Controller Aims to Restore Petty Cash System for Neighborhood Councils

A year-and-a-half after revoking petty cash privileges for neighborhood councils, Controller Wendy Greuel has written a letter to the Los Angeles City Council requesting a limited version of that spending process be restored.

In a letter to Councilman Paul Krekorian dated Wednesday, July 27, Greuel suggested that an imprest petty cash system be put in place for neighborhood councils, which would allow council members to make purchases without dealing with the hassle of filling out demand warrants.

"The process for neighborhood councils to expend funds and process expenditures through the Department of Neighborhood Empowerment in a timely and cost effective manner needs to be streamlined," Greuel wrote in the letter.

Through the current system, purchases are made either by the treasurer with a purchasing card or through the personal funds or council members, who are reimbursed through a demand warrant request. Both purchasing mechanisms have their drawbacks, said Treasurer Mark Reback.

"The current funding system requires a lot of paperwork and red tape, especially with demand warrants and the purchasing card reconciliation forms that are due every quarter," Reback said "We have to document every purchase with the receipt and a signed board resolution that acknowledges every expense has been approved by the full board. It can take months to get the checks cut and mailed out for Demand Warrants."

Mark Legassie, former treasruer for the , said that, at times, council members have been denied reimbursement for neighborhood council related purchases because they submitted demand warrants too late.

"[Mount Washington representative] Paula Sirola lost almost $50 of her own cash she had loaned to the city to support a neighborhood council activity," Legassie said.

There are shortcomings to a petty cash system as well, though, Legassie said.

"It requires more accounting and reporting by the treasurer, it's more costly and time-consuming to oversee and audit by the City and it's harder to trace fraudulent activity," Legassie said.

The imprest petty cash system would be different from the one utilized by neighborhood council's before privleges were revoked in February of 2010, as the account would only replenished once all purchases were reconciled.

Further, instead of receiving a set amount in petty cash advances every month, the council would receive enough funding to fully replenish the petty cash account. For example, if an account's maximum balance is set at $500 and neighborhood council members spent $100 during the month, the council would only receive $100 once all purchases are reconciled.

Reback said the establishment of a imprest petty cash system would make life easier for neighborhood council treasurers.

"I think petty cash accounts would be a great idea for smaller purchases that all neighborhood council board members could use. As treasurer, I’m the only one authorized to use the purchasing card, so every time we have to use it, I’m the one that has to deal with the purchase, which can become a bit of pain with my busy schedule," Reback said. "I would welcome a petty cash account for the neighborhood councils, for both the ease of accounting and ease of use for all board members."