Petty Cash Procedure

Purpose statement

This procedure sets out the purpose, establishment and replenishment of petty cash funds.  Petty cash funds are utilized by departments to facilitate payment of minor purchases, which cannot be covered using a corporate credit card, or for coin change float purposes. The intent of a petty cash fund is to reduce cheque issuance for very small dollar purposes.

Scope

This procedure applies to appointed staff in all departments that require petty cash funds for coin change float purposes or to cover minor purchases. These funds should not be used interchangeably, nor should they be used as follows:

1. To contravene the Town’s Purchasing by-law, Town’s Employee Related Business Expense or Conference, Seminar & Training Procedures.
2. To pay salaries for any permanent or temporary staff.
3. To pay for meal allowances or meal reimbursements (with the exception of transit Unifor 1256 employees).
4. To reimburse for mileage.
5. To pay supplier invoices.
6. For purchases greater than $50.
7. For personal use.

Procedure

Establishment of petty cash fund

1. Departments must obtain approval from the Manager, Accounting Operations in order to establish a petty cash fund.  For departments inside of town hall the Revenue and Taxation division will serve as the town hall petty cash.
2. The purpose of the petty cash fund must be clearly understood by both the department requesting the funds and Accounting Operations.
3. Departments must designate a staff person as the petty cash custodian (custodian). The custodian is responsible for managing and replenishing the petty cash fund as required, keeping the funds in a secure, locked environment, and ensuring that the petty cash procedure rules are followed.
4. Petty cash funds cannot exceed $500.
5. Departments complete a cheque requisition form (Appendix A) made payable to the designated custodian for an amount no greater than $500.
6. Once the cheque is generated it is sent to the custodian who is responsible for cashing the cheque and managing the fund. Temporary coin change floats may be established for special events, but are to be reconciled and closed after the event. To set up a temporary float, the above procedures are to be followed.

Use of petty cash funds for minor purchases

1. Petty cash funds can be used for reimbursing staff for minor purchases (<$50) they will be paying for on behalf of the town. Staff with PCOS cards should be utilizing these as the preferred payment method. If the purchase is greater than $50 staff will be reimbursed through payroll after completion of an Employee Requisition Form.
2. Requests for reimbursement through petty cash should be made using the “Petty Cash Voucher” form (Appendix B), with the original receipt attached as proof of payment. The receipt must show the HST amount in order for the HST rebate to be calculated.
3. The “Petty Cash Voucher” form should be completed with the following information
   1. Date
   2. Amount requested
   3. Purpose
   4. General Ledger (GL) account number
   5. Petty cash custodian name
   6. Recipient name
   7. Manager or Supervisor signature.
4. The custodian verifies that the recipient’s manager or supervisor has approved the reimbursement before processing it through the petty cash fund.
5. If a petty cash fund is a change float, then reimbursement for minor purchases should not be taken from these funds.  For departments located in town hall, the revenue and taxation section can provide change.

Replenishment of petty cash funds

1. The “Petty Cash Reimbursement” form (Appendix C) must be completed, listing all the purchases, applicable taxes and assigning an appropriate account number to every expense.  The appropriate general ledger account number should be shown on the “Petty Cash Voucher” form completed by the recipient of the funds.
2. Appropriate “Petty Cash Vouchers” and original invoices/receipts must be attached to the petty cash reimbursement form for tax purposes. Receipts must show HST if applicable.
3. Signature of custodian’s manager or supervisor must be on the “Petty Cash Replenishment” form.
4. The total of the requested replenishment, plus the cash remaining in the petty cash fund, should always equal the original amount of the petty cash fund.
5. Cheques for petty cash reimbursements are made payable to approved custodians.
6. The petty cash custodian shall exchange the cheque for cash with the Revenue Taxation division or the employees’ bank.
7. Petty cash floats are subject to periodic audits.
8. Petty cash funds used as change float should not need replenishment, unless they do not total the original float amount, then replenishment of the float will be charged to the responsible department.
9. Any fraudulent activity shall be reported immediately to the Manager, Accounting Operations.
10. Annually at year end, the custodians will complete and sign a “Certificate of Cash Funds” (Appendix D) to confirm the value of the petty cash funds and to acknowledge reading and understanding this procedure.  Should the total of the cash and requisitions not equal the approved fund balance, an adjustment will be done at year end to reflect actual amounts and will be charged to the responsible department.

Closing petty cash fund

1. To close a petty cash fund, a final “Petty Cash Reimbursement” form must be completed in order to expense all reimbursements made
2. Accounting Operations will treat this as a journal entry and not an accounts payable entry.

Any cash remaining in the fund must be returned to Accounting Operations to deposit to the bank and eliminate the petty cash fund.

Definitions

PCOS: Purchasing Card Order System refers to the town’s corporate credit cards

Responsibilities

The following are responsible for:

Directors:

Appointing Petty Cash Custodian and ensuring that a secure locked location is available for the funds to be held during the day and overnight.

Petty Cash Custodian:

Reconciling, disbursing and replenishing petty cash funds and signing off on confirmation and understanding of procedure

Manager, Accounting Operations:

Approving the establishment of new petty cash funds

Accounting Co-Coordinator:

1. Annually confirming the petty cash funds based on completion of Certificate of Cash Funds by petty cash custodians.
2. Ensuring the timely reimbursement of funds.
3. Ensuring compliance of expenses being reimbursed through petty cash.
4. Reviewing departmental petty cash usage, make recommendations to Manager, Accounting Operations.

Internal Auditor:

Periodic auditing of petty cash funds.