You need to include the month in your sequence and set Implementation to No Gap.

http://github.com/buke/openerp-ir-sequence-autoreset

Even though the question has been asked long time ago, I'm giving an answer that may be usefull for other users :

I inherited ir.sequence, and overrided _next method in order to reset number_next_actual to 1 if the current year and the last year are not equal (you can replace year by mounth according to your needs), it seems to work fine for me (odoo 9)

class sequence(models.Model):
    _inherit = 'ir.sequence'
    last_year = fields.Integer("last",default=1)    
    
    def _next(self):
        thisyear=int(date.today().year) 
        if thisyear!=self.last_year:
            self.last_year=thisyear            
            self.number_next_actual=1        
        result = super(sequence,self)._next()        
        return result

You can certainly set up a sequence that has month as part of the number (e.g PO/Mar13/001). What I am not sure about is if the trailing sequence resets. I can see how you can reset each year under fiscal years.