Petty Cash Standard Operating Procedure (SOP)
1. PURPOSE
This Standard Operating Procedure (SOP) outlines the process for
managing petty cash funds within the organisation. It aims to ensure
proper control, security, and accurate record-keeping for petty cash
transactions.
2. SCOPE
This SOP applies to all employees authorized to handle petty cash funds,
including the custodian (designated employee responsible for the fund)
and anyone requesting petty cash reimbursements.
3. DEFINITIONS
Petty Cash Fund
A small amount of cash designated for covering minor business
expenses not suitable for company checks or credit cards.
Custodian
The employee designated to manage the petty cash fund, including
maintaining records and disbursing cash.
Petty Cash Voucher
A pre-numbered form used to document petty cash disbursements.
Imprest System
This is a method to account for petty cash by maintaining a balance
in a fund that equals petty cash receipts plus additional cash in the
fund.
4. ESTABLISHMENT OF PETTY CASH FUND
A designated amount of cash will be established for the petty cash
fund based on typical monthly petty cash needs.
Approval for the fund amount will be obtained from the department
head or authorized personnel.
This procedure will cater for Petty Cash which will be of amounts not
exceeding $500.00 and the Imprest system will be used
5. CUSTODIAN RESPONSIBILITIES
The custodian will be responsible for:
o Safeguarding the petty cash fund.
o Maintaining accurate and complete records of all petty cash
transactions.
o Disbursing cash only upon receiving a properly completed
petty cash voucher with original receipts attached.
o Reconciling the petty cash fund on a regular basis (e.g.,
monthly) to ensure the amount of cash on hand matches the
documented disbursements.
o Replenishing the fund when it falls below a pre-determined
minimum level.
6. REQUESTING PETTY CASH REIMBURSEMENT
Employees requesting petty cash reimbursement must complete a
petty cash voucher, including:
o Date of expense
o Description of expense with business justification
o Amount requested
o Original receipts stapled to the voucher
7. DISBURSEMENT OF PETTY CASH
The custodian will review the petty cash voucher and attached
receipts for completeness and business justification.
If everything is in order, the custodian will disburse the requested
amount from the petty cash fund.
The custodian will obtain the employee's signature on the petty
cash voucher acknowledging receipt of the cash.
8. REPLENISHING OF PETTY CASH FUND
When the petty cash fund reaches a pre-determined minimum level,
the custodian will initiate a process to replenish the fund.
This typically involves submitting the petty cash vouchers and
remaining cash to the accounting department to receive a
reimbursement check for the total amount disbursed.
9. RECORD KEEPING
The custodian will maintain the following records:
o Petty cash log documenting all disbursements, including date,
amount, payee, and brief description.
o Original petty cash vouchers with attached receipts.
10. SECURITY
The petty cash fund must be stored in a secure location, such as a
locked drawer or cash register.
Only the designated custodian should have access to the petty cash
fund.
11. COMPLIANCE
All employees involved in handling petty cash are responsible for
adhering to this SOP.
Petty cash should only be used for approved business expenses and
documented with proper receipts.
12. Review and Update
This SOP will be reviewed annually and updated as needed to reflect
changes in company policies or procedures.
