A petty cash custodian agreement is an essential document that outlines the responsibilities of the person who is in charge of managing a company`s petty cash funds. Petty cash is a small amount of money that is kept on hand by a business for day-to-day expenses such as office supplies, postage, and minor repairs. The petty cash custodian is responsible for making sure that the money is used appropriately and is accounted for properly.

The purpose of a petty cash custodian agreement is to establish clear guidelines for the use of petty cash funds and to ensure that the custodian is aware of their responsibilities. It outlines the amount of money that is available for petty cash expenses, the procedures for requesting and documenting expenses, and the consequences for misusing or mishandling the funds.

The agreement should also outline the record-keeping requirements for petty cash expenses. The custodian should document each transaction with a receipt or invoice and maintain a log of all petty cash expenses. This log should be reviewed and approved by a supervisor on a regular basis.

It is important to note that the petty cash custodian agreement is a legal document and should be signed by both the custodian and a representative of the company. It should also be reviewed and updated periodically to ensure that it remains current and relevant.

In addition to the petty cash custodian agreement, there are other best practices that companies should follow to ensure the proper management of petty cash funds. These include setting a limit on the amount of money available for petty cash expenses, using a secure location to store the funds, and enforcing strict procedures for requesting and documenting expenses.

Proper management of petty cash funds is critical to the financial health of a business. By implementing a petty cash custodian agreement and following best practices, companies can ensure that their petty cash funds are used appropriately and accounted for properly.