Petty Cash Policy and Procedures
1. Purpose
The purpose of this policy is to establish guidelines for the management and
accountability of petty cash funds, including the roles and responsibilities of the
Petty Cash Custodian.
2. Scope
This policy applies to all employees who handle petty cash and are responsible for
its disbursement, including the Petty Cash Custodian.
3. Definitions
Petty Cash Fund: A small amount of cash on hand used to cover minor
business expenses.
Petty Cash Custodian: An employee responsible for the safe-keeping,
disbursement, and reconciliation of the petty cash fund.
Replenishment: The process of restoring the petty cash fund to its original
balance.
4. Responsibilities
4.1 Petty Cash Custodian
Secure and safeguard the petty cash fund.
Disburse petty cash in accordance with company policy.
Maintain accurate records of all petty cash transactions.
Reconcile the petty cash fund on a regular basis (weekly/monthly).
Request replenishment of the petty cash fund when necessary.
4.2 Finance/Accounting Department
Authorize and provide the initial petty cash fund.
Review and approve petty cash replenishment requests.
Audit petty cash records periodically.
5. Policy
5.1 Petty Cash Fund Limit
The maximum petty cash fund amount shall be determined by management
and should not exceed [insert amount].
Petty cash may only be used for minor expenditures, such as office supplies,
small repairs, and other approved incidental expenses.
5.2 Allowable Expenses
Petty cash funds may be used for expenses up to [insert individual expense
limit].
Examples of allowable expenses include:
o Office supplies
o Parking fees
o Courier services
o Small repairs and maintenance
5.3 Prohibited Expenses
Petty cash funds may not be used for:
Personal expenses
Loans or advances
Travel expenses exceeding the allowed petty cash limit
Payments to vendors for goods/services exceeding the petty cash limit
5.4 Cash Disbursement Procedures
Each disbursement must be supported by a receipt.
A Petty Cash Voucher must be filled out for each transaction and signed by
the person receiving the cash.
Each voucher must include:
o Date of transaction
o Purpose of expense
o Amount disbursed
o Signature of the recipient and Petty Cash Custodian
6. Procedures
6.1 Disbursement
1. The Petty Cash Custodian verifies the request to ensure it is a valid business
expense.
2. A petty cash voucher is completed, detailing the transaction and signed by
the recipient.
3. The Custodian disburses the appropriate amount of cash.
4. The Custodian attaches the original receipt to the voucher as proof of the
expense.
6.2 Reconciliation
1. The Petty Cash Custodian must reconcile the petty cash fund
[weekly/monthly] by:
o Counting the cash on hand.
o Verifying that the total of the cash on hand and petty cash vouchers
matches the original fund amount.
2. A Petty Cash Reconciliation Report must be prepared and submitted to
the Finance/Accounting Department.
3. Any discrepancies must be reported immediately and investigated.
6.3 Replenishment
1. When the petty cash fund falls below [insert threshold], the Petty Cash
Custodian requests replenishment.
2. The request for replenishment is submitted to the Finance/Accounting
Department along with a summary of the disbursements made.
3. The Finance/Accounting Department reviews and approves the replenishment
request.
6.4 Security and Safeguarding
Petty cash funds must be stored in a locked cash box and kept in a secure
location.
Access to the petty cash fund is restricted to the Petty Cash Custodian.
Unauthorized use or loss of petty cash funds will result in disciplinary action.
7. Audit and Review
The Finance/Accounting Department will conduct periodic audits of the petty
cash fund to ensure compliance with this policy.
Any discrepancies identified during the audit must be resolved promptly.
8. Exceptions
Any exceptions to this policy must be authorized by [insert appropriate
authority].
9. Policy Review
This policy will be reviewed annually by management to ensure it remains
relevant and effective.
