Petty Cash | Alumni Association of the University of Michigan                            

The Association recommends that clubs utilize the petty cash imprest system, which allows only the replenishment of the club's spending. In general, a club initiates a petty cash fund for a specific amount of money, with the cash placed in a locked box or safe. The club subsequently disburses cash for small expenses and obtains receipts. As the fund begins to get low, the club gathers receipts and generates a check request to replenish the fund for the exact amount of the receipts. For instance, if the fund starts at $150, and after a week, there is $25 left in the fund, there must be $125 in receipts available. The check request for $125 will return the fund back to $150.

Although the imprest system is simple, clubs should follow the following important procedures:

• If possible, only one club leader should have access to the petty cash fund, so that if funds are missing, there is no question who is responsible.
• No cash should be disbursed without a receipt. If the cash must be prepaid before a receipt is available (e.g., if someone needs the cash to buy lunch) then a note should be put in the cashbox and replaced with the actual receipt.
• The cash box should be counted often (daily or weekly is best) to ensure that both cash and receipts together always add up to the beginning (imprest) amount.
• Periodically, another club leader should perform a surprise audit to verify that the club leader responsible for the fund is following proper procedures.
• A check request to increase the amount of the petty cash fund should clearly indicate that this is for additional funds, not a reimbursement.