Continuing with its pursuit of instilling accounting discipline, the Nigerian Bar Association has introduced “PETTY CASH POLICY AND PROCEDURE” which is aimed at: providing funds for minor expenses; ensuring the cash is available when needed and accurately account for petty cash/ advances issued to staff This objectives are achieved by the various processes documented below.
1.0 Petty Cash Policy Statements
- An amount not more than N250,000 shall be dedicated as float for the purpose of petty cash administration. This amount shall be reviewed periodically by the Head-Accounts with the approval of the NBA President.
- The float shall be kept by a petty cashier for the purpose of funding. Only approved petty cash shall be disbursed.
- Only officers with approval limits (i.e. head of department) shall approve petty cash requisition.
- The petty cash expenses will be limited to amounts not exceeding N20,000 (twenty thousand naira) for expenses including but not limited to:
- Fuel expenses
- Official entertainment expenses
- Minor purchases and expenses d. Minor repairs and maintenance
- Local transportation
- Other minor expenses that may be logical and relevant to operational needs
- This list of allowable petty cash expenses shall be reviewed regularly and updated accordingly upon approval by the NBA President.
- There shall be segregation of duties between the custodian of petty cash, the officer responsible for approval of and replenishment of petty cash.
- The petty cash officer shall maintain a petty cash register for the purpose maintaining petty cash records.
2.0 Petty Cash Requisition
- A requesting department/individual raises a petty cash requisition and forwards to the petty cashier.
- The requisition must be approved by the HOD of the requesting department.
- The petty cashier reviews the requisition and confirms the item required is an allowable petty cash item, otherwise, redirect requisition to procurement or other appropriate process. List of petty cash allowable expenses are documented in the policy statements for petty cash above and is subject to amendments upon approval by the NBA president.
- Subsequently, the petty cashier prepares a petty cash voucher for approval by the Head of Accounts.
- On approval, the petty cashier disburses cash and the requesting individual signs for the cash received.
- After incurring the expenses, the requesting individual must ensure that the petty cash obtained is retired and relevant support documents and balance (if any) are submitted to the petty cashier.
- Support documents shall be filed accordingly with appropriate documentation.
3.0 Petty Cash Disbursement
- The maximum amount payable by the petty cashier shall be N20, 000 per expense.
- A duly completed and approved petty cash request form shall be presented by the requesting officer to the petty cashier for disbursement of petty cash.
- Expenses paid from a petty cash fund can only be made for the purpose for which the fund was authorized.
- At every point in time, the total amount of all receipts plus the cash on hand shall be equal to the total approved petty cash float of N250,000.
- Cash count shall be performed at the end of each day by the petty cashier and reconciled to the book balance of the cash on hand.
4.0 Petty Cash Retirement
- Petty cash advances/disbursements shall be retired within 72hrs of completion of the transaction for which the request was made.
- Retirement of petty cash shall be done using the petty cash voucher
- Any unexpended petty cash shall be accounted for on the petty cash voucher and returned to the petty cashier.
- Evidence of expenditure such as receipts, tickets etc. shall be attached to the petty cash voucher or retirement form.
- Petty cash advances not retired within the stipulated timelines shall be recovered from the requesting staff’s salary.
- Where no evidence of expenditure is provided, the HOD of the requesting department shall sign off on the expense, otherwise the amount of the un-receipted expense will be recovered from the requesting staff’s salary.
5.0 Petty Cash Reimbursement / Replenishment
- At the end of each month or when the petty cash balance available reaches a reorder level of N60,000, the petty cashier shall complete the petty cash replenishment form.
- The amount that shall be requested for reimbursement shall be equal to the summation of approved petty cash disbursed during the month, bringing the total available petty cash float to the approved monthly amount of N250,000.
- The request shall be submitted with supporting documents including: a. Petty cash register b. Petty cash support documents i.e. request forms, receipts etc.
- Such requests shall be reviewed by the Head-Accounts and approved for payment by the NBA President.
- All cheques for replenishment of petty cash float shall be made payable to the petty cashier.
- On no account shall the petty cashier have the aggregate of cash and unpresented for reimbursement vouchers that will be more than the float.
6.0 Physical security of petty cash
- Petty cash shall be placed in a safe i.e. fire – resistant box
- Access shall be granted to only authorized personnel.
7.0 Cash counts
- End of month cash count – At the end of the month, a member of staff from a different team other than finance team e.g. Internal Audit department or Administration department, will be appointed by the Head of Finance, shall conduct a cash-count and reconcile the cash counted to the book balance and the cash on hand. Any issues noted during the cash count shall be documented in a Cash count report.
- Surprise cash count – Management or the internal auditor shall carry out unannounced cash counts at least once a month or as deemed necessary. This aims at ensuring the cash on hand equals the book balance at all times.
