Petty Cash

A Petty Cash Fund is one alternative for handling small dollar purchases (not greater than $100).

A Petty Cash Fund operates as follows.

  1. A cheque is issued to the custodian identified by the department.
  2. The custodian cashes the cheque and places the cash in a departmental cash box.
  3. During the course of departmental business operations, small dollar purchases are covered by the Petty Cash custodian.
  4. Upon expending the cash, a reimbursement request is processed, expenditures are recorded in the department’s account(s), and cash is replenished by a cheque being issued to the custodian, who then cashes the cheque, replenishing the cash in the fund.
  5. The fund should be replenished prior to a change in custodian.

 

In order to compare the differences between a Petty Cash Fund, an Imprest Expenditure Bank Account and a Cash Float, refer to the document Comparing Payment Methods – Petty Cash / Imprest Expenditure Bank Account / Purchasing Card / Cash Float.

This section is divided into the following sub-sections:

Key Requirements

Eligible Expenditures

Ineligible Use of Petty Cash Fund

Open or Increase a Petty Cash Fund

Replenish a Petty Cash Fund

Change the Custodian of a Petty Cash Fund

Close a Petty Cash Fund

 

Key Requirements

Departmental Responsibilities

  • Determine the required amount of Petty Cash Fund.
  • Designate the Petty Cash Fund custodian, and the alternate custodian during lengthy absences (e.g. vacation, sick leave etc.)
  • Implement appropriate financial controls over expenditures (see below)
  • Maintain the security of the cash.
  • Use the Petty Cash Fund in accordance with these guidelines
  • Monitor and replenish the Petty Cash Fund to avoid shortages and record expenses within the fiscal period in which they were incurred
  • Close and return Petty Cash Funds, for example, when it is no longer required.

Financial Services Department Responsibilities

  • Process the approved request to establish or close a Petty Cash Fund.
  • Input data to update the accounting records, including custodian changes.

Approvals
The approval of the person who is at least one level of authority higher than the custodian is required:

  • to establish / increase / decrease / close a Petty Cash Fund,
  • to replenish the Petty Cash Fund, and
  • to request a change to the custodian.

Financial Controls

  • Keep the Petty Cash locked in a metal cash box.
  • A Petty Cash voucher is recommended for all disbursements because it accommodates the collection of required information, including:
    • date
    • amount
    • purpose
    • account to be charged
    • name of person who disbursed the petty cash
    • signature of person receiving the petty cash.
  • Each Petty Cash voucher should be supported by original receipts, where possible. Where this is not possible/practical, this should be indicated on the voucher.
  • Petty Cash and receipts are counted at least monthly by someone other than the custodian.
  • Cash custody, transaction recording and reconciliation to FIS statements are performed by different personnel.
  • Report cash shortages or excess cash immediately to the department head or person with authority over the fund.
  • Report thefts and/or attempted thefts to the University Police immediately – St. George campus, Mississauga campus, Scarborough campus.
  • Do not mix departmental revenues or deposits with the Petty Cash Fund. The Petty Cash Fund should never be replenished or supplemented other than through the Replenish a Petty Cash Fund process.

Reporting
In order to meet reporting requirements:

  • The University year-end is April 30 and all expenditures incurred to that date should be recorded in the accounts,
  • All Petty Cash expenditures relating to grants should be recorded in the sponsor reporting period in which they are incurred to ensure that all grant expenditures are recorded before grant funding expires.

Alternate Custodian
Cheques to replenish the Petty Cash are always issued in the name of the custodian. Just prior to planned leaves such as vacation, the custodian should replenish the fund to ensure adequate funds are available during the planned absence. If critical fund shortages arise during a lengthy or unplanned absence of the custodian, the alternate custodian should contact Accounts Payable at .

 

Eligible Expenditures

A Petty Cash Fund is intended for small cash expenditures only. The current limit is $100 per expenditure. Refer to the “Administrative Procedure – Cash Receipts and Cash Disbursements.

