PETTY CASH POLICIES AND PROCEDURES
Purpose:
Procedures for the handling of petty cash are designed to provide accountability for moneys received in accordance with generally accepted
standards of internal controls.
Overview
- Petty Cash should be used for small payments for goods or services, where it would be uneconomic to process these through the Accounts
Payable system and all other methods of payment provided by the LSMFEZ Ltd.
- The petty cash system used at the LSMFEZ Ltd is an imprest system: each petty cash float is for an approved fixed amount.
- Expenditure from the float is reconciled periodically, and the float is reimbursed by an amount equivalent to the expenditure.
- All purchasing transactions must be in accordance with LSMFEZ Procedures
GENERAL POLICY
It is the policy of the LSMFEZ Ltd that requests for petty cash disbursements will only be processed for payment if they meet the following
criteria:
1. Required form is fully completed
2. Supporting documentation is provided.
3. Purchase is under k1,500.00
Do not use Petty cash for:
-Travel expenses
-Awards etc
Steps to take for Petty Cash Reimbursement
The original amount in the petty cash fund remains constant. As cash is disbursed from the fund, it must be periodically replenished to ensure
sufficient cash remains in the fund to meet minor business expenses. Each time the fund is replenished, the amount of petty cash in the fund is
restored to the original fund balance.
The custodian of the petty cash fund will monitor the fund balance on a regular basis. When the cash balance in the fund is low, the custodian
prepares a request for replenishment check. Attached to this request are the receipts from the cash box for all expenditures made from the
fund.
As a best practice, a standard format should be used for the petty cash replenishment report. A check is then written to the custodian of the
petty cash fund in the amount of the expenses that were recorded in the general ledger as supported by the receipts. The custodian of the
petty cash fund cashes the check and places the cash in the cash box. This action returns the balance in the petty cash fund to its original
balance.
Fund Restrictions
• Petty cash funds are to be maintained on an imprest basis, which means that amount of the fund remains constant. Notes, coins plus petty
cash form in the box should always equal the authorized amount which is k15,000.
• This fund belongs to the LSMFEZ Ltd and should be kept in the safe at all time. As such, the fund can be subject to surprise count by the
Auditing Department.
• Department supervisors should periodically perform surprise counts.
• No money may be loaned or borrowed from petty cash for personal use.
• The fund may not be used to cash personal checks.
• Mishandling of funds may result in dismissal and/or prosecution of involved
employees and/or relinquishment of the fund by the department.
Changing a Custodian
When a change in the petty cash custodian is required, the HoD F must safeguard the fund and account for the company's cash. The cash on
hand must be counted, receipts reconciled, and the results of the reconciliation recorded by the HoD F before relieving the current custodian. If
the custodian does not complete this step, the HoD F must reconcile the fund. When a new custodian is appointed, the new person should
count the cash and reconcile the fund using the Petty Cash sheet.
Custodial Responsibilities
1. Safe and secure storage
2. Petty Cash fund will be kept separate from all other funds
3. Ensure that each transaction is for the established purpose
4. Provide proper documentation to support each expenditure
6. Report non-balance of the fund to the Mgt Accountant in a timely manner
7. Report theft from the fund to the HoD F
Time for paying of Petty cash
Paying of petty cash will be done twice everyday:10hrs in the morning
14hrs in the afternoon