What is a Petty Cash Fund?

A petty cash fund is a small amount of bills and coins that an organization keeps on the premises to pay for minor expenditures. The fund is typically replenished by the accounting department once a month. Examples of the items that may be paid for from the petty cash fund are flowers, food, office postage, presents, supplies, and taxi charges. There may be a petty cash fund in each major department of a company, so that local cash needs can be more readily met.

Petty cash funds are subject to theft, and so are commonly being replaced by corporate credit cards and employee expense report reimbursement systems.

Who is Responsible for a Petty Cash Fund?

A petty cash custodian is responsible for each petty cash fund, and maintains an up-to-date reconciliation of the amount of bills and coins remaining in it. This custodian is trained by the accounting staff in how to operate the fund. The accounting staff or internal audit staff may conduct an audit of each petty cash fund from time to time, which may result in retraining of the custodians, depending on the nature of any anomalies found.