Financial Services Manual (FIN)

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Effective: 6/22/1984

Revised: 3/1/2008

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[ASU logo]

FIN 403: Petty Cash Funds

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Contents

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Purpose

Source

Background

Policy

Establishing a Petty Cash Fund
Purchasing Card

Procedures

Establishing a Petty Cash Fund
Security of the Petty Cash Fund
Disbursements
Reimbursements
Reimbursement Deficiencies
Reestablishment (Rollover) of the Petty Cash Fund
Increasing a Petty Cash Fund
Termination of Fund Custodian Responsibility
Petty Cash Fund Close-Out

Cross-References

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Purpose

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To provide university departments with the necessary guidelines to:

  1. establish departmental petty cash funds
  2. permit efficient use of these funds
  3. safeguard the funds and related documents

    and

  4. maintain satisfactory accounting controls

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Source

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University policy

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Background

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Departments sometimes need to purchase certain low-cost items without requisition documents. (Examples include needs that occur when the office is closed, when personal pickup is required, when delivery delays could cause hardship to the department or the university Purchasing Card cannot be used.) Departments can use petty cash funds to reimburse individuals for such purchases. Petty cash funds can be established for limited or extended periods, but should be established for occasional purchases only.

The petty cash system, the only permanent petty cash system authorized at the university, is operated as a loan system. Under this loan system, a fixed minimum sum is authorized for the petty cash fund and maintained by the fund custodian, the individual ASU employee responsible for the petty cash fund. An original receipt is required. Itemized receipts are preferred and may be required in certain circumstances before reimbursement is made or other evidence of expenditure replaces the cash paid out when payments are made from the fund. Additional cash advances cannot be reimbursements to the current cash fund. The total of cash available and accumulated original receipts (itemized when available) must always equal the original fund amount.

The fund custodian is responsible for prompt and regular clearing of advance amounts. Clearing any type of cash advance requires proper documentation and/or repayment of unused funds. The fund custodian is responsible for providing documentation of the expenditures made from petty cash funds.

Certain petty cash funds are established to provide change for university functions, such as ticket sales. Although these change funds do not relate to the purchasing functions, cash fund security and control procedures applicable to purchasing petty cash funds also apply to these change funds.

Student Business Services is responsible for conducting periodic cash count audits. Recommended changes are communicated to the custodian and implemented as necessary. These audits may occur unannounced at any time; therefore, the custodian should always have the required documentation in order and be ready to respond to audit requests. Cash count audits are also sometimes done by the Board of Regents’ auditors or university internal auditors. Petty cash custodians are encouraged to require auditors to present identification. Auditors must never confiscate funds. Any attempt to do so should be reported to the ASU Police Department (ASU PD) immediately.

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Policy

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Departments can use petty cash funds to reimburse individuals for purchases of low-cost items without requisitions.


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.

Expense advance funds for sponsored project agency/orgs are issued by Student Business Services with approval of the project accountant in Grant and Contract Accounting. For more information on sponsored project expense advances, see the Research and Sponsored Projects Policies and Procedures Manual—RSP 503–02, “Sponsored Project Cash Advances.”

Petty cash funds are subject to the following restrictions:

  1. The purchase cost of a particular item shall not exceed $100.
  2. The purchase cannot be for:
    1. compensation for services rendered
    2. business meals or food and related expenses being paid from state agency/orgs (for meals paid from local agency/orgs, see FIN 420–02, “Business Meals, Food, and Related Expenses”)
    3. capital equipment
    4. travel

      or

    5. prohibited transactions listed in FIN 401–03, “Prohibited Transactions.”

Interdepartmental purchases should be made on Interdepartment Purchase Order documents or the Purchasing Card and not from petty cash funds. A department, however, may purchase limited quantities of low-cost items with petty cash funds if this is administratively easier. A single petty cash fund may be used to reimburse expenditures from any agency/org under the jurisdiction of the custodian.

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 will be asked 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.


Purchasing Card

The Purchasing Card is the preferred method of making off-campus small-dollar purchases for those departments authorized to use it. Some on-campus service providers also accept the Purchasing Card. For more information on the Purchasing Card, see the Purchasing and Business Services Policies and Procedures Manual—PUR 304–04, “The Purchasing Card.”

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Procedures

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Establishing a Petty Cash Fund

All petty cash fund applications require the inclusion of a justification for establishing the petty cash fund and the approval of an agency/org signer. Cash fund applications of $500 or more also require approval of the chief business or financial personnel for the applicable college or vice presidential division. D


Responsibility
Action
Department
  1. Select a petty cash fund custodian. The custodian must be an ASU employee.
If the application is on a state/local agency/org:
Petty cash fund custodian
  1. Complete an Application for Petty Cash Fund—State & Local Area Orgs form. List the funding source agency/org and obtain the signature of the org manager or any authorized agency/org signer for that agency/org. If the fund custodian and authorized agency/org signer are the same individual, the application must be approved by
    1. the agency/org manager
    2. an individual in a higher-level position within the organizational chain

      or

    3. the business manager reporting to such position.
    Note: The latter two individuals do not need to be authorized signers on the designated agency/org account.

