Legal Definitions - imprest fund

An imprest fund is a fixed amount of money set aside for specific, often small or recurring, expenses. The fund is maintained at a constant level; when money is spent from it, the expenditures are documented, and the fund is then replenished by the exact amount spent, bringing it back to its original fixed balance. This system ensures accountability for expenditures while providing immediate access to funds for necessary operational costs.

Here are some examples to illustrate how an imprest fund works:

• Office Petty Cash: A small business maintains an imprest fund of $300 for petty cash. This fund is used by the office manager to cover minor expenses like purchasing stamps, emergency office supplies, or reimbursing an employee for a small delivery fee. When the fund balance drops to $50, the office manager gathers all the receipts for the $250 spent. These receipts are submitted to accounting, and a check for $250 is issued to replenish the fund, bringing it back to its original $300 balance. This process ensures that there is always a readily available amount for small, immediate needs, with clear documentation of all outlays.

• School Field Trip Allowance: A school district provides teachers with a $200 imprest fund for each class field trip. This money is intended for unexpected minor costs during the trip, such as purchasing extra water bottles, a small first-aid item, or paying for an unforeseen parking fee. After the field trip, the teacher submits receipts for all expenditures from the $200. If they spent $75, the school's finance department reimburses the teacher $75, restoring the fund to its original $200 for the next field trip. This system allows teachers to handle minor contingencies without delay while maintaining financial oversight.

• Construction Site Emergency Supplies: A construction company establishes a $1,000 imprest fund for each project foreman. This fund is used for urgent, small purchases on-site, such as specific fasteners, a specialized tool needed immediately, or safety equipment that runs out unexpectedly. The foreman tracks all purchases with receipts. At the end of each week, the foreman submits the accumulated receipts to the project accountant. If $450 was spent, the accountant issues a check for $450 to the foreman, ensuring the imprest fund is always at its $1,000 starting amount for the following week's potential needs. This prevents project delays due to minor supply shortages.