Improving the Effectiveness of Your Claims Auditing Process

Local Government Management Guide

Payments Allowed in Advance of Audit

The governing board of a local government or school district generally may, by resolution, authorize payment in advance for public utility services, postage, freight and express charges.9 However, these claims should be audited as soon as possible after payment and included on the next abstract as prepaid amounts. Public utility services generally include electric, gas, water, sewer and telephone services.10

In addition, the governing board may generally establish petty cash funds and authorize petty cash payments in advance of audit. Most petty cash payments will involve small amounts required for infrequent purchases, such as office supplies. The amount of a petty cash fund may be limited by statute. The custodian of the petty cash fund should periodically request reimbursement for the fund by submitting all bills or receipts for purchases made from the petty cash fund. The person or body auditing claims should audit the reimbursement request in the same manner as other claims.


9 County Law section 369(5), Education Law sections 1724(3) and 2524(2), Town Law section 118(2), Village Law section 5-524(6)

10 For towns, fuel oil is considered a public utility service.