Rescinded [2009-10-01] - Policy on Petty Cash

To ensure the cost-effective and efficient use of petty cash funds while maintaining the required level of control.
Date modified: 1994-10-01

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This policy is issued under the authority of section 38 of the Financial Administration Act. It complements the Treasury Board Accountable Advances Regulations and establishes a control framework for petty cash as a payment instrument.

A petty cash fund is used to facilitate and accelerate the processing of low value transactions. Due to inherent costs and time required to process financial transactions, it is now practical, economical and recommended to use petty cash to process low value payments when an acquisition card is not available or when its usage is not appropriate.

A petty cash fund is a cash advance issued to a custodian who will be responsible for the security of the fund and the control of disbursements made from the fund. The amount of the fund is calculated based on operational needs.

Policy Objective

To ensure the cost-effective and efficient use of petty cash funds while maintaining the required level of control.

Policy Statement

It is government policy to use petty cash funds for making small miscellaneous payments when immediate settlement is required or when this method of payment is more cost-effective.


This policy applies to all organizations considered to be departments within the meaning of section 2 of the Financial Administration Act (FAA).

Policy Requirements

  1. The deputy head must ensure that policies and procedures are established and followed to ensure the control and safekeeping of petty cash funds (including suitable locks, keys or combinations) in accordance with regulations and policies.
  2. Overages, shortages, losses and thefts must be reported and recorded promptly in accordance with Chapter 4-7 of the Comptrollership volume of the Treasury Board Manual.

Note: The mandatory requirements of the Accountable Advance Regulations pertaining to petty cash are outlined in Appendix B.

Procedural Requirements

Accounting and control

  1. Petty cash must be used when it is more cost-effective than other payment methods such as Receiver General cheques, departmental bank account cheques or acquisition cards.
  2. Before establishing or increasing petty cash funds, the deputy head must ensure that the security and safekeeping arrangements are commensurate with the risk of theft and the size of the petty cash fund.
  3. Custodians must sign a statement confirming that they have received, read and understood policies, regulations, procedures and instructions and acknowledging that they are personally responsible for the advance.
  4. There must be only one custodian of a petty cash fund at any given time. A detailed account must be given each year and when there is a change in custodian. When the custodian is being changed, an acknowledgement must be obtained also.
  5. Petty cash advances must not be used to make change, to give salary advances to employees or to cash cheques.
  6. If a shortage is discovered, it must be reported promptly to the custodian's superior and to the senior full-time financial officer of the department who, after reviewing the circumstances of the case, shall take whatever corrective or recovery action is necessary.


Departments will conduct internal audits to evaluate their compliance with this policy.

The Treasury Board Secretariat will monitor the effectiveness of this policy by reviewing departmental internal audit reports.


This policy is issued under the authority of section 38 of the Financial Administration Act and should be read in conjunction with the following documents:

Accountable Advance Regulations,SOR/86-438;

Receipt and Deposit of Public Money Regulations, C.R.C.c.728, as amended by SORs/80-449 and 83-828;

Treasury Board Manual, Comptrollership volume Chapter 4-7 "Losses of money and offences and other illegal acts against the Crown".


This chapter cancels chapter 3-10 of the "Financial Management" volume dated August 1, 1993; and

this chapter replaces section 9.8 of the Guide on Financial Administration which was revised in April 1991.


Enquiries concerning this policy should be directed to your departmental headquarters. For interpretation of this policy, departmental headquarters may contact the:

Comptroller Sector
Program Branch
Treasury Board Secretariat
Ottawa, Ontario
K1A 0R5

Telephone: (613) 957-7233
Facsimile: (613) 952-9613

Appendix A - Guidelines

  1. The custodian should normally be an indeterminate full-time employee who has no other responsibilities associated with handling accounts receivable, verifying accounts and requisitioning payments.
  2. Departmental manuals should specify suitable procedures on establishing, reporting on, accounting for and controlling petty cash funds.

    The minister or his or her delegates have the authority to charge losses against the departmental appropriations. The custodian is required to reimburse losses and shortages unless: the prescribed procedures were followed and the petty cash was properly secured; there is physical evidence of breaking-in and no act or omission on the part of the custodian contributed to the loss, as stipulated by the policy "Losses of Money and Offences and Illegal Acts Against the Crown".

