The following guidelines are intended to ensure that cash/cash equivalents are disbursed only upon proper authorisation, for valid business purposes, and that all expenditures are properly recorded and accounted for. Show
The term ‘cash/cash equivalent’ encompasses physical cash as well as cheques and other cash-equivalent documents such as pay orders. This distinction is made because, at many emergency operations, there may not be banking facilities in operation and only cash payments are acceptable. Where banking facilities are available and operational, the use of cash to conduct daily operations must be discouraged and kept to a minimum.
The following are the minimum requirements for processing cash/cash equivalent disbursements.
The general procedures for cash disbursement control are as follows:
During the start-up phase of an emergency response operation, CARE staff members require cash floats to cover immediate expenses such as fuel, office rental, communications, lodging, per diem, stationery and other costs. It is understood that when CARE has completed administrative set-up, and if the conditions on the ground permit, the use of cash floats should be discouraged and kept to a minimum to avoid unnecessary risks to staff and CARE’s assets. CARE staff receiving cash floats may make use of them only for the purposes for which they were authorised, and will be held personally responsible and financially liable for the proper management and safekeeping of the advances. In addition, they must be in a position at all times to account for such advances and should submit weekly accounts, using the Cash Float Transactions Register (Annex 17.12) form, to ensure that the expenditures incurred are reported to donors in a timely manner. The maximum amount of these cash floats is USD5,000, and are replenished when at least 50 per cent of the float has been expensed and properly accounted for. In locations where there are no banks or cheques are not accepted, cash payments can be made through a cash float held at a CARE office. The procedures to follow under this category are explained in section 5.4 . Applicable amount limits, storage conditions, etc. are discussed in section 4 . Petty cash is an imprest fund that is maintained by an office to meet incidental and other unforeseen expenses that cannot be paid out through a cheque and are small in nature. Only expenses that are incidental-such as local handling, labour charges, purchase of small quantities of stationery and taxi fares that are below the limit set by the CO-can be paid out of petty cash. It should be noted that petty cash should not be used to get around a cheque payment system. The maximum amount to be paid out of petty cash should not exceed USD50 or its equivalent in the local currency. Any amount of USD50 and above should be paid through a cheque or cash float. All petty disbursements must be supported by Petty Cash Vouchers (Annex 17.11), duly approved by an authorised person-preferably the employee’s supervisor-and should have all relevant accounting information including donor line item information. Travel advances will be issued to staff to cover lodging, per diem and other travel costs incurred while travelling on CARE business. Lodging and other travel expenses must be supported by receipts, and per diem will be paid according to approved rates. The incidentals portion of the per diem can only be claimed if the employee is required to stay overnight and away from the normal project base. Travel advances will be settled by CARE staff through a Travel Expense Report immediately upon return from the business trip. Future advances will not be issued unless all prior advances have been accounted for. In instances where the total travel expenses amount is less than the advanced amount, the employee is required to immediately return the unused cash balance. In locations where CARE, for any reason, is not authorised to open a bank account or where authorised banking institutions do not exist, cash facilitation is an alternative and preferred method to staff hand-carrying cash or keeping large amounts of cash at the office. The procedure to disburse funds through selected cash facilitators (see Annex 17.6 Cash Facilitator Selection, Annex 17.5 Cash Facilitation Procedure, and Annex 17.4 Cash Facilitation Agreement) is as follows:
As indicated, the Request for Reimbursement must be presented by the cash facilitator attaching all white copies, signed received by the payee, as supporting documentation. The transaction fees charged by the cash facilitator must be in accordance to clause 3.1 of the Cash Facilitation Agreement (Annex 17.4). Which of the following internal control procedures is not usually performed in the accounts payable department?Which of the following internal control activities is not usually performed in the vouchers payable department? Accounting for unused prenumbered purchase orders and receiving reports.
What are the steps taken in the cash disbursement system?These steps include vendor account reconciliation, cash management techniques, and payment authorization. Cash management is the careful oversight of cash balances, forecasted cash payments, and forecasted cash receipts to insure that adequate cash balances exist to meet obligations.
What are the three important controls over cash disbursements?What Internal Controls Are Needed for Cash Disbursement?. Segregation of Duties.. Authorization and Processing of Disbursements.. Managing Restricted Funds.. Check Signing.. Internal Accounting Controls Checklist.. What are the things that you need to consider in preparing cash disbursement journal?What information should you include?. Payee name.. Amount debited or credited.. Accounts involved (e.g., payment method). Purpose of the transaction.. |