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City of Laramie/ Petty Cash Policy JULY 2006, page1 Petty Cash Policy I. PURPOSE: The purpose of this policy is to outline the responsibilities, controls, processes and procedures for maintaining, and reconciling a petty cash account. II. PRINCIPLES: Federal Law requires the certification of the City’s financial statements. The safeguarding of City assets including petty cash is an important function of each department. The Petty cash and reconciliation procedures are an internal control against fraud and help mitigate unintentional accounting errors. Petty cash is used because small purchases are not cost effective to process through the normal Accounts Payable procedures. Alternatives to petty cash should be processed with a AP check or with a credit card. 1. Physical access to petty cash should be restricted to designated authorized personnel and kept locked and segregated from all other funds. The maximum amount of petty cash funds allowed on site is $750.00*. 2. Disbursement of funds is a 4-step process: a. Distribute funds with a petty cash receipt slip. EXHIBIT B. Obtain signature on slip. b. Get the third-party receipt for items purchased. This shall be returned by the next working day and signed in. c. Document exact amount spent from petty cash. When these excess funds are returned with the receipt, the original petty cash slip is completed for the exact amount. And the third-party receipt is attached. EXHIBIT B. d. Month end audit is to complete the Petty Cash log, include receipts. EXHIBIT C. Ensure Signatures will be in ink. 3. reconciliations ensure documentation, cash balance, department head review and signatures. III. RESPONSIBILITIES: Department Head - is responsible for the petty cash fund assigned to his/her department and is responsible for designating the custodian and alternate custodian for the fund. The assignment of these roles should be completed and on file in the Finance Department via the form “Petty Cash Assignment”. EXHIBIT A. The Department Head may request an increase in petty cash in writing to Administrative Services. The department head must review the audit and sign off. Department Custodian and Alternate Custodian of Petty Cash – are responsible for the petty cash fund and must be present whenever the fund is accessed. They must verify that the receipts and the cash total the designated petty cash amount at all times. This includes the reconciliation, petty cash count, and disbursement approvals with cash release slips and receipts. Administrative Services: Finance Accounting Supervisor - are responsible for audits, general ledger balances, reconciliation or any rejected vendor invoices forwarded from the Department. VI. CONTROLS: 1. Restricted Access -All petty cash funds should be restricted to authorized personnel. Cash funds should be locked in a cabinet to safeguard the security of the cash asset. 2. *Allowance - The maximum amount of petty cash funds allowed on site is $750.00. Increases maybe requested. 3. Activity -All activity must be documented in the Petty Cash Log. Receipts must be attached to the log with the cash slip signed. 4. Audit - The petty cash account should be audited, reconciled and submitted to Finance the first week of the month. 5. Transactions - Generally, petty cash transactions should be for small dollar amounts around $50.00-$200.00. Amounts exceeding this threshold should be processed with a AP check or with a credit card. Exceptions may occur. 6. Petty Cash Replenishment - Petty cash will be replenished from an AP check from Finance made payable to the Department after the audit is complete and authorized by the city Finance Committee at the beginning of every month. 7. Prohibited Transactions - The following list of transactions are prohibited from petty cash with the exception of an emergency. - No Employee reimbursements - No Employee wages or commissions - No Payments to registered vendors - No Travel expenses - No Gas expense - No Registration or Education expenses - No cashing personal or payroll checks 8. Petty Cash Use – some examples are business meeting supplies, post office expense, minor emergency repair/replacement not under warranty, reimbursement for emergency purchase, to pay for small local purchases of supplies and materials, to make change in across the counter cash transactions. ---PAGE BREAK--- City of Laramie/ Petty Cash Policy JULY 2006, page2 Petty Cash Policy: EXHIBIT A Department Petty Cash Assignment Department General Ledger Account # Petty Cash Amount Petty Cash Custodian (print name) Alternate Custodian (print name) I have read the City of Laramie Petty Cash Policy and agree to comply with the terms. Petty Cash Custodian date I have read the City of Laramie Petty Cash Policy and agree to comply with the terms. Alternate Petty Cash Custodian date I have read the City of Laramie Petty Cash Policy and agree to comply with the terms. Department Head date ---PAGE BREAK--- City of Laramie/ Petty Cash Policy JULY 2006, page3 Petty Cash Policy: EXHIBIT B CASH RECEIPT SLIP To distribute funds from petty cash a signature from the individual receiving the funds needs to sign along with initials of the Petty Cash Custodian distributing funds. 1. Include signatures. Receiver of funds and distributor of funds. 2. Include date. 3. Include cash amount distributed. 4. Include reason for funds. ---PAGE BREAK--- City of Laramie/ Petty Cash Policy JULY 2006, page4 Petty Cash Policy: EXHIBIT C PETTY CASH LOG Policy:1. Attach all receipts and record all disbursements of petty cash. 2. The petty cash log must be reconciled and signed off by the department. 3. Submit to Finance to update the general ledger and reimburse account. Petty Cash Balance Petty Cash Reconciliation Begin End Receipts: GL Petty Cash Balance: General Ledger Balance: Dept. Signature: Finance Signature: cash date name description/reason project code H.T.E. account # : DEPOSIT TOTALS : RECEIPT TOTALS : END BALANCE