PETTY CASH FUND & REVOLVING FUND

IBA BOTANICALS, INC.

Document No. 2019-XXX

Subject: POLICIES AND GUIDELINES ON PETTY CASH FUND & REVOLVING FUND
Department: ALL EMPLOYEES

I. OBJECTIVES

a. To promulgate policies and guidelines in handling PETTY CASH FUND AND

REVOLVING FUND to effectively control and safeguard cash and for proper
monitoring as part of the internal control measures of the Company;
b. To establish responsibilities and accountability in handling physical amount of
such funds;
c. To establish accounting policies and procedures in creation, replenishment and
derecognition of Petty Cash Fund and Revolving Fund.

II. CUSTODIANSHIP

A Petty Cash Fund 1 (PCF1) amounting to FIVE THOUSAND PESOS (P5, 000) is intended for
Farm Operation and Petty Cash Fund 2 (PCF2) TEN THOUSAND PESOS (P10,000) is intended
for Alabang Head Office Operation are hereby set up to enable both operations to make
emergency purchase and take care of minor disbursements where a request for payment
through check or a purchase order is not cost effective or impractical, consisting of day-to-day
expenses amounting to not more than TWO THOUSAND PESOS (P2, 000).

A Revolving Fund (RF) amounting to THIRTY THOUSAND PESOS (P30, 000) is hereby set up
for payment of operational expenses not exceeding P10, 000. The RF may also be used for
other minor disbursements exceeding the PCF limit of P2,000 but not more than P10,000
provided however that the disbursement is limited to the following:

a) When the payee does not accept checks;

b) Where the disbursements are for payment of labour costs to each worker in a
specific project payroll

Petty Cash Fund Policies and Procedures 1

Revised -11-19
 c) For payment of food, drinks and other incidental expenses during guesthouse
accommodations, meetings, head office personnel sit visits, after-office-hours staff
work, and other similar company activities.

d) For disbursement of cash advances for travel and other minor expenses

e) For other transactions where cash is the mode of payment that is most practical,
convenient and beneficial to the Company.

The funds are established at the time of approval and shall be maintained on imprest fund
system. At any given time, the total cash on hand and the un-replenished disbursements should
be equal to the amount of the fund. Expenditures must be within the policy and it may not be
used to circumvent current and existing purchasing procedures.

The RF shall be in the custody of the Site Manager or, in the absence of the Site manager, the
designated custodian; while the PCF1 shall be in the custody of the Farm Manager or the
designated custodian. On the other hand, PCF2 shall be in the custody of Finance and
Administration Assistant. Access to and responsibility for each of the funds is limited to the
respective custodian who shall be under the supervision of the Finance Department only in as
far as their custody of funds is concerned.

Each fund is kept separately and should never be mixed together.

III. REPLENISHMENT

The Petty Cash/Revolving Fund contains request for reimbursement/replenishment when the
funds run low and insufficient to cover petty expenses or revolving fund disbursements.
Custodian is required to request for replenishment every week or once 50% fund balance was
reached whichever comes first so as not to deplete the fund. For the PCF1, the replenishment
point is P2,500. While for the PCF2, the replenishment point is P5,000. For the RF the
replenishment point is P15, 000 or as an actual need to replenish arise. It should always
available and must not run out of cash. If it so happens, the custodian shall justify and be
subjected to investigation by Finance Department.

The Finance Department shall release the replenishment funds based on the Payment
Requisition Form duly approved by the Finance Manager and supported by duly audited
Replenishment Summary for PCF or RF, as the case may be, together with the duly approved
PCF/RF Vouchers.

The RF and the PCF may be replenished by the Finance Department every end of the month
regardless of the amount disbursed for purposes of matching income and expenses monthly
through preparation of the income statement.

The replenishment check should be payable to the fund custodian.

IV. DUTIES OF THE CASH CUSTODIAN

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Revised -11-19
 a) The custodian is responsible at all times for the appropriation and safekeeping. Fund
shall be secured in a locked device and should not be commingled with personal and
any other funds.
b) The custodian shall keep accurate records of the fund. PCV/ RV shall be properly
monitored and accounted.
c) He/She shall be personally accountable for the fund until all the funds/ or valid receipts
have been reviewed/audited and account closed by Finance Department.

V. REGULAR CASH COUNT OF THE FUNDS

The Custodian ensures daily the cash per count sheet tally with the cash on hand.

VI. ACCOUNTING PROCEDURES FOR PETTY CASH FUND AND REVOLVING FUND

The imprest fund system is the one usually followed in handling petty cash and revolving fund
transactions. The pertinent accounting procedures are:
a) A check is drawn to establish the fund. The check is given to the petty cashier or any
responsible officer.

Petty cash fund/ Revolving Fund XX

Cash in Bank XX

b) Payment of expenses out of the fund- No formal journal entries are made. The petty
cashier generally requires a signed petty cash voucher for such payments and simply
prepares memorandum entries in the petty cash journal.

c) Replenishment of petty cash payments- whenever the petty cash fund runs low, a check
is drawn to replenish the same. The replenishment check is usually equal to the petty
cash disbursements. It is at this time that the petty cash disbursements are recorded as
follows:

Appropriate Expense Account XX

Cash in Bank XX

It is to be pointed out that the petty cash and revolving fund disbursements should be
replenished only by means of check and not from undeposited collections.
d) At the end of the accounting period, it is necessary to adjust the unreplenished expenses
in order to state the correct petty cash balance as follows:

Appropriate Expense Account XX

Petty Cash Fund/ Revolving Fund XX

The adjustment is to be reversed at the beginning of the next accounting period so that
the normal replenishment procedures may be followed by simply debiting expenses and
crediting cash in bank without distinguishing whether the expenses pertain to the current
period or prior period.
e) An increase in the fund is recorded as follows:

Petty Cash Fund Policies and Procedures 3

Revised -11-19
 Petty cash fund/ Revolving Fund XX
Cash in Bank XX

f) A decrease in the fund is recorded as follows:

Cash in Bank XX
Petty cash fund/ Revolving Fund XX

VII. ACCOUNTABLE FORMS (Petty Cash Voucher / Revolving Voucher)

a) A Petty Cash Voucher (PCV) is required for disbursement from the Petty Cash Fund
(purchase from National Bookstore)

b) Revolving Fund Voucher (RFV) is required for disbursement from the Revolving Fund
(purchase from National Bookstore).

c) Request for Reimbursement (to be drafted)

d) Replenishment Report for Petty Cash/ Revolving Fund (to be drafted)

e) Cash Count Sheet (to be drafted)

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Revised -11-19