Best Practices
➢ Departmental policies and procedures for the activity should be formally documented. This should include authorized activity, workflow, responsibilities, documentation requirements and step-by-step instructions for processing activity.
➢ Documented policies and procedures helps ensure departmental personnel understand expectations and requirements, and promote accountability and consistency in activities.
➢ Finance and Business Affairs should maintain a listing of all custodians of cashiering funds (i.e., start-up cash, petty cash) that should be monitored to ensure the list is accurate and complete. There should be a process to document when a custodian transfers custody of petty cash funds to another employee.
➢ Petty cash funds should only be used for purposes outlined in the policy. These funds should not be used to circumvent established procurement policies and requirements.
➢ Petty cash accounts should be implemented and authorized through Finance and Business Affairs. They should not be established by withholding cash receipts from deposits of operating activities.
➢ The individual who actually administers the account should be the official petty cash custodian on record in Finance and Business Affairs.
➢ The custodian should ensure that the cash and records are stored together in a secure location, such as a locked drawer within the office. Under no circumstances should the custodian take the petty cash funds and records to their personal residence.
➢ Care should be taken when distributing petty cash funds. Every employee that receives reimbursements from petty cash should sign an internal petty cash receipt. The custodian should record the proper financial coding and sign the receipt. These signatures are an important part of the internal controls for petty cash funds. The supplier receipt should be attached to the petty cash receipt.
➢ All transactions should be reimbursed in a timely manner. This helps ensure that period costs are accurately recorded.
➢ Periodic spot checks of activity should be performed to ensure petty cash activity is conducted in compliance with policy.
➢ All accounts should be reconciled periodically and shortages / overages reported following normal policies and procedures.
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