Developed by the City of Toronto

Petty cash refers to a fund (usually between $200 and $400, depending on your corporation’s specific needs) of fixed amounts used for small expenditures A petty cash policy details how and when these funds can be used.
Although petty cash amounts should be relatively small, they can be subject to theft if the proper controls are not in place. To prevent this, the Board should have a documented petty cash policy. Petty Cash policies/procedures must allow for adequate control over petty cash expenditures, ensure that petty cash payments are supported by proper documentation, and ensure that petty cash funds are protected from theft.
The amount should cover at least one month’s petty cash requirements.
A good business practice is to have only one person appointed custodian of the petty cash fund.
A petty cash voucher should be used for all disbursements.
Ensure that vouchers have the following information:
  • date
  • amount
  • purpose
  • account to be charged
  • name of person who disbursed petty cash
  • signature of person receiving petty cash
Each petty cash voucher should be supported by original receipts, where possible. Where this is not possible, this should be indicated on the voucher.
  • Petty cash and receipts should be reconciled at least monthly by someone other than the custodian. This step should be done in the presence of the petty cash custodian.
  • Decide when cash will be replenished. Stamp vouchers and receipts “paid” when the fund is replenished.
  • Cash shortages or excess cash should be reported immediately to the person with authority over the fund.
  • Report thefts and/or attempted thefts to police.
  • Petty Cash should be replenished when cash is nearly spent, allowing enough time to process a reimbursement request, e.g. 3 to 4 days.
  1. Use Cash and Create Petty Cash Voucher
    1. Use cash to purchase small maintenance and office supply items.
    2. Keep receipts and details of purchase.
    3. Substantiate petty cash purchase with a voucher.
  2. Reimburse Petty Cash
    1. Complete cheque requisition form.
    2. Complete expense details (voucher system) and
      attach receipts.
    3. Forward requisition to Board for approval.
    4. Perform petty cash reconciliation and file.
    5. Determine who does this step.
  3. Approve cheque requisition
    1. Approve payment
    2. Determine who approves payment (i.e. Treasurer)
  4. Issue cheque
    1. Book expenses.
    2. Issue cheque.
    3. Forward to signing officers for signature.
    4. Determine who does this step (i.e. book keeper)
  5. Sign Cheque
    1. Signing Officers sign cheque and return to property manager
  6. Cash Cheque
    1. Cash cheque and replenish petty cash float.
    2. Determine who does this step (i.e. property manager)
The Board of Directors can ensure that the corporation’s petty cash policy is being followed by
  • Having the Treasurer approve monthly payments to petty cash.
  • Having the Treasurer do the petty cash reconciliation once a year.