|Policy Number: 9.19||Effective Date: 12/12/2012|
|Responsible Unit: FSO - Financial Management||Last Revised Date: 10/04/2017|
|Email: firstname.lastname@example.org||Phone: 520-621-3220|
Purpose and Summary
To inform University employees of the policies and procedures required to establish, reimburse and settle petty cash funds.
This policy applies to all University locations and units, including all University extensions, satellite locations, and off-site campus units, both domestic and international.
- Petty Cash: A cash advance used to provide operating funds to authorized individuals (usually a moderate amount) for incidental departmental expenses and reimbursement for small dollar expenditures where it is not practical to use the Disbursement Voucher (DV) process or a Purchasing Card (PCard).
- Custodian: A University employee designated by a dean or department head who is responsible for and will have primary control over the maintenance and distribution of the petty cash advance. The custodian is responsible for ensuring that the expenditures incurred or reimbursed from the advance are allowable in accordance with University policy.
- Petty Cash Custodial Agreement: The agreement signed by the custodian and dean or department head acknowledging business responsibility for the petty cash advance and indicating their intent to comply with policy.
- A petty cash advance is available only to an employee of the University.
- Petty cash funds may not be used to reimburse expenses for sponsored project grant or contract accounts. If the expense should be charged to a sponsored project account, process the reimbursement request via a DV.
- Petty cash funds must not be used for types of expenditures which are prohibited by University policy. See policy 9.10 Requisitions/Reimbursements for information on allowable and unallowable expenditures.
- The recipient who signed the Petty Cash Custodial Agreement will have fiduciary and professional responsibility for the proper expenditure and receipting of the funds and may be subject to sanctions for violation of University policy in regard to the funds, including legal collection of the debt. In the event of termination of employment, the University Payroll Department may exercise the right-of-offset, or the University may take other legal action, as appropriate.
- Records and receipts must be maintained to support all expenditures incurred or reimbursed from the petty cash advance. The bills or invoices submitted for reimbursement must show evidence of being paid. If a receipt was not issued or does not show evidence of being paid because payment was made by check, include the canceled check. The custodian should deny the request if the original receipts or attachments required by policy are unavailable, or if the request is not reimbursable under University policy. If a request to replenish the petty cash advance is refused due to lack of support or if the expenditure is disallowable per University policy, the custodian and the department associated with the funding account assumes responsibility for the use of the funds.
- The use of petty cash funds is subject to University audit, and therefore the custodian is responsible for the proper disbursement of the funds, receipting, and record keeping according to University requirements. In addition, the custodian is responsible for maintaining an activity ledger of all receipts and disbursements of petty cash.
Establishing a Petty Cash Advance
- The Business Office creates a Disbursement Voucher (DV) payable to the custodian, with the following information:
- The amount requested,
- The name of the custodian who will be responsible for the funds,
- Specific reasons for the request,
- The types and frequency of the anticipated expenditures,
- The account where the advance will be posted as a receivable on object code 8140 petty cash,
- The method of storing and safeguarding the petty cash funds, and
- A completed Petty Cash Custodial Agreement. The Custodial Agreement must be signed by the custodian responsible for the advance and by the dean, department head, or the fiscal officer responsible for the account on which the advance and expenses will be recorded.
- The custodian is responsible for completing the Cash Handling & Receiving training within UAccess Learning.
- The custodian responsible for the advance may not delegate their signature. However, the dean, department head, or fiscal officer’s signature may be delegated, as long as the designee is not also the custodian.
- Upon completion of the DV, the Business Office submits the request along with the signed Custodial Agreement to FSO-Accounts Payable for processing.
- Once processed, the custodian will be contacted by Accounts Payable. Advance checks must be picked up in person and cannot be sent to the department. At Accounts Payable, the custodian will be asked to sign the Custodial Agreement, if this has not already been done, and will receive:
- The advance check, and
- A copy of the signed Custodial Agreement.
Security of the Petty Cash Fund
- Petty cash funds should be physically separated from other types of advances in a secure locked drawer, a locked cash box, a safe accessible only to the custodian, or maintained in a separate checking account. Checking accounts must be in the name of the custodian, not the University of Arizona.
- A reconciliation of petty cash funds should be completed on a monthly basis.
- The department is responsible for performing monthly surprise audits of the fund. Evidence of the audit, including the supervisor's sign-off, should be maintained.
Replenishing Petty Cash for Allowable Expenditures
- The custodian prepares an expense summary, organizes and attaches all original itemized receipts substantiating the expenditures in chronological order by type of expenditure, and forwards to the appropriate dean or department head for approval.
- The department prepares a new DV for the actual expenses incurred, attaches the approved expense summary and original receipts, and then submits to Accounts Payable. The following information should be included on the DV:
- Payee: The custodian of the petty cash fund.
- Funding: Record a summary amount for each object code to which an expense is to be charged.
