Petty Cash (Alberta Council)

From SJA

This is a draft document.

The Need

Petty cash funds may be used for making small one-time purchases. Petty cash documentation and control requirements are relaxed compared to normal purchasing policies because small amounts are normally involved. Nonetheless, those policies that are in place should be followed scrupulously.

A sound system of internal control requires that there be separation between the person approving the expenditure and the person incurring the expenditure.

Policy

Petty cash shall be used only when employees are required to make a small, reasonable one-time cash purchase on behalf of the company less than $50. Detailed receipts must be retained and recorded by the employee responsible for petty cash.

Petty cash must not be used for:

- Large office supply purchases
- Gas purchases (when a gas card is available)
- Student refunds
- Community Service reimbursements
- Instructor Expenses (i.e. mileage, meals, parking). These expenses must be submitted on the instructor payment summary for reimbursement.
- Large classroom expenses (i.e. DVD players, training equipment, etc.)
- Purchases that could be directly invoiced to St. John Ambulance Alberta Council

Purpose

This Statement of Policy and Procedure outlines the circumstances under which petty cash should be used, and describes controls related to the stewardship of the petty cash funds.

Scope

This policy applies to all individuals maintaining petty cash amounts, individuals accessing petty cash, and the finance department.

Responsibility

All operating departments are responsible for ensuring that expenditures made on behalf of the company represent good value and are necessary business expenses.

The petty cash custodian is responsible for:

Validating that the request for petty cash is for company purposes
Maintaining a record of all transactions affecting the amount of petty cash
Submitting Petty Cash Reimbursement Report on a monthly basis

The Finance Department is responsible for:

Ensuring that petty cash records are reconciled on a monthly basis with actual cash on hand
Replenishing petty cash amounts on a timely basis
Maintaining current petty cash agreements

Definitions

"Account allocation" is the act of applying petty cash disbursements to various general ledger accounts to reflect how the petty cash was used.
"Disbursement" is the paying out of money to an individual.
"Petty cash custodian" means the individual chosen to hold and disburse petty cash and to maintain a petty cash log.
"Petty cash voucher" means an invoice, cash register slip or other evidence of an amount reimbursed from petty cash.
"Reconciliation" is the process of comparing actual amounts held to the amounts that the records indicate should be there, and finding reasons for any differences.
"Overage" means the amount by which the petty cash has more than the records indicate it should.
"Shortage" means the amount by which the petty cash has less than the records indicate it should.

References and Related Statement of Policy and Procedure

Expense Authorization (Alberta Council)
Cheque Issuance

Procedures

Petty Cash Box

Petty cash should be kept in a secure location in a locked cash box as the petty cash custodian is personally accountable for any missing funds.
One employee - the petty cash custodian - shall keep the petty cash box key and manage the petty cash, including monthly reconciliation and refreshment of funds.
In the absence of the petty cash custodian, a delegate petty cash custodian may be named. Where there is more than one petty cash custodian, transaction logs must show the initials of the individual accessing petty cash for each transaction.

Reimbursements from Petty Cash

For normal purchases, employees make the purchase from their own funds and keep the receipt for the purchase for reimbursement purposes.
For unusual purchases, employees should obtain oral approval from the department manager prior to making the purchase from their own funds as above.
Employees may obtain reimbursement for expenditures from petty cash when they present their receipt to the petty cash custodian. The back of the receipt must contain a simple explanation as to the nature of the expense and the account code.
Disbursements shall be recorded on the petty cash log and the receipts kept in the petty cash box until they are submitted as back up with the Petty Cash Reimbursement Report.

Disbursements and Returns to Petty Cash

In some cases, it is not possible or practical for an employee to make a purchase from their own funds. In these situations, the petty cash custodian may make an advance disbursement to the employee for the estimated amount for the required purchase.
The employee estimates the required amount, and that amount is then disbursed to the employee. A petty cash voucher is completed which includes the nature of the requirement and the amount withdrawn. Both the employee and the petty cash custodian should initial the petty cash voucher.
If the petty cash custodian has any concern about the request, he or she may request the approval of the department manager before disbursing the cash.
The employee retains the receipt from the purchase. The receipt, together with the change remaining from the initial disbursement, is returned to the petty cash custodian, with a brief explanation as to the nature of the purchase and the account code on the back of the receipt.
The petty cash custodian verifies that the amount of the receipt and the amount of change equals the amount initially disbursed. The original disbursement entry is reversed and the purchase entry is made in the log.

Reconciliation and Reimbursement of Petty Cash

The petty cash custodian shall perform a reconciliation of petty cash and receipts on a monthly basis.
The total of all receipts plus the cash remaining in the box should equal the total amount in the petty cash box at the beginning of the period.
If the petty cash and receipts do not reconcile, a mistake has been made. It is the responsibility of the petty cash custodian to find the mistake and correct it.
If after concerted effort, the petty cash custodian cannot find the error and still cannot reconcile, the custodian should report the overage or shortage to the Finance Manager who may recommend that the overage or shortage be written off.
The petty cash reimbursement form, together with all the receipts, any vouchers issued, and the log for the period shall be forwarded to the Finance Department for review and reimbursement.
The petty cash log is used to record the cash balance left over from the previous reconciliation. The replenishment cheque is cashed by the petty cash custodian, and the amount is entered into the log as a petty cash deposit.

Petty Cash Reimbursement Reports

Petty Cash Reimbursement Reports are to be submitted to the Accounts Payable Coordinator on a monthly basis. Submitted petty cash reports must include:

A completed reconciliation of cash on hand
All receipts and any vouchers as an attachment to the report in a logical and organized manner which means stapling the receipts to separate sheets of 8 1/2" x 11" white paper in the order they are recorded on the petty cash report. Missing receipts will not be reimbursed.
Petty cash log for the period attached
The account code in correct format is (AAAA-LL-DD-FF)

Failure to complete the petty cash report in accordance with the above will result in the Petty Cash Reimbursement Report being returned to the petty cash custodian and payment delayed until the report is completed correctly.

Alternative to Petty Cash

St. John Ambulance Alberta Council has credit with various companies in many different industries. This means that the St. John Ambulance Alberta Council will be billed directly for purchases made with these companies. Contact the Accounts Payable Coordinator to inquire about the companies with which we have existing credit accounts.

If a purchase needs to be made with a company which we do not have a line of credit, a credit application form may be requested from the company and forwarded to the Accounts Payable Coordinator for completion.

Attachments

Petty Cash Reimbursement Report

Petty Cash Reimbursement Report
Petty Cash Voucher

Petty Cash Voucher
Record of Petty Cash Expenses

Record of Petty Cash Expenses