Question: What is the proper procedure to open a "petty cash fund" for ASB? The need for a petty cash fund will be covered at the next ASB meeting, and as I have never done this before want to be sure I have the basics in place. When the signed memo comes from ASB with minutes to back it up, we plan to write a check to "cash" and use the cashed funds for petty cash during the year. I use quicken 2005 and plan to create a category for petty cash that shows withdrawal at the beginning of the year and deposit at the end, and I also plan to track the day-to-day usage of the petty cash fund using an excel spread sheet. Please let me know if there are any holes in my plan.

Response: Your plan to set up a petty cash fund is solid, but we have a few thoughts.

One suggestion would be to make the check payable to the custodian, as opposed to cash, so only that person can cash the check.  Use words like "Jane Don, Petty Cash Custodian" as the payee.

Be sure to establish the fund amount in the ASB action so it's clear how large the fund will be.  We recommend keeping it at $50 or less.

You might set up a form to go with the spreadsheet that you can use to support the replenishment of the fund when it is exhausted. Be sure it contains signature lines for the appropriate officials. Or, another option would be to use existing purchase requisition forms.

You may also want to consider establishing written procedures, approved by the ASB, governing its use. The procedures would describe things such as what it can be used for, maximum amounts per transaction, who the custodian will be, and approval processes.

10/28/09