  3. The petty cash fund is to be safeguarded in a lockable cash box which should be kept locked not only after hours but also during normal business hours in a safe or a filing cabinet approved by the RCMP or by the departmental security services. Keys and combinations should be kept in a secure place (not a desk drawer) by the custodian.
  4. When disbursements are not made frequently, the custodian should check the petty cash fund at least once a week to ascertain that no theft has taken place.
  5. The deputy head may invoke sub-section 38(2) of the Financial Administration Act to recover an advance from any monies payable to a custodian if sub-section 7(2) of the Accountable Advances Regulations is not adhered to.

    Sub-section 38(2) of the FAA: legal authority to recover advances out of any money payable to the person to whom the advance was made.

    Sub-section 7(2) of the AAR: the deputy head may, by written notice require from the custodian of the advance, an accounting and repayment of any unexpended balance within 30 days of the notice.

  6. Periodic unannounced verifications of the petty cash advances should be made by internal audit groups or management to determine whether the funds are being used properly and to ensure that they are adequately protected against loss or misuse and are properly accounted for.
  7. There are two methods of changing the custodian of a petty cash fund. One method is to close out the fund by requiring the current custodian to account for the vouchers on hand and refund the difference and then start a new fund by requisitioning an advance for the new custodian. The second method is by transferring the fund. This requires a written statement that must include the details of the transfer, the signatures of the transferor and transferee and the approval of a superior following the physical check of the cash and vouchers on hand by all parties. This second method could be used when there is insufficient time to establish a new petty cash fund for the new custodian.
  8. Rather than establishing a large fund, it may be preferable to establish several smaller funds or shorten the reimbursement cycle.
  9. The authorized amount of the petty cash should allow for normal peak requirements and take into account the time required to obtain reimbursement without exceeding the amount necessary to meet the contemplated expenditures.
  10. Using acquisition cards to purchase low value items is a very cost-effective payment method and petty cash should only be used when acquisition cards cannot be used.
  11. All vouchers submitted in support of a requisition for reimbursement should be cancelled in a manner that will preclude any possibility of being reused.
  12. When there is an overage in a petty cash fund, a study should be carried out to find the cause of the overage. When the money cannot be returned to its rightful owner, it should be deposited to the credit of the Receiver General in accordance with the Receipt and Deposit of Public Money Regulations, recorded as an overage and credited to a departmental miscellaneous non-tax revenue account.

Appendix B - Regulatory Requirements


Departments and agencies must meet these regulatory requirements. They are not included in the policy only to avoid duplication.


  1. An individual to whom a petty cash advance is issued is personally responsible and any loss or shortage in respect of that advance may be recovered from that individual.
  2. A deputy head may issue an accountable advance to establish a petty cash fund.
  3. A petty cash fund shall not exceed $2000 and no single expenditure from that fund shall exceed $200 without the prior approval of the Treasury Board.
  4. As a standing advance, a petty cash fund shall not exceed the amount required to settle expenditures expected to be made within a period determined on the basis of operational requirements and the rotation of the advance.
  5. The custodian of a petty cash fund shall give an accounting within 10 working days of the end of any month in which expenditures are incurred by showing that the cash on hand plus receipts or paid vouchers equals the amount of the advance.
  6. The deputy head shall at the end of every fiscal year:
    1. obtain, from the custodian of a petty cash advance to provide, within 30 days after the end of the fiscal year, written confirmation of the amount of the advance and his or her continuing responsibility for; and
    2. provide to the Receiver General such reports and certificates in respect of all petty cash advances as may be required for the purposes of the Public Accounts.
  7. When the deputy head issues a petty cash advance, he or she may at any time, by written notice to the custodian of the advance, require an accounting and repayment of any unexpended balance. The custodian shall, not later than 30 days after receiving such notice, provide an accounting and repay the advance.
  8. Repayment of all or part of a petty cash advance that has to be reimbursed must be made in full by the custodian in a single payment.
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