Petty Cash Funds - Set Up, Replenishment
RELATED POLICY STATEMENT(S):
July 1, 1984
January 1, 1995
Petty cash funds help University departments make small dollar amount purchases without an excessive amount of paperwork. Change funds help departments that collect and handle cash on a regular basis. This procedure provides guidance in creating both types of funds and for obtaining replacement cash for petty cash funds when the money has been spent.
- Petty Cash / Change Fund Authorization
- Direct Pay Request (DPR)
- Petty Cash Receipt
Set Up a Petty Cash or Change Fund
Petty cash and change funds may be established by request of a department, with the approval of the applicable Dean, the area Vice President, and the Controller, once the need for the fund has been established. First, a Fund Custodian should be identified. This will be the individual designated by the department chairperson to have responsibility for properly managing the fund. (Personnel with cashiering duties should not be Petty Cash Fund Custodians.)
A Petty Cash / Change Fund Authorization form should be completed by the department, approved by the Dean and appropriate Vice President and forwarded to the Controller for final review and approval. Instructions for completing this form can be found in Section VI, STANDARD FORMS, of this manual. If the request is approved, the Controller's Office will add the accounting distribution to the form and forward it to the department. The department then takes the form to the Business Office for disbursement of the cash. When petty cash and change funds are created, they are charged to a General Current Fund (GCF) asset account.
Additional guidelines regarding petty cash funds include:
- Individual petty cash purchases are limited to no more than $50 each.
- Advances are not permitted from petty cash funds.
- Petty cash funds are not to be used for cashing personal checks, travel and business expenses (mileage, meals, lodging, etc.) or for entertainment.
- The individual receiving the reimbursement cannot be the individual approving the disbursement from the petty cash fund.
- Signature stamps cannot be used as the approval signature on petty cash transactions.
- Sales tax cannot be reimbursed.
- Original receipts are required for all reimbursements from the petty cash fund.
- Any shortages of petty cash or change funds must be replaced with departmental funds. Loss or theft of petty cash or change funds should be reported promptly to Public Safety and the Controller's Office.
- Petty cash and change funds should be kept in a locked cabinet or desk when not under the direct control of an authorized employee. Only the Fund Custodian and an alternate should have access to this storage area.
- All petty cash and change funds are subject to periodic review by Internal Audit.
- The Office of Associate V.P. for Finance is responsible for monitoring proper approvals and valid receipts, since petty cash funds are replenished by the Business Office, rather than the Controller's Office.
Replenishment of Petty Cash Funds
Since petty cash funds make disbursements, it will be necessary to periodically obtain additional cash in exchange for the receipts documenting previous amounts spent. Each time a disbursement is made from the petty cash fund, the Fund Custodian should have the recipient of the cash complete a Petty Cash receipt. Periodically, the Custodian should take the Petty Cash receipts to the University Business Office and exchange them for cash. The amount of cash needed to return the petty cash fund to its initial authorized balance should be exactly equal to the dollar amount of receipts presented to the Business Office.
Operation of Change Funds
Change funds are established solely for the purpose of providing departments that collect cash for goods and services a means of being able to make change available as necessary. Change funds are not to be used in place of petty cash funds for small dollar purchases within departments.
Change funds should not change and do not need replacement. On a routine basis, preferably daily, the funds in excess of the established change fund should be reconciled to the day's business and deposited with the Business Office. Any reconciliation differences should be resolved on a timely basis to avoid further difficulties.