5. Cash disbursement control procedures
- Disburse cash/cash equivalents only for valid business purposes upon proper authorisation.
- Adhere to the minimum requirements and general procedures for case disbursements.
- Discourage the use of cash floats at completion of administration set-up.
- Use petty cash only for incidental payments.
- Payments for lodging and other travel expenses must be supported by receipts.
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.
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.
- Are the authorisation, processing, approval, recording and reconciliation activities clearly segregated?
- Are the persons authorised to approve expenditures clearly identified in an Authorised Signatory Limit form, and are all expenditures approved in advance by an appropriately authorised person?
- Are invoices and requests for disbursements supported by appropriate receipts or documentation that indicates receipt of the goods or services?
- Are all disbursements made by pre-numbered cheques?
- Is a record of the cash disbursement such as cheque stub, cheque copy or cash disbursement voucher kept by the person processing the cash/cash equivalent disbursement?
- Does a disbursement list accompany the cheques for signature?
- Is cheque signing authority vested in persons at the appropriate level within the financial administration?
- Do cash/cash equivalent disbursements over USD5,000 require two signatures?
- Is the number of authorised signatures limited to a minimum practical number?
- Does the person signing the cash/cash equivalent disbursement review and initial the supporting documentation that indicates completeness and appropriate approval, and compare them to disbursement voucher amounts?
The following are the minimum requirements for processing cash/cash equivalent disbursements.
- There is proper identification of fund(s) chargeable, availability and required accounting information including donor specific line item(s).
- Supporting documentation provides sufficient evidence of amount owed and receipt of the goods/services as per the negotiated conditions. If any supporting documentation is missing, then the reason for this needs to be documented.
- There is proper authorisation of transactions, which is made according to Annex 17.1 Authorised Signatory Limits Form by the corresponding budget holder and charged to an approved budget.
- Cash/cash equivalent disbursements exceeding USD5,000 or its equivalent in the local currency must be co-signed by two authorised signatories. This is also applicable to project disbursements authorised by project managers/coordinators through a cash float, or payments made through a cash facilitator.
- Once a cash/cash equivalent payment has been issued, all documentation needs to be cancelled or stamped to ensure that it is not inadvertently processed again. This includes stamping all accounting and supporting documents that indicate the cash disbursement voucher and cheque number.
- All transactions and supporting documentation must be filed sequentially in box files and stored in a secure location. Poor filing may lead to documentation being misplaced or lost, thereby having negative effects on subsequent audits/reviews.
The general procedures for cash disbursement control are as follows:
- A limited number of persons should be duly authorised to sign cheques and cash disbursements, and the specimen signatures of these persons should be kept on file. This information must be documented in several Authorised Signatory Limits Forms (Annex 17.1) completed for each staff member and authorised by the Country Director.
- Other staff with authority to approve and encumber funds on behalf of CARE (procurement request forms, purchase orders, goods/services received forms, office leases, transport contracts, etc.) must also have their own Authorised Signatory Limits Form (Annex 17.1) authorised by the Team Leader.
- All requests for disbursements must be made with an approved Cash Disbursement Voucher (Annex 17.3). This includes payments to vendors, cash float requests, travel expense reimbursements and petty cash float replenishment.
- Expenses must be authorised by the staff member’s manager/budget holder (provided that signatory authority has been granted), except for when the manager/budget holder is not working in the same location. A staff member’s expenses must not be authorised by the claimants themselves or by anyone who reports to the claimant.
- The person authorising a cash disbursement must determine that:
- payment has not been made previously
- documents have the required approvals and comply with purchasing, receiving and payment procedures.
- Supporting documents must always accompany the Cash Disbursement Voucher, and must be examined before the Cash Disbursement Voucher is signed and the cash or cash equivalent issued.
- All Cash Disbursement Vouchers issued should be entered in numerical order in a disbursements ledger on a daily basis. Separate disbursements ledgers should be kept for each cash/cash equivalent account and expenditure incurred must be booked daily.
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:
- Follow general cash disbursement procedures (see section 5 ).
- Duly approved Disbursement Voucher(s) must be grouped by supplier/payee and a Cash Facilitator Pay Order Form (Annex 17.7) filled with the required payment instructions, by payee, and including all required approvals.
- Give the white copy (original) of the Pay Order Form to the payee to hand out to the cash facilitator upon receipt of cash.
- The light blue copy is the payee copy. Initially, it is held at the originating CARE office and given to the payee, as evidence of payment, when the cash facilitator returns the white copy together with a Request for Reimbursement (Annex 17.8).
- The yellow copy is advance information given to the cash facilitator so that they can make arrangements for payment of cash to the payee, and is especially important where the payment(s) involves large amounts of cash.
- The light green copy is a file copy and must not be removed from the book. It will be used to ensure that Pay Orders have been issued sequentially and that all Pay Order numbers are accounted for.
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).