Petty Cash Policy

• New Hampshire Library Association permits Sections to maintain a petty cash fund
• The petty cash fund is a cash advance issued to the Section Treasurer, who is the Custodian of the fund
• The Custodian is responsible for the security of the fund and the control of disbursements made from the fund
• The amount of the fund and a maximum expenditure, which can be paid with petty cash, is determined based on operational needs
• The Section Board decides who can authorize petty cash payments

• Petty cash can be used to make small purchases or reimbursements, in cash, for small, incidental Section expenses such as stamps, supplies, copying, etc., especially when immediate payment is required.
• Petty cash should be used only when absolutely necessary.

• Petty cash funds will operate as Imprest funds - the total of vouchers (with receipts) plus cash available must equal the petty cash fund amount
• Personal expenditures or borrowings, in any amount, by the Custodian or Section members are not authorized uses of the fund
• Petty cash advances must not be used to make change or to cash checks

• Requests to establish a petty cash fund (or increase an existing petty cash fund) should be submitted, in writing, to the NHLA Treasurer for the NHLA Board's approval
• The request should include the following information and recommendations for NHLA Board approval:
  • The reason and justification for the fund
  • The dollar amount of the fund
  • The maximum expenditure that can be paid with petty cash
  • The Custodian of the fund
  • Who may authorize petty cash payments
  • How & where (location) the fund will be secured
• Once the NHLA Board approves the creation of the petty cash fund, the NHLA Treasurer, using Section funds, writes a check to the petty cash custodian to establish the fund. Example: if Mary Smith is the Section Treasurer, the check is payable to Mary Smith, Petty Cash Custodian

• Cashes the petty cash check
• Safekeeping of the monies
  • The petty cash monies should be kept in a locked box, drawer, filing cabinet or safe to which there is limited and controlled access
  • Funds should not be left unattended or unsecured at any time
  • Only the custodian should have access to the cash
  • When disbursements are not made frequently, the Custodian should check the petty cash fund regularly to ascertain that no theft has taken place
• Monitors the use and replenishment of petty cash
• Ensures that the fund is used to cover only those expense reimbursements or advances for which it is not feasible to use normal purchasing methods
• Ensures that the fund is used for legitimate Section purposes
• Performs reconciliation of the fund on a regular basis, typically monthly. This is provided to the NHLA Treasurer on the Petty Cash Reconciliation Statement
• Report immediately any theft or loss from the petty cash fund to the Section President and the NHLA Treasurer

• This is the preferable method of petty cash payment
• The Custodian obtains proof of purchase (receipts, etc) from the Purchaser
• The Purchaser completes a Petty Cash Voucher, detailing the nature and reason for the expenditure
• A person authorized to approve petty cash payments signs the voucher
• The Custodian reimburses the Purchaser for the expenditure

• This method should be seldom used, as it requires more tracking and requires the Purchaser to connect with the Custodian twice rather than once
• Petty cash advances may be allowed with the stipulation that the Purchaser returns with a receipt and change
• The Purchaser completes a Petty Cash Voucher for a cash advance
• A person authorized to approve petty cash payments signs the voucher
• When the purchase is done, the Purchaser completes an accurate voucher for the final purchase amount, attaches the receipt, and returns the change to the Custodian

• The fund should be replenished when the money on hand is adequate for the needs over the next 30 days, or on a regular basis, typically monthly but at least quarterly
• The Custodian completes a Petty Cash Reconciliation Statement
  • Vouchers are assigned to appropriate categories (e.g., postage, office supplies, etc.) and added up for a category total
  • Category totals are entered on the Petty Cash Reconciliation Statement and the total expenditure is calculated
  • The total of the receipts (expenditures) plus the cash available must equal the petty cash fund amount in order to prove that all money is accounted for
• The completed Petty Cash Reconciliation Statement and the vouchers with attached receipts are sent to the NHLA Treasurer
• When the NHLA Treasurer assures that the account is balanced, the petty cash vouchers (with receipts) are stapled to the Petty Cash Reconciliation Statement
• The Petty Cash Reconciliation Statement is sent to the NHLA Bookkeeping firm, along with the Deposit and Payment Vouchers. The Bookkeeper writes a check payable to the Petty Cash Custodian, for the exact amount of the vouchers (with receipts), bringing the fund back to its original balance

• Theft and any other losses of petty cash are the responsibility of the Section

• Over/short amounts normally do not occur in petty cash funds
• If this should occur the Petty Cash Custodian should:
  • Verify that all receipts have been turned in
  • Ensure that the amount expended for a Petty Cash Voucher and its accompanying receipt(s) hasn't been counted as two expenditures, instead of one.
  • Ensure that each disbursement has a supporting receipt
• If the fund finally cannot be reconciled the Petty Cash Custodian must provide as an attachment to the Petty Cash Reconciliation Statement a full explanation for the overage or shortage

• The Custodian reconciles the petty cash fund
• The Petty Cash Reconciliation Statement, vouchers with receipts and the remaining cash is turned over to the NHLA Treasurer
• The cash will be deposited in the Section's savings account

• When the Custodian/Section Treasurer changes the petty cash fund should be reconciled and closed
• A new petty cash fund will be created with a petty cash check issued in the name of the new Section Treasurer