Petty Cash Policy

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• Custodian of Petty Cash

  • In terms of Local Government Transition Act No. 209 of 1993, Section 10 G (2)(a) and 2(c), the custodian of the petty cash is a Chief Financial Officer Designate in the Finance Department who keeps the cash under lock and key all the time.
  • The petty cashier should be independent of all other cash functions such as cashiering.

• Petty Cash Requisitions

  • When a Section within a department requires petty cash a requisition form is completed and approved by the respective Head of the Section.
  • The petty cash requisition form details must include the vote to be debited before the Chief Financial Officer Designate advances the cash.  The requisitioned amount should not exceed a maximum amount set by Council.

• Supporting Documentation

  • Every petty cash requisition must be supported by proper supporting documents such as cash sale slips or receipts etc.  Therefore if cash is advanced without supporting documents it should be on the basis of an advance until the purchase is made and the supporting documents is submitted within the week.

• Petty Cash Register

  • Each requisition is entered on the petty cash register.

• Replenishing Petty Cash

  • When the float reaches the minimum amount determined by the Chief Financial officer, the Secretary prepares a voucher and submits the register and voucher to the Chief Financial Officer who checks and authorises the voucher.
  • The Creditors Clerk processes the voucher makes out a manual cheque to the Executive Secretary who cashes it at the bank.

• Petty Cash Counts

  • The Accountant makes surprise inspections of the petty cash as he deems fit but at least, once, quarterly.  A count of petty cash on hand takes place at financial year end.
  • The petty cash total on hand at financial year end is reconciled to the petty cash requisition forms, vouchers and other supporting documentation.

• I.O.U's

  • The petty cahier may only issue cash to employees once they have completed a properly authorised I.O.U voucher.  The Head of the Section in which the employee is employed must sign the I.O.U voucher to indicate authorisation.
  • The Petty Cashier must follow up on I.O.U's on a regular basis.  Long outstanding I.O.U's should be brought to the attention of the Chief Financial officer to deal with appropriately.

• Debtor Collection

  • In terms of the IMFO Handbook for Municipal Financial Officers, May 1993, paragraph 2.1.1 :
  • All monies due to the Municipality must be collected as early as possible and  banked daily.  Cash left lying in the safe poses a risk, and could require additional insurance cover.
  • It is essential that all amounts owing to the council be levied by way of a debit in the applicable debtors system.
  • A well managed debtors and banking control system is the proper measure for ensuring that funds owed to the council are timeously received and banked.
  • Debt collection performance should be regularly reviewed by comparing funds presently owed to council in relation to the total income as well as to the situation in the previous financial year, in order to determine whether the debt collection process is deteriorating or improving.
  • All monies collected by the Council should be banked in the bank account of the council.
  • Monies collected by some other agency on behalf of the Council shall be paid over to the Council or deposited in the bank account of the Council in a manner prescribed by the Municipal Manager.
  • The receipt of all monies collected by the Council shall be acknowledged forthwith by the issue of a numbered official receipt.

• Payment to Creditors

  • In terms of the IMFO Handbook for Municipal Financial Officers, May 1993, paragraph 2.2 :
  • Another aspect of effective cash management is adequate control over the timing and payment of creditors' accounts.
  • If possible, it is essential to limit the payment of creditors to one payment per creditor per month, in order to avoid the additional bank costs involved with cheque payments.
  • Where practicable, the Municipality should make use of electronic funds transfer facilities to make payments to creditors.
  • When considering when to pay a creditor, due regard must be taken of the terms of credit offered.
  • Where cash discounts are offered for early settlement, the discount, given the scale involved, would in most cases, out-weigh any investment benefit that could be obtained by the temporary placing of funds.
  • Therefore, where discounts for early settlement are offered, these should be carefully considered and acted upon.
  • Apart from 14.4 above, the normal conditions of credit in terms of payment offered by suppliers should also be considered and utilised to the full by paying on the due date and not earlier.

• Receipt of Money over the Counter

  • Every amount of payment received by a cashier or other officer charged with the receipt of money shall be acknowledged at once by the issue of a numbered official receipt or cash ticket.
  • Every receipt form, which is cancelled, will be reattached, in the correct place, in the receipt book. Where computer generated receipts are used, the original receipt must be filed for audit purposes.
  • When money (including postal orders and cheques) are received with the Council's mail, the Registry Clerk shall record all payment remittances as and when received in the cheque register in the presence of a witness. Post dated cheques received in the Council's mail must also be recorded in the cheque register. The cheque register shall be regarded as the register of remittances received by post.
  • The cheque register together with all remittances received must be sent to a designated official in the finance department.
  • The designated official on receipt of the cheque register together with the remittances will code all remittances and submit it to the cashier for receipting.
  • The cashier will receipt all remittances and issue official receipts to the designated official.
  • The designated official will record all receipts in the cheque register and return same to registry. The Registry Clerk must ensure that all receipts are recorded in the cheque register.
  • All documents relating to remittances received in the mail must be filed for audit purposes.
  • A separate register for post dated cheques will be maintained by the Registry Clerk and all postdated cheques must be stored safely in the Registry Strongroom; and
  • The Registry Clerk will ensure that all postdated cheques, which become due are sent promptly to the designated official for receipting and recording of receipts in the postdated cheque register.

• Bank Accounts and Cash

  • According to the Municipal Finance Management Bill, 2000, chapter 6, paragraph 27(1), the Municipal Manager is the Accounting Officer of the Municipality. However, he may delegate certain duties/tasks to designated Officials, who would be accountable to him. The Municipal Manager is therefore accountable for all transactions entered into by his designates. One of the main functions of the Municipal Manager is that of adequate and effective cash management (IMFO Handbook For Municipal Financial Officers May 1993).
  • The Chief Financial Officer is responsible for establishing systems, procedures, processes and training and awareness programmes to ensure efficient and effective banking and cash management. Sound cash management includes the following:
  • Collecting revenue when it is due and banking it promptly;
  • Making payments, including transfers to other levels of government and non-government entities, no earlier than necessary, with due regard for efficient, effective and economical programme delivery and the government's normal terms for account payments;
  • Avoiding pre-payments for goods or services (i.e. payments in advance of the receipt of goods or services), unless required by the contractual arrangements with the supplier;
  • Accepting discounts to effect early payment only when the payment has been included in the monthly cash flow estimates provided to the relevant treasury;
  • Persuing debtors with appropriate sensitivity  to ensure that amounts receivable by the Municipality are collected and banked promptly;
  • Accurately forecasting the institution's cash flow requirements;
  • Timing the inflow and outflow of cash;
  • Recognising the time value of money, i.e. economically, efficiently, and effectively managing cash; and
  • Taking any other action that avoids locking up money unnecessarily and inefficiently, such as managing inventories to the minimum level necessary for efficient and effective programme delivery, and selling surplus or under utilised assets.

• Investment Documents

  Sisonke Investment Policy Cover page.pdf	Size    98KB
  Sisonke Investment Policy.pdf	Size    36KB