Administrative Practice Letter I-E

Subject: Petty Cash

Issue 6

Effective 7/10/07

General

Each petty cash fund is in the sole custody of a business manager who is responsible to the Treasurer of the University for its safekeeping. Therefore, creation of all petty cash funds must go through the appropriate campus financial office. It is never permissible for a department to create a petty cash fund by withholding funds from a deposit.

Upon receipt of petty cash funds, the responsible person acknowledges receipt of the funds and assumes full responsibility for the funds by signing an Imprest Fund Receipt and Agreement form (Attachment I (PDF)). The proper manner of maintaining such a fund is on the imprest basis, which means that the amount of the fund will remain constant and that the custodian will be reimbursed for amounts paid out of the fund upon presentation and surrender of satisfactory evidence of such disbursements to the SWS Accounting Department. The Imprest Fund Distribution form (Attachment II (PFD)) is updated on a monthly basis by campus management to monitor and report changes in petty cash fund levels.

Reimbursement need be made only as frequently as a fund requires replenishing, except that it should be replenished at least monthly and at the close of each fiscal year, in order to record disbursements in the proper year. All receipts must be deposited immediately. Each fund should be balanced at least as often as it is reimbursed.

Petty cash funds may consist of either cash or a checking account. A general ledger account is created for cash and for each checking account. Cash and checking account balances must be kept separate.

When petty cash funds have been established within checking accounts, they should be reconciled monthly to their appropriate general ledger accounts. A copy of this reconciliation should be sent to the SWS Accounting Department.

Audit Requirements

Each campus petty cash fund custodian (or designee) must make, at a minimum, an annual count of all petty cash funds acknowledged on the signed Imprest Fund Receipt and Agreement form and determine whether the petty cash accounts are operating in accordance with this practice letter. More frequent counts and audits are encouraged to assure that the funds are intact. These audits should be accomplished using the Petty Cash Audit Program (Attachment III (PDF)). A Cash Count Sheet (Attachment IV (PDF)) is provided to assist with this process.

When performing cash counts, the auditor should consider whether the petty cash fund is necessary and if the amount is appropriate, ensuring that funds are adequate but no larger than required for efficient operation. They should discuss their observations with the campus Business Manager or other appropriate financial officer.

Annually, the campus Chief Financial Officer should send to the Internal Audit Department:

A summary of the areas audited (e.g., location, responsible person, authorized petty cash amount, auditor).
A note that there were either no concerns or a description of the issues found (e.g., shortages, segregation of duties issues, supporting documentation issues, reconciliation issues). In addition management should comment on any changes made to address these concerns or a conclusion that no change would be made and why.

If the audits reveal areas of high risk or concern, the campus should immediately contact the Internal Audit Department.

Need for Petty Cash

The Treasurer, or designee, establishes petty cash funds where there is a frequent need for payments of relatively small amounts (not to exceed $125 in cash), or to provide for emergency situations such as travel (not to exceed $300 in cash), where use of a credit card or University purchasing card is not possible and payments through normal accounting channels would result in delay, annoyance or excessive expense of maintaining records. Petty cash funds (cash or check) are not to be used for any expenses that require IRS reporting.

Imprest funds can also consist of change funds where there is a regular need to make change. These funds are not to be used for any purpose other than to make change.

Disbursements

Requests for disbursements out of petty cash are made by completing either a Petty Cash Request form (Attachment V (PDF) & Accessible Text-Only Version of Attachment V) or a Travel Request/Cash Advance form in APL IV-B. Explanations on how to complete these forms can be found at Attachment VI and Attachment VII respectively. Requests for petty cash reimbursement must include original receipts and be submitted in a timely fashion, not to exceed 90 days from the receipt date. Employees should strive to make requests within the same fiscal year as the expense. Exceptions to the policy must be approved by the applicable Chief Financial Officer or Treasurer. Those receiving a travel advance must comply with the requirements of APL IV-B Travel and Expense Reporting Policy.

Reimbursement

Each petty cash fund is replenished by submission of a Check Request (Attachment VIII (PDF)) and a supporting Petty Cash Summary (Attachment IX (PDF)) through Accounts Payable. The check will be received at the campus in accordance with the Accounts Payable Schedule of Check Runs. If time does not permit submission of a check request through Accounts Payable, the check request indicating an ACH transfer may be sent to Funds Management at the System Office. An ACH transfer will be done the day following receipt of the request. A copy of the Petty Cash Summary and all related petty cash forms, requests, and receipts are retained at the appropriate campus financial office for reference, review and audit.

If an imprest checking account is being replenished, the check request should indicate that the replenishment check be made payable to the University checking account number, c/o an individual so authorized under the requirements of APL IV-C Signature Authority. If cash is being replenished, the check request should indicate that the replenishment check be made payable to an individual authorized under APL IV-C.