Imprest Accts-P/Cash -Bank Accts  0112-01    ZZall

                                                                             - - - Rejoice in the Lord always ... again I say Rejoice !!! - - -


                               TO: Interested Ministries                                                                                   FROM: Jim Bramer, Retired Auditor-CPA 
                                                                                                                                                                FILE: 0112-01/all)

                                RE:  Imprest Petty Cash/Checking Accounts                                             Originated:   June 1997                                   


            Below is a hypothetical Online Email thread (THRD) between any one of the following MFTeam members: PAT (Ministry Chief Executive), LEE: (Ministry Volunteer Treasurer), or FRAN: (Ministry Computer Bookkeeper) and  Jim@bcidot.org


FR: Fran                 

        Somewhere in our inter-action I have picked up the term "Imprest";  please tell me more.

FR: JIM@bcidot.org

            Am not real sure, Fran, but I believe it is an old English term that was often used when someone was given an advance of money subject to later accountability and settlement. To most of us now it means: "A Ministry sum of money on hand, or on deposit,  that facilitates specialized small cash disbursements via an applicable Ministry set of records"

FR: FRAN

        Give me some use examples, Jim.

FR: JIM

         The two uses I know of are explained below:

IMPREST PETTY CASH  (1)

        Most of us know that a recommended system of Petty Cash is to write a check to the Ministry for an even amount, like $100.00, and establish a Petty Cash  Asset account. When the check is cashed, the Petty Cash custodian then spends this cash for petty authorized items and maintains disbursement records in a Petty Cash   'separate set of records'. When the fund gets low, let's say it now has $8.21, then a reimbursement Petty Cash check payable to either Petty Cash or the Ministry for $91.79 is processed. The expense types are recapped from the 'separate set of records' and serves as support and expense distribution for the $91.79 check. The custodian then has $100.00 again to use for such purposes. The asset account and the amount in the ACTIVE set of books never changes.  Please Go Here for some more insight about Petty Cash monies.

IMPREST CHECKING ACCOUNT (2)

        The foregoing Imprest concepts apply equally to a separate, or branch, Checking Account set up for a specific purpose and for larger amounts ---- I have seen the original check to establish the Imprest Checking Account asset account be as much as $5,000.00. And then like the Petty Cash process above, the deposit, in this case, to this Checking Account is the reimbursement check from the head office ---- all of the Ministry income flows to the head office. This Imprest Checking Account  'set of records, or books', usually at a Branch of a Ministry,  usually is just the check stubs records as supported by cancelled checks and copies of bills paid, etc. When the Bank balance gets low, then copies of bills support the reimbursement check from the head office. Please Go Here  for another example use.
        In my experience, Imprest Checking Accounts  work very effectively for applicable Missionary Organization or School branch offices. But the most practical use I have seen involves the need for immediate payment at any type of Ministry because all checks must have two signatures. Sometimes the signors are not available. The answer has been to have a Imprest Checking Account --- sometimes called the NOW or EMERGENCY Bank Account --- whereby one official can disburse small emergency amounts via this Imprest method.
        Another aspect is the use of debit cards (eCHECKS) as they are used by branches and Imprest Checking Accounts.  You will remember that debit cards are pre-arranged plastic mechanisms that are accepted by merchants like regular credit cards.  But the bank account , not your credit card account,  is charged for the transaction as if it were a check.

FR: FRAN

        Very helpful, Jim. I always wondered about the IMPREST term. You will remember that we use QuickBooks (TM) (QB)  and we handle our Petty Cash a little differently. We originally wrote a check to Petty Cash for $100.00 and posted it to an QB Petty Cash asset account, or register. Then the Petty Cash custodian provides me with paid out info right after it occurs and I go to the Petty Cash QB register and reduce the asset balance. When it gets low, we simply process another check for $100.00 and increase the QB Asset Petty Cash Register and ‘eat away at it’.
        Weekly I give the custodian a Register print out and this person then balances to the actual currency/coins on hand. Frankly it does not always balance and I post the difference to Misc. Expense.

FR: JIM

        Yes, I identify with the foregoing and see no problem in your method for either Imprest Petty Cash or for Imprest Checking Accounts.   But, I believe that internal control is better served for the Imprest Checking Accounts that you handle when the head office reimbursement is for exact charges to this special bank account. 
        I am also impressed (not imprest) with less need today for such "Petty" accounts because it is far more efficient for buyers to appropriately use Plastic.   Ask me as Jim@bcidot.org for perspective on this.

FR: FRAN

        Thank you ever so much, Jim. I am going to share this with PAT. We are often frustrated when we can not efficiently get checks signed for "MUST HANDLE NOW" situations.
        Which reminds me, do you have any thots about the whole check signing process at Ministry ? Also do you have any more ideas regarding Petty Cash?

FR: JIM

        Yes, please Go Here  for check signing matters. Some Ministries simple do NOT have a Ministry "PETTY CASH FUND". Staffers advance their own personal funds for smaller authorized items. After they have provided the Ministry with 'paid out documentation', the Ministry cuts a check to reimburse the Staffer.
        But, I am sorry to say that some Ministries are NOT using their PETTY CASH FUND as it was intended. They may pay out the Green Stuff (and Coins), but they do NOT require complete 'paid out' documentation or attempt to reconcile to the remaining balance on hand. They simply distribute the flat amount of the reimbursement check to a expense account.  Of course, this is not acceptable.
        Be sure and digest the content  Found Here when we recommend that you do NOT use such
Imprest Petty Cash/Checking Accounts  and righteously buy via the Plastic process.  Ask us at Jim@bcidot.org  for more information. 
        Staff members often need to buy something but ,since they do not know it's exact cost, they obtain a flat sum advance; the Petty Cash custodian so indicates this info and awaits final information from the Staffer. Again the proper use of Plastic removes the need to get such cash advances.

FR: FRAN

        Thanks, Jim --- very helpful !


      This publication originated in June 1997 and was  .     UPTD: May 29, 2010

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        (1) An Onliner Document, or WRIT (Writing), may be applicable to all Ministries, or it may be designed for just groups like: Evangelical Church, School, Missionary Agency or Organization, Christian Camp / Conference, or other named group.
        (2) WRIT formats include the perspective of   Jim@bcidot.org  via IOMs (Inter-Office Memos) to the Ministry Finance Team (MFTeam); THRDs, a hypothetical Online conversation with members of the MFTeam; GLEANINGS, or Scripture within context of the MFTeam; FWIW; A periodic editorial (For What it is Worth); TRUISM, or believed Ministry Finance principles; and via FAQ, response to Frequently Asked Questions