|CMP 403-01: Petty Cash Funds|
To: Petty cash fund managers
From: Bob Norton
Subject: Recall/Elimination of Petty Cash.
As a result of the availability of the Purchasing Card and the audit issues associated with petty cash funds, it is being requested that all petty cash funds be eliminated. This action has been prompted by recent internal audits and was recommended by the Vice President for Administration.
Thank you for your cooperation in these matters.
To provide university departments with the necessary guidelines to:
Certain low-cost purchases must sometimes occur outside of the normal Purchasing function. Example situations include needs which occur outside of regular office hours, when personal pickup is required or when delivery delays could cause hardship to the department. Petty cash funds can be used by University departments to reimburse individuals for monies spent on these purchases. Petty cash funds can be established for limited or extended periods, but should not be established for only occasional purchases
The petty cash system is operated on an imprest basis and is the only permanent petty cash system authorized at the University. Under this imprest system, a fixed sum is authorized for the petty cash fund and maintained by the fund custodian, the individual responsible for the petty cash fund. A voucher or receipt replaces the cash paid out when payments are made from the fund. The total of cash available and accumulated vouchers must equal the original fund amount.
Petty cash funds are subject to the following restrictions:
1. The purchase cost of a particular item must not exceed $25.00.
2. The purchase cannot be for any of the following purchases:
A) Compensation to individuals for services.
B) Capital items.
C) Food or entertainment.
E) Inter-departmental purchases, such as NAU Bookstore, since inter-departmental requisitions are used to pay for goods or services from a campus service department.
Petty cash funds are established on a fiscal year basis (July 1st to June 30th). June 30th of each fiscal year has been established as the year end due date for all outstanding petty cash custodian reimbursements. Each petty cash fund must be fully reimbursed prior to the beginning of each fiscal year.
Establishing a Petty Cash Fund
The amount of a petty cash fund should be limited to a level that permits efficient use of the cash fund, normally $25 to $100. Excessive petty cash fund balances lead to unnecessary risks of loss. Each request to establish a petty cash fund requires the submission of:
An "NAU Request To Establish A Petty Cash Fund" form.
All petty cash fund applications require the approval of the Comptroller.
After the Comptroller's Office has reviewed the application for completeness/appropriateness and has authorized the new petty cash fund, a payment voucher will be processed by the Comptroller's Office authorizing a check to be made payable to the fund custodian, who has sole responsibility for the security of the petty cash fund and related documents.
The fund custodian shall sign for the check and this signature shall remain on file in the Comptroller's Office - Internal Control.
The fund custodian will be notified in 7 to 10 working days when the petty cash check is ready for pick-up from the Comptroller's Office.
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 Card Web Page.
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. Keys and lock combinations should be restricted to the fund custodian. Related documents and receipts should be stored in a secure place separate from the petty cash.
If the petty cash fund is lost or stolen, the fund custodian is responsible for filing a report with NAU Police.
Property and Liability Insurance Services reviews all reports of lost or stolen cash to determine whether an insurance claim can be filed. 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 employee's departmental account as decided on a case by case basis.
In the case of a theft or loss, a new petty cash fund may be established after the following conditions are met-
1) The Comptroller is satisfied that the fund custodian has implemented the necessary procedures to prevent further thefts.
2) A memo is sent to the Comptroller's Office, requesting reissue, and signed by the appropriate Associate/Assistant Vice President for the department. The memo should signify that the Associate/Assistant Vice President is aware of the loss and provide instructions on which departmental Dept/Unit and Obj/Sobj to charge for the reissue.
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) Expenditure must be an original invoice showing paid. Invoice must show date, vendor name, items purchased and cost of goods. Each invoice must be securely attached to a completed "Petty Cash Voucher" form (see Exhibit B). Number each form beginning with "one".
2) The purchase results from an expediency requirement or cost efficiency where acquisition can not be done through the Purchasing process.
Note: Cash register receipts must indicate the actual items purchased and must not include a combination of University and personal purchases.
When a petty cash is necessary for replenishment, the Fund Custodian must follow these steps:
1) Complete a Petty Cash Expenditure Summary (see Exhibit C) with original supporting documentation.
2) Obtain signature of authorized Department Head.
3) Forward original documentation to Accounts Payable, Box 4104.
Note: Accounts Payable will review documentation for all properly approved Petty Cash expenditures. If expenditures and documentation are correct reimbursement should take approximately 5 to 7 working days.
Checks to replenish the petty cash fund are generated payable to the Fund Custodian. It is the responsibility of the Fund Custodian to cash the check. This may be done at the Fund Custodian’s personal bank or at Student and Departmental Account Services.
The documentation of the Petty Cash Expenditure Summary will be verified by the Accounts Payable representative and approved by the Accounts Payable manager. If any discrepancy is found, a Petty Cash Deficiency notice will be attached to the Expenditure Summary along with the supporting Documentation showing reason for return. (See Exhibit E).
Certain cash funds are established to provide change for University functions, such as ticket sales. These change funds do not relate to the purchasing function. See NAU Comptroller's Procedures for Change Funds.
If a custodian manages more than one petty cash fund, transactions relating to each fund must be kept separate. The necessity of a petty cash fund, size and uses are reviewed by the Comptroller's Office and Internal Audit. Recommended changes are communicated to the Department Head and Fund Custodian.
Additional cash advances cannot be issued to the custodian in lieu of processing requests for reimbursements to the current cash fund. Cash count audits may occur at any time and on an unannounced basis.
Termination of Fund Responsibility
If a custodian terminates employment at the University, the account representative must notify the Comptroller's Office and the Board of Regent's Auditors immediately. All receipts and cash are to be returned to the mail clerk for close out of the petty cash fund prior to preparation of the custodian's terminating payroll action request and before issuance of the custodian's final pay check. A new custodian can be appointed by the Department Head through processing of a new application.
Termination or Reduction of Petty Cash Fund - Exhibit E
When a department decides to terminate or reduce their Change Fund, the cash must be deposited back into the Comptroller’s cash account. Please contact the Comptroller’s Office for the proper accounting. The department completes a Deposit Transmittal Form in duplicate, submitting the original to Student and Departmental Account Services with the appropriate amount of cash and forwards the duplicate to the Comptroller's Office.
Change Funds CMP 403-01.
For a list of prohibited petty cash transactions, see CMP 401 03, Prohibited Transactions.
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