Accounting Services

Petty Cash Funds

General

Under certain circumstances, a petty cash fund may be authorized as a means of making limited recurring or small emergency purchases for the University. Due to the decentralized control and handling of purchases and cash, certain procedures and safeguards are essential and are outlined here.

Policies

  1. A fund may be used for small repetitive or emergency purchases under $20 as required by a department and approved by the appropriate authority.
  2. The Controller will receive and review requests for establishment of funds.
  3. The size of the fund should be the minimum practical to meet department needs.
  4. Small repeat purchases from petty cash should not be used to avoid purchasing procedures where volume and bidding might secure lower prices.
  5. A fund will be established only as outlined in these procedures. A fund will not be used for payroll or purchase from other University departments, to cash checks, make change, make cash advances (IOUs), etc. A fund that is unused or improperly used may be withdrawn.

Procedures

To Establish a Petty Cash Fund

Complete the Request to Establish a Petty Cash Fund and submit the form to the Controller. The Cashier's Office will provide the money upon approval. The designated petty cash fund custodian will be required to sign for the money and assume responsibility for its safeguarding and proper utilization.

Managing a Petty Cash Fund

Responsibility for the management and operation of a petty cash fund, in accordance with these procedures, is delegated by the Controller to the designated and approved custodian.

To change the primary or alternate custodian on a petty cash fund, complete the Request to Cthange Petty Cash Fund Custodian form. The fund status is verified by both the outgoing and incoming custodians, who must sign the form. Submit the form to the Controller for approval.

When an increase in the amount of a petty cash fund is needed, complete the Request to Increase a Petty Cash Fund and submit the form to the Controller.

Purchases with Petty Cash Funds

Approval for Purchases from Petty Cash

Before making a purchase, approval must be obtained from the fund custodian. Prior approval is necessary to insure that:

  1. The proposed purchase can properly be made from petty cash;
  2. The department authorized the purchase and will reimburse the purchaser;
  3. The purchaser understands the procedures for purchase, requirements for receipt, and procedures for reimbursement.

Making a Purchase

Upon approval by the custodian for the specific purchase and the amount to be spent, the individual will:

  1. Make the authorized purchase;
  2. Pay for the purchase with their own funds;
  3. Obtain a receipt or itemized ticket signed and marked "Paid" by the vendor.

Reimbursement for a Purchase

After making an authorized purchase as outlined above, the individual purchaser is reimbursed from the petty cash fund. The fund custodian will:

  1. Verify the purchase was pre-approved and the goods/items were purchased as evidenced by a receipt or itemized sales ticket marked "Paid" by the vendor;
  2. Reimburse the purchaser from the petty cash fund;
  3. In the event a receipt was not obtained, the custodian will document that the purchase was made using the Payment from Petty Cash Fund form. The form should include the date of the purchase, amount of the purchase, a description of the purchase, the name of the purchaser and the signatures of the custodian and purchaser.

Cash Advance Prior to Purchase

It is intended that the purchaser pay the vendor and secure reimbursement from the fund upon presentation of a receipt. However, under unusual circumstances and when deemed necessary by the custodian, a cash advance may be made prior to the purchase under the following conditions:

  1. The advance may be given only for the specific purchase approved and may not be outstanding for more than two working days.
  2. The custodian will document an advance was given using the Payment from Petty Cash Fund form, noting the date of the advance, amount of the advance, description of what will be purchased, and the name of the individual receiving the advance. The form should be signed by both the custodian and the individual receiving the advance.
  3. The signed form is to be placed with the petty cash funds.
  4. Upon completion of the purchase, the form is marked "Cancelled" and either the purchaser or the petty cash fund is reimbursed for any difference between the amount of the advance and the actual cost of the purchase.

Replenishing a Petty Cash Fund

When cash on hand in the fund reaches a level where replenishment is needed, the custodian will reconcile the petty cash fund and request replenishment as follows:

  1. Count the cash and verify the total cash plus the total purchase receipts equals the authorized fund amount.
  2. Sort or organize receipts according to the FOAP to be charged.
  3. Complete the Petty Cash Reconciliation Statement & Disbursement Report. Document any fund shortage on this form, including an appropriate explanation for any shortage.
  4. If there is an overage, document it on the Reconciliation Report and deposit the monies with the Cashier's Office.
  5. Prepare a Check/EFT Request Form for the amount due the fund. Indicate on the form the distribution of charges by FOAP.
  6. Attach the Reconciliation report and supporting receipts to the Check/EFT Request and submit to Accounts Payable for processing.
  7. The custodian should retain a copy of all documentation.

Safeguarding a Petty Cash Fund

All cash receipts and other applicable documents of the fund should be secured and safeguarded in a metal locking box and placed in a locked desk, locked cabinet, or locked safe.

Audit of Petty Cash Funds

The University's Internal Auditor will periodically (announced or unannounced) make an audit of petty cash funds. The State Auditor, or designee, may also perform audits of selected funds. The custodian and the custodian's immediate supervisor are to insure that the fund is balanced and available for audit at all times.