What is petty cash?
Petty cash is a small, fixed pot of cash for payments too small to write a check for. This cheat sheet covers how to think about the fund and the controls that keep it honest. The detail is further down.
How to think about it
- It's a fixed amount. The U.S. Treasury describes an imprest fund as fixed cash or a petty cash fund, in currency or coin, advanced to a cashier.
- It replaces small checks. The IRS says a petty cash fund lets you make small payments without having to write checks for small amounts.
- Every payment gets a slip. Fill out a petty cash slip for each payment and attach it to the receipt as proof of payment.
- You refill it with a voucher. In the IRS's own imprest funds, the cashier prepares a reimbursement voucher to bring the fund back to its correct balance.
Controls to put in place
- Split the duties. In IRS imprest funds, the cashier must not control or approve the spending from the fund.
- Count it by surprise. The IRS audits imprest funds held as cash, unannounced, at least once each quarter, checking the balance, what the fund actually holds, the paperwork and physical security.
- Audit at every handoff. When one cashier hands the fund to another, the outgoing and incoming cashiers do a full audit.
- Lock it up. IRS rules bar keeping imprest fund checks and records in a desk drawer or a file cabinet without a key lock.
How the IRS audits its own imprest funds
| Review | When | What it checks |
|---|---|---|
| Monthly audit | Every month, for funds kept at a financial institution | The bank statement and the expenses |
| Unannounced cash audit | At least once a quarter, for cash held outside a financial institution | Fund balance, what the fund actually holds, expense paperwork, physical security |
| Transfer of accountability audit | Whenever a cashier hands the fund to another cashier | A full audit by both cashiers |
Questions
What is petty cash used for?
Small payments. The IRS describes a petty cash fund as a way to make small payments without having to write checks for small amounts.
What is a petty cash slip?
A record you fill out each time you pay from the fund. The IRS says to attach it to the receipt as proof of payment.
Is petty cash the same as an imprest fund?
The U.S. Treasury defines an imprest fund as fixed cash or a petty cash fund in currency or coin advanced to a cashier.
How is petty cash replenished?
In the IRS's own imprest funds, the cashier prepares a reimbursement voucher, and accounts payable reviews it and restores the fund to its correct balance.
Sources
- Internal Revenue Service, Publication 583 (12/2024), Starting a Business and Keeping Records, accessed November 2, 2026.
- U.S. Department of the Treasury, Bureau of the Fiscal Service (TFX), Imprest Fund, accessed November 2, 2026.
- Internal Revenue Service (Internal Revenue Manual), 1.35.18 Imprest Funds, accessed November 2, 2026.
- Engine, Direct Bill for Company Hotel Travel, accessed November 2, 2026.