Southwestern

Engaging Minds, Transforming Lives

Business Office

Petty Cash Funds

In order to decrease administrative overhead and to expedite the process of handling minor purchases, a department may be authorized to operate a Petty Cash Fund.

Use of Petty Cash Funds

Authorized Usage — These funds should be used for non-capital expenditures where it is expedient and efficient to pay cash and where the cost is less than $100.00.

  • Alcoholic Beverages — Purchases of alcoholic beverages may not be reimbursed by the federal government, either directly on a contract or grant account, or indirectly through the indirect cost rate calculation.
  • Due care should be exercised by user departments to avoid frequent small purchases through the use of petty cash, where the utilization of a purchase order to the Purchasing department will result in more effective purchasing (see Purchasing Policy here).

Prohibited Usage – The following types of transactions are not allowed reimbursement through a departmental petty cash account.

  • Payment for services rendered by employees or non-employees (see Contract of Services here).
  • The cashing of personal checks or the making of loans or advances.
  • Meals, entertainment and expenses (other than local mileage/parking costs) associated with business travel. A Travel Reimbursement Form needs to be completed for such travel expenses.
  • Personal expenses
  • Any other expenses that would not normally be allowed reimbursement by regular Accounts Payable procedures.

Establishment of Petty Cash Fund

Required Documentation – Department heads may request a petty cash fund by sending a memorandum to the Associate Vice President for Finance. The memorandum should include the reason for the request, the amount requested, the name of the petty cash custodian (including their signature), and physical location of fund.

Size of Petty Cash Fund – The established amount of a petty cash fund will be dependent upon the volume of transactions handled by the department, the fund will be in a fixed amount sufficient to cover these transactions up to a maximum of $500.00.

Responsibility for Funds – Each petty cash fund is the responsibility of the head of the department or activity receiving the fund. The department head should designate one individual as the custodian of the petty cash fund to be accountable for the custody of the funds including proper safekeeping of the fund and adherence to all applicable policies and procedures.

Audit of Funds – Petty cash funds are subject to periodic surprise audits by Southwestern University external auditors and by the Business Office. Cash funds that are not used in compliance with this policy or which have significant discrepancies may be revoked at any time.

Custodian Responsibility

Protection of Petty Cash – Petty cash should be kept in a secured area at all times. Only the custodian should have access to this area

Thefts of petty cash funds are to be reported to Campus Police and the Associate Vice President for Finance immediately.

Petty cash funds should be reconciled by the custodian on a monthly basis to ensure that cash on hand plus receipts equal the total amount of the fund (see reconciliation form here). An independent reconciliation should be performed by the custodian’s supervisor at the end of each fiscal year.

Maintenance of Petty Cash Fund

Petty Cash Vouchers

  • A petty cash voucher (see petty cash voucher here) must be used to authorize the release of funds and to document the nature of the expenditure and must be accompanied by a sales receipt or invoice.
  • The petty cash voucher must be signed by the person being reimbursed and approved by someone who has signature authority for the account charged.
  • The custodian may not approve his or her own expenses and may not approve expenses for an individual to whom he or she reports either directly or indirectly.
  • At all times the petty cash fund must be accounted for by vouchers for advanced funds, receipts, and cash-on-hand. The total of these three must equal the petty cash fund total.
  • Receipts for advanced funds vouchers must be returned to the custodian within five business days of advance.

Replenishment of Petty Cash Fund

  • List disbursement receipts in Section A on the petty cash replenishment form (see replenishment form here), with appropriate account number information for each petty cash voucher.
  • All vouchers must have proper supporting documentation prior to replenishment requests.
  • Enter the total amount of the petty cash vouchers in Section B-Line (A) on the petty cash replenishment form.
  • Count the remaining cash on hand and enter the amount in Section B-Line (B). The total of Section B-Line (A) and Line (B) must always match the total amount of the petty cash fund, Section B-Line (C).
  • Prepare a check request form, payable to the fund custodian, which summarizes the charges to each account code recorded on the petty cash replenishment form. The amount requested must fully replenish the petty cash fund.
  • The fund custodian must sign both the check request and the petty cash replenishment form.
  • The fund custodian’s supervisor must review supporting documentation and approve the check request form.
  • The check request and the petty cash replenishment form with all supporting documentation are then forwarded to the Accounts Payable Department for payment processing.

Change in Custodian of Petty Cash Fund

  • Prior to change in custodian, the petty cash fund should be reconciled (see reconciliation form here) and replenished.
  • The department head may transfer the petty cash fund to a new custodian by sending a memorandum to the Associate Vice President for Finance.
  • This memorandum should include:
    • Current custodian name and signature
    • New custodian name and signature
    • Reason for transfer of petty cash custodianship
    • Approval of department head

Return of Petty Cash Fund

  • When the current petty cash custodian leaves the University, the petty cash fund must be closed or custodianship must be transferred before the current fund custodian leaves the position
  • Custodianship remains with an individual until one of these two procedures is completed. This responsibility lies with both the petty cash fund custodian and department head.
  • Submit a memorandum to the Associate Vice President for Finance requesting that the fund be closed including final petty cash reconciliation and any remaining cash balance.
  • The Associate Vice President for Finance may also close petty cash funds at his discretion to maintain sound fiscal policies and practices.