Petty Cash (Imprest) Funds - Part III

Part I of the Petty Cash (Imprest) Funds Avoiding Pitfalls series discussed the establishment of petty cash (imprest) funds, and Part II provided information on making withdrawals from these funds. This portion addresses additional recommended controls to safeguard petty cash funds.

The designated petty cash custodian is personally responsible for the cash entrusted to the fund. That person should properly secure petty cash funds in a metal lock box that is maintained in a locked desk, locked cabinet, or locked safe to which access is limited.

Reconciliations of the petty cash fund should be done by someone other than the person approving withdrawals from the fund. At any time, the amount of cash on hand plus the receipts, and any outstanding advances if the advance method of withdrawal is used, should equal the amount of the approved petty cash fund. When replenishing petty cash funds, the total of the original receipts maintained by the custodian should match the amount of the replenishing check. The original receipts should be maintained and filed as supporting documentation.

An entity's governing body should consider adopting a petty cash policy. That policy should include when petty cash funds may be used, what items may not be purchased with petty cash, proper petty cash documentation, and procedures for replenishing petty cash.

Date this Avoiding Pitfall was most recently published: 05/26/2023