A transition date of Monday, February 4 has been set for phasing out the Canadian penny after which the Royal Canadian Mint will no longer distribute pennies. On this date, businesses will be encouraged to begin rounding cash transactions. Please note that the cent will remain Canada's smallest unit for pricing goods and services and that the phasing out of the penny will have no impact whatsoever on payments made by cheque or electronic transactions. 1. The penny is not suddenly going to disappear. Pennies can still be received and given as change if they are in the cash drawer. However, with a gradual withdrawal from circulation, price rounding on cash transactions will ultimately be required. 2. Point-of-sale systems and cash registers do not need to be updated. Given that all non-cash payments will not be rounded, no system changes will be required. 3. Rounding of cash payments. When pennies are not available, cash transactions should be rounded to the nearest five-cent increment in a fair and transparent manner. Rounding should only be used on the final bill of sale after all taxes are applied. If the final bill ends in a 1, 2, 6 or 7, it should be rounded down; when the final bill ends in a 3, 4, 8 or 9, it should be rounded up. This is a manual calculation done by the person accepting payment. 4. Reconciling small differences. If you have rounded a cash transaction during the day, your cash reconciliation will most likely be out of balance although the discrepancy is expected to be small. This will be handled with an adjusting entry in the same way you would currently manage a small cash outage. In this case, however, you are to use new class code 777 - Penny Rounding. If you have any questions, please contact me at 566-0590 or Deidre Smith at 566-0470. For further information, please go to http://www.budget.gc.ca/2012/themes/theme2-eng.html Allan Hughes Director, Financial Services