If the petty cash fund request is for $500 or more:

  1. Have the chief business or financial personnel for the college or vice presidential division sign the application.
If the application is on a sponsored project agency/org:
Petty cash fund custodian for Office for Research and Sponsored Projects Administration (ORSPA) agency/orgs
  1. See the Research and Sponsored Projects Policies and Procedures Manual—RSP 503–02, “Sponsored Project Cash Advances,” for specific instructions on establishing a sponsored project petty cash fund or expense advance.
  2. Forward the petty cash or sponsored advance application form, with all required signatures, to Student Business Services, Temporary SBS Building, mail code 0303.
    Note: Student Business Services will process applications for all campuses.
Student Business Services
  1. Review the application for completeness, appropriateness, and required signature approvals.
  2. Authorize the new petty cash fund.
  3. Complete a quick payment voucher (PVQ) in Advantage authorizing a check payable to the petty cash fund custodian.
  4. Print the PVQ, make a copy for the petty cash file, and forward the original to Accounts Payable with a copy of the petty cash application.
Cashiering Services
  1. Notify the petty cash fund custodian in five to seven days to pick up the check from Cashiering Services at the requested campus.
Petty cash fund custodian
  1. Pick up the check from Cashiering Services and present a current ASU faculty/staff identification card.
Cashiering Services
  1. Verify the custodian’s current ASU faculty/staff identification card, obtain the custodian’s signature, and disperse the check.
    Note: Cashiering Services will cash petty cash checks up to $500.

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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 never to be commingled 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.

A reconciliation of the petty cash fund should be done every time an expense reimbursement is made, or at least on a monthly basis. The amount of petty cash on hand plus the petty cash voucher amounts should equal the petty cash advance total. If a discrepancy is noted, the org manager or authorized signer of the account should be notified.

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 can be established after the Student Business Services director is satisfied that the fund custodian has implemented the necessary procedures to prevent further thefts. If the theft loss does not qualify for insurance recovery, the amount of the theft loss will be charged to the fund custodian directly, or to the employee’s departmental account, as decided on a case-by-case basis.


Disbursements

Petty cash funds must never be used for making personal loans or cashing checks. The custodian should disburse cash from the petty cash fund only when each of the following conditions is met.

  1. Evidence of expenditure is presented in the form of a paid invoice, original receipt (itemized when available), or cash register tape showing date, vendor, items purchased (including documentation on the public purpose served if not readily apparent due to the nature of the item), and amounts. The evidence of expenditure should be maintained in an orderly manner for future submission with the Quick PV document. An optional Expenditure Register (to organize receipts) is available on the Financial Services forms Web site; original receipts must be maintained even if the register is utilized. Cash register tapes should indicate the actual items purchased and should preferably not include a combination of university and personal purchases. If, however, cash register tapes include personal and university-related purchases, the university-related items are to be circled and personal items crossed out.
  2. The purchase results from a need for expediency or cost efficiency, and the acquisition cannot be done through regular Purchasing and Business Services procedures.

The custodian should deny the request if the original receipts (itemized when available) or attachments required by policy are unavailable, or if the request is not reimbursable under ASU policy. If a request to replenish the petty cash advance is refused due to lack of support or the expenditure is disallowable, the custodian will be held personally liable.


Reimbursements

Petty cash funds need to be reimbursed periodically. To receive reimbursement, use the following procedure: D


Responsibility
Action
Petty cash fund custodian
  1. Complete a quick payment voucher (PVQ) in Advantage for the total amount of reimbursement, using E2 for the check category and PETTYCASH for the vendor code.
  2. Supporting evidence of expenditure must be taped or stapled to an 8.5-by-11-inch paper and attached to the PVQ. Do not tape or staple one receipt on top of another or paperclip attachments. The department should keep copies of all receipts for future reference.
  3. Have the org manager or other authorized signer approve the PVQ online. The approver must be someone other than the fund custodian.
  4. Deliver a screen print of the approved PVQ along with the supporting documents for petty cash funds to Payables and Reimbursements.
Payables and Reimbursements
  1. Verify items for completeness and absence of obvious errors.
  2. Determine whether accountant approval is required.
If accountant approval is required:
  1. Send the PVQ screen print and supporting documents to the appropriate accountant for review and approval.
If accountant approval is not required:
  1. Review the supporting documents attached to the reimbursement request and process the required check request.
If no discrepancy exists:
  1. Go to step 12.
If a discrepancy exists:
  1. Contact fund custodian or department for resolution of discrepancy or, in some instances, forward the reimbursement request to the accountant for processing.
  2. Charge or credit any difference to the custodian’s petty cash advance.
  3. Mail petty cash reimbursement check to custodian.
    Note: Cashiering Services will cash reimbursement checks up to $500.

