You must specify what the petty cash can be spent on. Make sure your employees understand what the petty cash fund can or can’t be used for by creating a petty cash policy. An employee using petty cash should provide a receipt for the purchase to the petty cash custodian. Give the receipt to your finance department or the person who handles your small business books. Most businesses will reserve enough cash in their fund to meet their monthly needs. However, keeping too much cash could result in unused funds sitting in an account.

When cash or cheques are received, the Cashier verifies the
purpose of the payment. The purpose for which a payment is made should be
consistent with the policies, aims, and activities of the UN. Cashier, Petty Cash and Imprest Custodians now record
journal entries in Umoja at the time of cash disbursement.

Journal entry for removing money from the petty cash fund

When the petty fund is replenished, usually by drawing on a company-issued check, it’s recorded as a debit to the petty cash account and a credit to the cash account. For cheque payments, Umoja creates a cheque file to print
cheques and How Journal Entries For The Imprest Petty Cash System Are Recorded? the corresponding Positive Pay Files. Positive Pay is a tool
available to prevent cheque fraud currently being used by the UN. Umoja
transmits the Positive Pay Files to the House Bank containing information on
the cheques issued.

• In reality, the balance in the petty cash account is higher than the amount of cash actually in the petty cash box, since the cash in the box is continually being paid out.
• The ACH pre-notification
  file will be automatically transmitted to the bank along with daily ACH payment
  files.
• Often, a few individuals are authorized to approve disbursements and can only do so for expenses related to legitimate company activities or operations.
• Document type ZI (Imprest Account) or ZP
  (Petty Cash) is automatically assigned by the system for Cash Journal (CJ)
  transactions depending on Cash Journal type used.
• Caution should be taken not to re
  dial / re initiate a payment document whose status is ‘Rejected by bank’.

This reflects the fact that the bank has debited the account
for the disbursement they made on our behalf. Umoja thus reduces the balance of
the Bank Nominal in the GL to synchronize it with the balance held by the bank. In principle, as far as Outgoing Payments are concerned, the GL Bank Nominal account
will only be credited when the bank has effectively paid out money as
instructed by the UN. Any Outgoing Payments generated by us but for which the
bank has not yet made disbursements will appear in the GL Cash EFT Out (or
Cheque Out) as KZ or PY documents and not in the GL Bank Nominal.

Master Data Maintenance

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After
communication with Treasury department, Bank reconciler found out that the
amount had been returned by the bank, being payment rejected by the bank. Incoming Payments from these vendors to settle outstanding items will have to
be matched and cleared manually. For Umoja bank
accounts which do not go through the SWIFT system, manual upload of bank
statements are required to facilitate bank reconciliation process.

Example of Petty Cash Accounting

If a master record meets the
criteria for complex banking instructions, the record will be forwarded to the
Treasury Master Data Team for manual review. If a master record is considered
straight forward payment, the record will be automatically released in Umoja. If the payee bank record passes
the validation, the Payee Bank Processor 1 will continue the process of payee
bank creation. If the payee bank record does not pass the validation, the Payee
Bank Processor 1 will contact the payee to obtain the correct information from
the payee in replacement.

This opens the Post with Clearing Process open items screen. Enter the EFT-AP GL account
of the Source bank in the Account field and change the Account Type
to S. Enter FEBAN in the Command
field and click the Enter icon. This opens the Selection of Bank
Statements by Banks and Account Nos. screen. Click Enter to return
to the Post with Clearing Add G/L account item screen. It will show the debit to Csh HQ USD EFT AP and credit to Csh
HQ USD Nominal.

How the petty cash imprest system works

The Treasury Banking Approver
reviews the justification for a new bank account. If justified, the Treasury
Banking Approver then assesses the appropriateness of the bank identified based
on set criteria (e.g. credit checks, global/regional network, D&B reports). The Payee Bank
Processor 2 verifies the parked payee bank record against the supporting
document received from the payee. The Payee Bank Processor 2 saves the payee
bank record. In the case below the total of all PY
and ZR postings did not amount to zero, which means we cannot reconcile
the entries for this particular Assignment (BP). Note different GLs in Account
field, representing different bank accounts that have postings related to one
BP.

The Payee Bank Processor uploads to Umoja the payee bank account
information received, in digitized form. In cases when the result of the
transaction doesn’t equal zero, the first step is to notify Payroll
counterparts and request that posting is manually adjusted. The analysis of
payroll related postings is done in the HCM module of Umoja (Human Capital
Management), to which bank reconcilers do not have access. In this case, the summary of postings
on different banks equal zero, so the open items
can be cleared manually using the T-code F-03 in the same posting period
as PY and ZR. This brings up the ZR document
number but this time it appears in the PmtAcc field of Posting Area 1. When manual clearance is completed another ZR document will be generated
in the now empty Doc.

Master Data Maintenance – Payee Bank

Then, create another journal entry debiting the Petty Cash account and crediting the Cash account. To improve the way you handle petty cash accounting, require a petty cash receipt for each transaction. And, create a petty cash slip indicating the amount, employee’s name, and date when you give employees petty cash. When you or employees pay with petty cash, retain the receipt and attach the petty cash slip to the receipt for your records.

• Any Outgoing Payments generated by us but for which the
  bank has not yet made disbursements will appear in the GL Cash EFT Out (or
  Cheque Out) as KZ or PY documents and not in the GL Bank Nominal.
• The Outgoing Payments process identifies the steps to create
  a payment proposal, conduct required cash sufficiency checks, hold a payment
  (if necessary) and release the payment.
• This
  brings up the ZR document number but this time it appears in the PmtAcc
  field of Posting Area 1.
• For detailed process
  steps on transaction code F-28, please refer to section 3.2.2
  of Finance Manual Chapter on Accounts Receivables specific to Incoming
  Payments.
• Click on the Enter icon,
  which opens the Post with Clearing Add G/L account item
  screen where additional data for the debit line will be entered.

At any point in time, the receipts plus the remaining cash should equal the balance of the petty cash fund (i.e., the amount of cash originally placed in the fund). Petty cash is a small amount of cash that is kept on the company premises to pay for minor cash needs. Examples of these payments are office supplies, cards, flowers, and so forth. Petty cash is stored in a petty cash drawer or box near where it is most needed.