|Approved by:||Board of Trustees|
|History:||Issued -- March 14, 2002|
|Revised -- March 30, 2004|
|Last Reviewed --|
|Responsible Official:||Vice President for Finance and Treasurer a tel. (202) 319-5606|
It is the policy of the University to establish petty cash funds at the departmental level where necessary and justified. Such funds will be established for the specific period of time the funds are actually needed; if the requirements are permanent and continuing, the period may be for an indefinite time.
This policy applies to all departments and offices of the University wishing to make use of petty cash funds.
A. Petty Cash Fund means a reimbursement fund which makes cash conveniently available for expenditure at local levels, in small dollar amounts, for official purposes of the University.
B. Petty Cash Change Fund means a fixed amount of cash made available to a department or activity for necessary cash operations.
III. Fund Establishment
Authority to establish a petty cash fund must be requested by the department head from the Associate Treasurer or a designee. Except in extraordinary circumstances, the Associate Treasurer or a designee will not establish more than one petty cash fund per department. Petty cash change funds will be established as required, but for restricted periods coinciding with specific events or cashiering requirements. Purchases are not to be made from change funds. Petty cash funds are to be controlled and managed in accordance with these guidelines.
The head of a department or activity must determine the justification for the petty cash fund, the amount of fund requested, and must select a primary custodian. An alternate custodian may be selected at the same time. Custodians and alternates must be employees of the University; they may not be student or temporary employees. The fund level should be based on the estimated monthly activity; the default level will be $200 unless otherwise approved by the Associate Treasurer. The request must clearly state whether the fund is to be petty cash or change making.
Designated custodians must become familiar with these policies and procedures at the time of designation.
IV. Change Funds
Change funds are not to be used for expenditures or reimbursement. They are otherwise managed and controlled in the same fashion as petty cash funds. Change funds are to be distinguished from petty cash funds, and should not be commingled with petty cash funds. A separate custodian must be appointed for a change fund; i.e., a single person may not be custodian for two funds.
V. Responsibilities of Petty Cash Custodian
Petty cash funds are to be carefully managed, and may not be used to circumvent the University's procurement systems, travel policies, or other procedural restrictions. Departments are encouraged to use procurement cards fully as a preferred alternative to petty cash funds. All expenditures from petty cash are charged to the department's budget, and must not cause that budget authority to be exceeded. Petty cash expenditures must also conform to the university's policy on Prohibited Transactions.
The custodian should arrange for a secure, locked location for the fund. Only the custodian should have access and keys to that location.
In the event of theft or unexplained disappearance of all or part of the fund, Public Safety should be notified immediately. The Associate Treasurer should be notified as soon as practical. Once new security measures have been taken, the appropriate Campus Security report and an explanatory memorandum from the custodian should be sent to the Associate Treasurer, who will arrange for the re-establishment of the fund. The Associate Treasurer has the authority to decline to replace a petty cash fund in cases of custodial mishandling.
Under no circumstances may undeposited receipts be used as a petty cash fund, nor may petty cash funds be commingled with other funds. Petty cash funds and petty cash change funds may not be used to cash checks of any kind. A petty cash fund may not be used to make personal loans or salary advances.
A petty cash fund represents a loan to the department by means of a cash advance from the Associate Treasurer. It is always subject to audit, and must be "whole" at all times; i.e., the fund custodian must always have in hand a sum of cash and receipts equal to the original advance.
No single expenditure from a petty cash fund may exceed $75.
Reimbursement for petty cash expenditures must be in the exact amount of the expense(s), and must be documented by original detailed receipts. If an unallowable purchase is made through a petty cash fund, the custodian will be held personally responsible for reimbursing the fund. Splitting a transaction which exceeds petty cash limits into two or more smaller transactions is specifically not allowed.
Payments for rent, royalties, awards, and personal services are prohibited from petty cash funds. Human subject payments (but no other personal service payments) may be made through the petty cash funds, subject to several limitations. A detailed log must be maintained and a copy submitted with the reimbursement request. The log should show the payee's name, tax identification number, date and amount of payment, and the accounting chartfields to be used for the expense. If annual payments to any one person exceed $600, or any one payment exceeds $50, the payment must be processed through Accounts Payable.
Custodians may provide a cash advance to an employee who is going to make a purchase up to two days in advance of the anticipated purchase. The fund custodian is responsible for the return of the funds or an appropriate receipt.
Each expenditure from petty cash must have documented: the date of the transaction, the exact amount expended, a brief description of the expenditure including its University-related purpose, and the accounting chartfields.
At least monthly, the custodian should balance the fund, determining that the equation of cash and receipts is correct. The custodian should maintain a log of these monthly reviews. When the cash on hand is depleted, the fund custodian must prepare a request for reimbursement. The request for reimbursement must be submitted to the Accounts Payable Office, who will issue a reimbursement authorization to the custodian, bringing the fund cash on hand back to the original advanced amount. The custodian will take the reimbursement authorization to the University cashier, who will provide the cash upon receipt of the authorization.
Twice during the year, petty cash custodians will be required to reconcile their accounts and submit all receipts and other documents to completely account for the petty cash advance:
- December 15 - to ensure that all transactions with tax implications are accounted for.
- April 20 - to ensure that all-outstanding advances are properly accounted for in the close of the fiscal year.
Custodians should submit reimbursement requests with full documentation as of these dates, and should deliver the requests to the Accounts Payable Office, on the first working day after these deadlines.
Change Funds: A change fund is an advance of cash to begin and sustain a cashiering, revenue-producing activity. It maintains its original cash level at all times. At the end of each day, the amount of the advance is removed from the till and kept separate. The remaining cash in the till is turned in as the current day's receipts. Any discrepancy between receipt records and this remaining cash affects the day's receipts but not the original amount of the change fund.
VI. Change of Custodian
Permanent Change: Upon a change of custodian, the fund should be reconciled and a request for reimbursement prepared. The old custodian, the new custodian, and the departmental supervisor should cosign the form. The reimbursement authorization should be requested payable to the new custodian. A covering memorandum from the departmental manager should give the reason for the change and provide the name, office, and phone number of the new custodian.
Extended Absence: If the custodian is to be absent for an extended period (as determined by the department), an alternate cashier may be appointed. The turnover procedure is the same as for a permanent change, with the period of temporary transfer stated in the covering memorandum.
Brief Absence: If the need for petty cash arises during a brief absence of the custodian and cannot wait for the custodian's return, the petty cash transaction should be requested from the Cashier's unit of the Treasury Office. The transaction will be charged to the department's budget but will not affect the department's petty cash fund.
VII. Accounting Requirements
Reimbursements of petty cash funds are the responsibility of the Accounts Payable section of the Controller's Office. The Treasury's Office is responsible for auditing petty cash funds and for general management questions or issues. Unannounced audits of petty cash and change funds will be conducted by the Treasury or Internal Audit's Offices.
VIII. Increase in Petty Cash Fund
Fund custodians should monitor the petty cash fund for:
- Too-frequent reimbursement (more than once per month), indicating the level is too low, or
- Excessive cash on hand and infrequent reimbursement, indicating the level is too high or that a petty cash fund is no longer necessary.
Adjustments should be requested by memorandum to the Associate Treasurer, who will approve the adjustment at the next reimbursement.
IX. Closing a Fund
If approved for a specific period, a petty cash fund or a change fund should be closed at that date, or an extension requested and justified. If a fund is no longer used or required, it should be closed regardless of the original schedule. A fund is closed by submitting the current receipts and the remaining cash to the Treasury Office with a covering memorandum and without a request for reimbursement.