-05-10.
- Date – Enter the date of the expenditure
- Description of Purchase- Enter a brief explanation of the expense
- Amount – Record the amount to be paid to the requester
- Account Distribution – Enter the six digit General Ledger account code(s) by amount that will be used to post the payment to Account Payable.
- Received By – Signed by the requester upon receipt of reimbursement
- Approved By – Signed by petty cash custodian.
If a Requester needs to take funds based on an estimate and intends to return with a receipt, the product and change the amount initially taken should be recorded and signed for as no funds are to be released without having the requester sign for it. Upon return the voucher should be completed showing the actual amount spent.
Any voided vouchers are to be maintained in numerical order.
Reimbursement Process from Accounts Payable
The custodian or petty cashier must have a specially assigned vendor number, e.g. Joe Manager, Petty Cashier. To request a vendor number for the custodian, see the procedure for Vendor Additions. At the end of each week, but not less than once a period, reimbursement of the vouchers should be made by submitting a summary schedule, all vouchers and supporting documentation to Account Payable. The Petty Cash Fund should be reconciled at the time submission is made for reimbursement, but not less than once a Period. When the reimbursement check is received, stamp all vouchers ‘PAID’ and attach the remittance advice to the summary schedule.