Financial Services Manual (FIN)

Interim Posting

Note: At the request of the provost, a vice provost, or a vice president, this policy has been posted in the interim between scheduled posting dates by University Policy Manuals Group because it has significant and urgent importance for the university community. This policy will be included in the publication process by the next feasible posting for online policies and procedures.


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Effective: 6/22/1984

Revised: 6/18/2014

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FIN 403: Petty Cash Funds for State and Local Accounts

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Purpose

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To provide university departments with the policy guidelines to:

  1. establish state or local departmental petty cash funds
  2. use petty cash funds appropriately
  3. secure petty cash funds

    and

  4. account and control petty cash funds

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Source

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University policy

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Policy

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Petty cash or change funds are small amounts of cash held by a department to pay for low dollar, incidental expenses when another form of payment (procurement card, purchase order, check) is not appropriate or expedient, or to give change to customers when they are paying for goods or services.


Establishing a Petty Cash Fund

The amount of a petty cash fund should be limited to the smallest possible amount necessary that permits efficient use of the cash fund, normally $50 to $100. The petty cash fund should be kept to a minimum, as excessive balances lead to unnecessary risks of loss. Each petty cash fund is kept by a fund custodian who has sole responsibility for the security of the cash and related documents. Petty cash funds are established by submitting the Application for Petty Cash Fund—State & Local Area Orgs to Student Business Services


Use of a Petty Cash Fund

Petty cash funds are not to be established to bypass the university’s accounts payable and purchasing policies and procedures. All university policies apply to petty cash funds, including documentation requirements and restrictions on use by fund group (e.g., state petty cash funds cannot be used for business meal expenses). In addition, petty cash funds should not be used to:

  1. purchase items with a cost greater than $100
  2. make payments for services that would be considered either wages or independent contractor payments
  3. pay for gifts, awards, prizes or scholarships
  4. issue personal loans or cash personal checks

    and

  5. pay travel reimbursements.

Temporary petty cash accounts are established for a specific use and should end within one calendar year.

Permanent petty cash funds are continuing and custodians are required to complete rollover forms at fiscal year-end to verify that the funds are still in use and need to be rolled over to the next fiscal year


Security of the Petty Cash Fund

The fund custodian must secure all petty cash in a secure lockable cash box placed in a locking desk or cabinet. If a safe is available, the cash box should be placed in the safe at closing time. Petty cash funds are not to be comingled with any other university or personal funds, e.g., an employee checking account. Keys and lock combinations should be restricted to the fund custodian. Related documents and original receipts (itemized when available) should be stored in a secure place separate from the petty cash.

Financial Services provides Online Petty Cash Training, consisting of a tutorial and quiz, for departments that utilize petty cash funds. Academic and administrative areas are encouraged to incorporate this tutorial and quiz into their internal requirements for petty cash custodians.

If the petty cash fund is lost or stolen, the fund custodian is responsible for filing a report with ASU Police Department (ASU PD). Insurance Services reviews all reports of lost or stolen cash to determine whether an insurance claim can be filed. Although copies of all cash loss reports are sent to Insurance Services from ASU PD, the fund custodian must also contact Insurance Services to determine the status of the theft claim or loss.

A new petty cash fund will not be issued until the fund custodian has completed the Online Petty Cash Training, and Student Business Services agrees that all necessary procedures have been implemented to prevent further thefts.


Accounting for, and Control of, Petty Cash Funds

Petty cash funds are subject to periodic audits. The custodian is responsible for ensuring the cash on hand and receipts equal the authorized amount of the funds at all times. Petty cash funds must not be commingled with personal funds, cash drawers, or any other collected revenues.

Petty cash funds are to be reconciled each time there is a disbursement or monthly if no disbursement has occurred in the last 30 days. Overages, small shortages, or theft are handled on an individual basis. Contact Student Business Services for instructions regarding overages and small shortages. Contact Student Business Services, after contacting ASU PD, regarding theft.

Fund custodians who submit reimbursement requests that contain deficiencies such as:

  1. evidence of unauthorized use of petty cash funds
  2. inappropriate use of funds
  3. insufficient or incomplete documentation

    or

  4. evidence of an extended period between petty cash fund reconciliations

may receive written notice of the deficiency. The petty cash fund is terminated by Student Business Services when a custodian has received three memos citing deficiencies during a twelve month period, or if there is a major deficiency warranting the immediate termination of the fund. To reestablish a petty cash fund, a new custodian must be appointed. The new custodian must complete the Online Petty Cash Training.

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Cross-References

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For a list of prohibited petty cash transactions, see FIN 401–03, “Prohibited Transactions.”

For information regarding subject pay, see FIN 421-05, “Human Subject Payments.”

For information regarding sponsored expense advances, see the Research and Sponsored Projects Policies and Procedures Manual—RSP 503–02, “Sponsored Project Expense Advances.”

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Additional Information

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For more information on the procedures for establishing, reimbursing, increasing, extending, transferring, or terminating a petty cash fund, please refer to Petty Cash Procedures Guide on the Financial Services Web site.

Access the Online Petty Cash Training on the Financial Services Web site.

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