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Reimbursement Deficiencies

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

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

    or

  3. failure to complete documentation properly

may receive written notice of the deficiency. A copy of this memo will be (1) sent to the org manager, (2) attached to the petty cash note file, and (3) attached to the reimbursement request file. The petty cash fund is terminated by Student Business Services when a custodian has received three memos citing deficiencies during a fiscal year. To reestablish a petty cash fund, a new custodian must be appointed.

Student Business Services will not reimburse employees for items not purchased from the petty cash fund. Reimbursements of this nature can be processed by presenting a payment voucher (PV) to Payables and Reimbursements (see FIN 420–01, “Faculty and Staff Reimbursements”).


Reestablishment (Rollover) of the Petty Cash Fund

Each permanent petty cash fund must be reestablished (rolled over) at the end of every fiscal year.

A rollover application is sent to each permanent petty cash fund custodian several weeks before the end of the fiscal year. The application must be signed by the fund custodian, an agency/org signer/manager, and other required personnel as noted in the procedures for establishing a Petty Cash Fund. Return the rollover application to Student Business Services.


Increasing a Petty Cash Fund

If a petty cash fund needs to be increased, the authorized agency/org manager or signer must send a memo to Student Business Services, justifying the need for the increase. If the increase brings the total petty cash fund to $500 or more, then the memo must be approved by the chief business or financial personnel for the college or vice presidential division before sending the written justification to Student Business Services. If the increase is approved, Student Business Services will prepare the PVQ and submit it to Accounts Payable for processing. The fund custodian will be notified in five to seven business days to pick up the check at Cashiering Services on the requested campus. The fund custodian must pick up the check in person by showing his or her current ASU faculty/staff identification card.


Due Date Extension Request

If a temporary petty cash fund needs to be used by the custodian for a longer period of time than estimated on the original application, an authorized agency/org manager or signer must send a memo or e-mail message to Student Business Services. The message must include the name and ASU ID number of the custodian, the amount of the petty cash fund, a justification for the extension, and a new due date, not to exceed two months. Student Business Services will attach a copy of the memo or e-mail to the application and make note of the changed date on the application. Temporary petty cash funds can only be extended once.


Transfer of Petty Cash Fund Custody

Student Business Services will permit a custodian to relinquish (transfer) the responsibility of a petty cash fund to a new custodian upon reconciliation of that fund to the original advance amount. To process the transfer, the new custodian must submit a completed petty cash fund application to Student Business Services. Student Business Services will transfer responsibility for the existing petty cash fund to the new custodian without verifying that the fund is intact, i.e., cash on hand and paid out vouchers/receipts add up to the balance of the petty cash fund. The new custodian and his or her department accept responsibility for the fund and any discrepancies that might exist.

If the new custodian and department prefer, the current custodian can close out the existing petty cash fund, and the new custodian can apply to establish a new petty cash fund. See procedures below for termination of fund custodian responsibility.


Termination of Fund Custodian Responsibility

If a custodian terminates employment at the university, either the org manager or other authorized signer must notify Student Business Services immediately. All receipts and cash are to be returned to Student Business Services for closeout of the petty cash fund before preparation of the custodian’s terminating Personnel Action form (PAF) and before issuance of the custodian’s final paycheck. A new custodian can be appointed by the org manager by processing a new application.


Petty Cash Fund Close-Out

A petty cash fund may be terminated by processing the final reimbursement request through Student Business Services. Remaining money in the fund is deposited with Cashiering Services. The procedures for the close-out of the fund are as follows. D


Responsibility
Action
Petty cash fund custodian
  1. Complete a quick payment voucher (PVQ) in Advantage for the total amount of unreimbursed receipts, using PETTYCASH for the Vendor code and 70 for the check category.
  2. Supporting evidence of expenditure must be taped or stapled to an 8.5-by-11-inch paper and attached to the PVQ. Do not tape or staple one receipt on top of another or paperclip attachments. The department should keep copies of all receipts for future reference.
  3. Have the org manager or other authorized signer approve the PVQ online. The approver must be someone other than the fund custodian.
  4. Calculate the unspent amount of the petty cash fund to be returned by subtracting the PVQ total from the total petty cash fund balance, prepare a Petty Cash Close-Out receipt for the unspent portion of the petty cash fund, take the cash and receipt to the cashiering office on any campus to deposit the unspent funds, and attach a copy of the receipt to the approved PVQ.
  5. Forward the screen print of the approved PVQ along with the supporting documents for petty cash funds to Student Business Services, Temporary SBS Building, mail code 0303.
    Note: Student Business Services will process applications for all campuses.
Student Business Services
  1. Confirm that check category 70 has been entered on the PVQ, and forward the PVQ screen print and supporting documents to Payables and Reimbursements
Payables and Reimbursements
  1. Verify the contents of the reimbursement, resolve any differences with the custodian, obtain accountant approval if required, and then process the required check request.

endtable3

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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 sponsored expense advances, see RSP 503–02, “Sponsored Project Cash Advances.”

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