Petty Cash (Imprest) Funds – Part I
Petty cash funds, referred to as “imprest funds” in Minnesota’s statutes, are authorized for school districts, towns, counties, and cities. Due to the fact that these are cash funds (currency in the form of coins and bills), extra security precautions should be taken to safeguard these funds.
Each petty cash fund must be established by an entity's governing body, and a “custodian” of the fund must be appointed. Meeting minutes should document the creation, custodian, and amount of any petty cash fund. The governing body should periodically review these funds to determine whether they are still necessary.
Petty cash funds are not separate checking accounts. Rather, by law, these funds are cash (currency). They are allowed for the payment of any proper claim if “it is impractical” to pay the claim in any other manner. The statutes prohibit the funds' use for salaries or personal expenses of an officer or employee. Counties and school districts have additional statutory authority to use a petty cash fund for certain travel advances.
A claim itemizing all disbursements from a petty cash fund must be presented to the governing body at its next meeting. If the governing body approves the claim, the fund’s custodian should be given payment to replenish the fund. If the governing body fails to approve the claim in full, the fund’s custodian is personally responsible for the difference. The laws governing petty cash (imprest) funds are Minn. Stat. §§ 123B.11 (school districts), 366.01, subd. 12 (towns), 375.162 (counties), and 412.271, subd. 5 (cities).
Date this Avoiding Pitfall was most recently published: 06/26/2020.