The expenditure limit is set low for two reasons:

  • A relatively small Petty Cash Fund is required if used only for small expenditures. This has two benefits:
    • The smaller the fund, the smaller the security risk, and
    • Cash on hand is not earning interest. Keeping the size of the Petty Cash Fund small minimizes lost investment income.
  • As the dollar value of expenditures increase so does the potential price advantage in using a purchase order or departmental credit card.

Payments for personal services which are very small, non-routine and non-recurring (e.g. paying a student a nominal amount for a delivery) may be made from Petty Cash only when the department is reasonably certain that the individual will not receive more than $500 from the University in the calendar year.

Alternatives to Petty Cash Payments – Currently available options for expenditures in excess of $100 include the use of the departmental purchasing card, purchase orders or certified invoices.

 

Ineligible Use of Petty Cash Fund

Do Not Use a Petty Cash Fund for:

  • loans
  • cashing personal cheques
  • payments of salary or wages or other remuneration and fees, commissions or other amounts for services, including honoraria (guest lecture fee) and subject payments
  • cumulative expenditures in excess of $100 (see Travel and Other Reimbursable Expenses)

The majority of payments to individuals for services come under the Income Tax Act and the University must meet requirements thereof, including:

  • reporting the payment
  • making and remitting deductions in respect to the payment, e.g. tax, Canada Pension Plan (CPP) payments, Employment Insurance (EI) payments
  • remitting the University cost of CPP and EI.

Where the University fails to meet these requirements it is potentially liable to make restitution and incur penalties and fines. For this reason such payments should be processed by the Payroll Department. Refer to the section Employee versus Contractor and Taxation of Payments.

 

Open or Increase a Petty Cash Fund

The Petty Cash/Imprest Open/Change Custodian/Increase Form serves both to establish, change custodian and increase the balance of a Petty Cash Fund. The approval of the person one level higher than the custodian is required. Send the request to:

Accounts Payable,
Financial Services Department
215 Huron Street, 2nd Floor

To assist you in completing the form, refer to the document Instructions for Completion: Open/Increase Petty Cash form.

 

Replenish a Petty Cash Fund

Petty Cash should be replenished when cash is nearly expended, allowing sufficient time for processing a reimbursement request, e.g. 3 to 4 days.

The Petty Cash – Request for Reimbursement / Closure / Decrease form is available to facilitate replenishment and processing in FIS by Departments.

To assist you in completing the form, refer to the document Instructions for Completion: Petty Cash – Request for Reimbursement / Closure / Decrease form.
The department will then process the Petty Cash Reimbursement in FIS

An electronic approval is acceptable if the approver is on-line. If the approver is not on-line, then some form of paper signature is required.

The system-assigned document number should be written on the envelop, screen print or paper form.

 

Change the Custodian of a Petty Cash Fund

Department:

  • Replenish the fund prior to a change of custodian,
  • Former custodian turns over replenished cash to the new custodian,
  • Complete the Petty Cash/Imprest Open/Change Custodian/Increase Form authorizing the change and forward to Accounts Payable, Financial Services Department for processing.

Accounts Payable:

  • Changes the master record of the Petty Cash Fund.

 

Close a Petty Cash Fund

Departmental Responsibilities:

  • Complete a Petty Cash/Imprest-Request for Reimbursement Closure/Decrease form in the amount of the unreplenished expenditures.
  • Specify on the Reimbursement Request Form, “CLOSURE”.
  • Deposit the balance of funds with the University Cashier (e.g. crediting the departmental fund center)
  • Attach the deposit receipt to the Reimbursement Request Form.
  • Attach related expenditure receipts.
  • Send the approved form to Accounts Payable, Financial Services Department to close the Petty Cash Fund.

Accounts Payable Responsibilities:

  • Review receipts and form for completeness and compliance
  • Record the final expenses and close the petty cash fund.
  • Confirm that the total, including the deposit (if any) equals the outstanding Petty Cash Fund and Close the Petty Cash Fund.
  • Process a Petty Cash Reimbursement in FIS.


Last Revision October 2023