VS HYDRO (PVT) LTD

MEMORANDUM
FROM
TO
COPIES
SUBJEC
T
DATE

Country Manager Kenya

All Project Managers
MD, CEO, COO, Accountant
Use Of Petty Cash Imprest

Use Of Petty Cash Imprest

1. Purpose & Operation
A Petty Cash Imprest is a cash fund which is used by the sub-units of the
company to bear the urgent expenses in the daily activities of the unit.
The imprest system ensures that you must document how the petty cash is
spent. In a petty cash system, petty cash receipts are written for each
amount issued. So, when all of these receipts are totaled at the end of the
month and deducted from the opening petty cash float, the calculated value
must agree with what is left in the petty cash float. Under the imprest
system, only that which is recorded as spent is replenished. Any shortfalls
may have to be replenished by the guardian, usually a bookkeeper, of the
petty cash float from their own personal resources.
Petty cash imprest system allows only to replenish the spending. So, if you
start the month with Ksh. 1000 in your petty cash float and spend Ksh. 900
of that cash in the month, an amount of Rs. 900 will be then placed in your
petty cash float to bring the balance of your petty cash float back to Ksh.
1000. The replenishment is credited to the primary cash account and the
debits will go to the respective expense accounts, based on the petty cash
receipts.
2. General Guidelines
1. Petty Cash Imprest should not be used for routine purchases, i.e.,
Construction materials, Victualling items, etc. and for routine payments,
i.e., Payment of salaries, Payments to sub-contractors, Payments for
hired vehicles / machineries, Electricity bills, Telephone bills, House
rents, etc. Such requirements must be planned and indicated to the head
office well in advance to ensure timely actions.
2. Petty Cash Imprest may be used for urgent purchases where a delay in
such purchase can badly effect the operation of the project, i.e. spare
part of machinery, Urgently needed tool, etc.

3. Petty Cash Imprest may be used to purchase the items of which a stock
cannot be maintained and the requirement of the item can arise at any
time, i.e., Fuel.
4. Petty Cash Imprest may be used to make an urgent payment which
cannot be delayed until arrival of cash from head office, i.e. payment to
a hired labourer, postage, travelling expenses, transportation, etc.
5. When making a purchase in line with the above guidelines, the Project
Manager should make sure that the following actions / approvals are
taken.
a. Up to Ksh. 2,000 in each cash memo after recording that purchase
has been made after a thorough market search and after ensuring
that price has been reasonable.
b. Between Ksh. 2,001 and 5,000 in each cash memo Generally after
obtaining three quotations and ensuring that purchasing is
reasonable. But if the requirement is very urgent the project
manager may follow the procedure same as in item a above,
along with a certificate that in view of extreme urgency, it was not
possible to effect the purchase by inviting quotations.
c. Between Ksh. 5,001 and 10,000 in each cash
obtaining three quotations and ensuring that
reasonable when consider the factors such as
Delivery time, Payment terms, Warranty, After sales

memo After
purchasing is
Price, Quality,
services, etc.

d. Between Ksh. 10,001 and 50,000 in each cash memo Obtain three
quotations and submit the same to the Deputy General Manager of
the region for his approval. However if the requirement is so urgent
the approval of the DGM may be obtain via e-mail or telephone.
e. Above Ksh. 50,000 in each cash memo Requirement should be
indicated to the Head Office to decide the purchasing procedure.

6. If a requirement arises to make a payment for something other than a

purchase;
a Up to Ksh. 5,000 in each cash memo After recording the reason
and obtaining the signature & the details of the person to whom the
payment has to be made.
b Above Ksh. 5,000 in each cash memo After obtaining the approval
from the Deputy General Manager of the region and obtaining the

signature & the details of the person to whom the payment has to
be made.

..

Lt. Commander; Ruwan Mapa (SLN Retired)

Country Manager Kenya
VS Hydro (Pvt) Ltd