- Comment: Identify the petty cash being replenished by referencing the number of the ORIGINAL DV used to establish the petty cash.
- Documentation required for:
- Expenditures: Supported in detail by the record of petty cash expenditures (or equivalent expense summary form) and original itemized receipts.
- Payments to individuals: If the individual is paid in cash, he or she must sign to acknowledge receipt.
- Social security numbers and home addresses are not required for one-time payments of less than or equal to $50.
- Include the recipient’s name, legibly written or typed, and a description and supporting documentation for the payment.
- Once approved and processed by Accounts Payable, the custodian will receive a check to cash and replenish the petty cash fund.
Changing Petty Cash Custodians
- The new custodian must complete all of the steps above for establishing a petty cash advance. Once the process is complete, a check will be issued to the new custodian.
- The previous custodian must follow the process for closing the petty cash fund as detailed below.
Reducing the Petty Cash Fund
- When it has been determined that the petty cash fund must be reduced because the original amount is no longer necessary, a new Custodial Agreement must be filled out by the custodian with the new amount. Reference the number of the original DV used to establish the petty cash fund. Send the new Custodial Agreement to FSO-Operating Funds.
- Prepare a Cash Receipt in UAccess Financials to deposit the amount that is no longer necessary. Deposit the funds at the Bursar’s Office.
Increasing the Petty Cash Fund
- To increase the amount of an existing Petty Cash, a new Custodial Agreement must be filled out by the custodian. The Custodial Agreement will reflect the total of the original amount and the new increased amount. Add a note to the Custodial Agreement indicating “This replaces the original Custodial Agreement” and include the original DV document number for reference.
- Complete a DV in UAccess Financials for only the amount of the increase. In the Explanation section of the DV, indicate “This is an increase and replaces the original Petty Cash of ($XXX)” and include the original DV document number. Accounts Payable will issue a check for the amount of the increase only.
- The check can be brought to the Bursar’s Office to be exchanged for cash. Please call 621-1783 in advance so that the Bursar’s Office can prepare for the exchange. If departments need to cash a Petty Cash check for over $300, the department must contact the University Police Department (UAPD) to reserve an escort for the department representative from the Bursar's Office. At least 24 hour notice must be provided and the pickup must be scheduled to occur prior to 3:00PM.
Renewal of the Petty Cash Fund
- Custodial Agreements are updated in April of each year and must be renewed by the custodian of the fund if the activity is to continue. To ensure the updated Custodial Agreement will be approved, comply with Cash Handling & Receiving training requirements per policy 8.10 Cash Receiving as Custodial Agreements will not be renewed until the training has been completed.
Closing the Petty Cash Fund
- Complete a distribution of income and expense for any expenditure incurred and not replenished in the fund. In the comments section, state the closing of the fund and the original DV used to establish the fund (e.g. “CLOSING ORIGINAL DV 123456). The distribution of income and expense will be crediting the account where the advance is recorded (object code 8140) and debiting the appropriate account and object code to record the expense.
- Any cash remaining in the fund should be deposited through the Bursar's Office using a cash receipt. Be sure to deposit the funds to the account where the advance is recorded (object code 8140). Reference the cash receipt number on any distribution of income and expense that is submitted and reference the original DV number on the cash receipt
Frequently Asked Questions
- What are some examples of incidental expenses that petty cash may be used for?
- Postage and mailing
- Office supplies
- Business meeting expenses with proper documentation provided.
- What should petty cash not be used for?
- Purchases which are required to be reported in a specific manner such as, but not limited to:
- Travel expenses
- Subject payments
- Payroll advances
- Payments to individuals for services (refer to Policy 9.12 Independent Contractor Services)
- Personal expenses or any other expenses unallowable under University policy.
- Purchases which are required to be reported in a specific manner such as, but not limited to:
- What should departments do if they need a due date extension request for a temporary petty cash fund?
If the temporary petty cash fund needs to be used for a longer period of time than estimated on the original Custodial Agreement, the department must send an email to their Fund Accountant. The email must include the following information:
- Custodian name,
- Amount of the petty cash,
- Original DV number,
- Account number, and
- New due date.
- What if the department wants to change the account number that it used to establish the original petty cash fund to a new account number?
The department will need to complete a Distribution of Income and Expense (DI) document to move the petty cash funds from the current account to the new account. The department’s fund accountant will add a note to the original Custodial Agreement.
- What do I do in the event there is a theft of petty cash?
For a loss involving criminal activity, the department should file a police report with UAPD and notify Risk Management and their Fund Accountant.
Petty Cash Custodial Agreement
Policy 8.10 Cash Receiving
Policy 9.10 Requisitions/Reimbursements
Cash Handling & Receiving training within UAccess Learning
Disbursement Voucher Training
Misuse of University Assets
* Please note that sections titled Frequently Asked Questions and Related Information are provided solely for the convenience of users and are not part of the official University policy.