The petty cash fund (PCF) is used to cover small expenses i.e., purchases that involves petty amount of money for the day to day operation of an office.
While the total amount of the PCF is considerably small, as compared to the total amount of fund being held by an office, the Commission on Audit (COA) has prescribed significant number of policies for the proper utilization of the fund.
In this article we give you ten (10) of those policies based on the Government Accounting Manual which you can download here.
1. Petty Cash Fund refers to the amount granted to duly designated Petty Cash Fund Custodian for payment of authorized petty or miscellaneous expenses which cannot be conveniently paid through MDS checks or List of Due and Demandable Accounts Payable – Authority to Debit Account (LDDAP-ADA).
2. The Petty Cash Fund (PCF) to be set up shall be sufficient for the recurring petty operating expenses of the agency for one month. It shall be maintained using the Imprest System.
The base characteristic of an imprest system is that a fixed amount is reserved, which after a certain period of time or when circumstances require, because money was spent, it will be replenished [1].
3. All replenishments shall be directly charged to the expense account and at all times, the PCF shall be equal to the total cash on hand and the unreplenished expenses.
4. The PCF shall be replenished as soon as disbursements reach at least 75% or as needed.
5. The PCF shall be kept separately from the regular cash advances/collections and shall not be used for payment of regular expenses such as rentals, subscriptions, light and water bills, purchase of supplies and materials for stock purposes, and the like.
6. Payments out of PCF, which shall be made through a Petty Cash Voucher (PCV) i.e., Appendix 48 of the GAM), should be allowed only for amounts not exceeding P15,000 for each transaction, except when a higher amount is allowed by law and/or specific authority by the COA. Splitting of transactions to avoid exceeding the ceiling shall not be allowed.
7. All disbursements out of PCF shall supported by cash invoices, ORs or other evidence of disbursements.
8. The unused balance of the PCF shall not be closed/refunded at the end of the year. The fund shall be closed only upon termination, separation, retirement or dismissal of the Petty Cash Fund Custodian (PCFC), who in turn shall refund any balance to close his/her cash accountability.
9. At the end of the year, the PCFC shall submit to the Accounting Division/Unit all unreplenished Petty Cash Vouchers (PCVs) for recording in the books of accounts. The unreplenished PCVs shall be replenished in the succeeding year.
10. The documentary requirements to support the utilization of the PCF is setforth under COA Circular No. 2012-001 dated June 14, 2012, amended by COA Circular No. 2013-001 dated January 10, 2013.
[YOU MAY ALSO LIKE TO READ: 10 Internal Control Systems that COA Wished All Government Agencies Have All the Time]
