1A Prepare Petty cash vouchers in accordance with workplace procedures

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1 Record and balance petty cash transactions: Learning material This section addresses the following performance criteria: Petty cash vouchers are prepared in accordance with workplace procedures Before processing, petty cash claims and vouchers are checked for accuracy and authenticity Petty cash transactions are recorded Irregularities are noted and referred to nominated person/section in accordance with workplace procedures 1A Prepare Petty cash vouchers in accordance with workplace procedures Petty cash is the small amount of cash that is held on the company premises to be used to reimburse staff for small, incidental purchases such as milk or small items of stationery, which they purchase on behalf of the business. Petty cash is generally used for purchases where authorisation is not needed and the amount is so small that it is not sensible raise an order to pay by cheque or card. So that the petty cash is used in a controlled way, a specific person, usually a bookkeeper or a member of the administration staff is appointed as person responsible for petty cash. Policies, procedures, and codes of practice Critical standards that need to be met by bookkeepers relate to honesty, efficiency, effectiveness, accuracy, and high levels of customer service. These standards are essential for any employee as they provide the foundations upon which the business grows. They are part of the strategic and operational success of the business. For any business to work effectively and to work toward the achievement of its goals, all employees must understand and implement business policies and procedures related to workplace performance appropriately. Policy A policy is a statement of agreed intent that clearly describes any business' views with respect to a particular matter. It describes the principles that provide the direction for the business. It is a set of principles or rules that provide a definite direction for a business and embraces the general goals and acceptable procedures in its area of influence. Policies assist in defining what must be done when particular events occur. Policies are the rules that can be referred to as a means of maintaining order, security, consistency, or practices for successfully furthering a goal or mission. For example, a business might have a policy in place that deals with suppliers when an error is made on invoices. Then, each time that situation arose, staff members could refer to the policy rather than have to make decisions based on the circumstances of the individual cases. Policies are necessary so that people working in the business can have a framework for actions that helps them perform their jobs in the way that is expected by their employer. It alleviates the problem of people having to discuss and resolve issues each time a situation arises. The policy provides the decision-making process and the actions that can be applied in many cases and as a consequence has efficiency benefits. For every policy developed, a business will need to create and document supporting procedures. Procedure A procedure is a clear step-by-step method for implementing a business's policy or responsibility. A

2 procedure describes a logical sequence of activities or processes that are to be followed to complete a task or function in a correct and consistent manner. It can be a manner of proceeding; a way of performing or effecting something or it can be a series of specific steps to be taken to accomplish a given result or product. Policies and procedures are usually compiled together to form a manual. A Policy and Procedures Manual is a compilation of the written records of the agreed policies and practices of a business. The manual should be maintained in a loose-leaf file system so that it can be updated and added to as policies and practices are reviewed and amended. The manual should be regularly reviewed and each policy and procedure should have a review date. The manual should readily be available to all staff. The accounts section of any business will have clearly documented procedures outlining and detailing the steps and the specific instructions that are required before an account payable invoice for example can be cleared for payment. The total of the petty cash fund, the maximum amount of each purchase from it, and other conditions of use, are set by the company and are usually recorded in a petty cash policy and/or procedure. The person in charge of the petty cash should make sure that they are aware of the contents of the policy/ procedure and follow it at all times. The most common way of accounting for petty cash expenditures is to use the Imprest system. The initial fund is created by issuing a cheque for the desired amount, for example $100. The bookkeeping entry for this initial fund is to debit petty cash and credit bank account. Petty cash is usually kept in a locked petty cash container which can, for added security, be kept inside a locked drawer or cabinet. It is important the keys are kept in a separate location to prevent unauthorised people access to the tin. As the petty cash is used (expenditures are made), the person in charge of the fund will reimburse employees and receive a petty cash voucher with a receipt/ invoice attached in return. At any given time the total of cash on hand plus the reimbursed vouchers must equal the original fund. Alternately, a petty cash advance can be issued to a member of staff. In this case a petty cash advance slip is filled out and the receipt/ invoice, together with any change, is handed in to the petty cash person in charge after the purchase has been made. When the fund gets low the person in charge requests a top up and submits the vouchers for reimbursement. Assuming the vouchers add up to $80, an $80 top up cheque is issued and an $80 debit towards office expenses is recorded. Once the cheque is cashed, the person in charge again has cash at the original amount of $100. Petty cash vouchers It is the person in charge's job to ensure that there are sufficient petty cash vouchers on hand to keep the system running smoothly. Although the details needed, can be written on pieces of paper, this is not a practice that is recommended. Little pieces of paper of different shapes, sizes and colours can easily be mislaid, lost or accidentally thrown out. A blank piece of paper also provides no guidance as to the information that must be recorded and thus, critical information might not be captured. Using a proforma voucher is a good way to make sure that petty cash documentation is easily identified, is consistent in what information is captured, and makes it easy for the person in charge to reconcile. If it is created electronically and saved it can be used as a template and printed as required. A petty cash voucher (proforma) can look like this example, although there are many variations on this:

3 Please Pay: Date: Approved by: Received by: Unused vouchers are usually kept with the petty cash tin which contains the money. Sometimes they are kept in a small plastic money bag to keep them all together. By keeping them in the tin they are at hand when someone needs cash. When stocks of the vouchers get low the person in charge simply needs to print out some more sheets and, if necessary, cut them to size. Now complete the learning task below. (called task 1 in the activities tab) You have responsibility for the Petty cash claims being paid in your workplace. Complete the following claim forms. Use today s date for your claims 1. Sanjit Sidhu has purchased some sugar for use in the staff kitchen. He is asking for a petty cash reimbursement. The sugar cost $3.45. Complete the petty cash voucher so that he can be refunded his money. The code the petty cash should be charged to is: 03:staff refreshments.

4 Please Pay: Date: Approved by: Received by: 2. Dana Bunning has come to you for a petty cash advance for some specialised stationery items that she has to buy for a job she is completing. She does not know exactly how much they will cost but has investigated possible suppliers and that they will be less than $50. Complete the petty cash voucher for this transaction. The petty cash code this is to be charged to is: 05: Stationary. Please Pay: Date: Approved by: Received by:

5 3. Charles Bright works for you in the dispatch department. He has purchased some additional pencils for completing the paperwork associated with posting items to clients. The pencils cost him$5.35. Complete his Petty Cash claim for him. Purchase code is 05: Stationary Please Pay: Date: Approved by: Received by: 4. Therese Green has required a taxi to visit a client on the other side of the town in which her business operates. Her fare is $ Complete the claim form for her. The code is08: travel Please Pay: Date: Approved by: Received by: