Editor's
notes:
POLICY TITLE:
DATE OF ISSUANCE: This policy was approved by the President's Council on March 23, 1999.
ACCOUNTABLE DEPARTMENT/UNIT: Accounting Services. Specific questions about policy content should be directed to Financial Services at x8-5158.
RELATED DOCUMENT: Purchasing Policy for the Tartan Trust Program
FORMS: Accounting forms, including Petty Cash Reimbursement form
ABSTRACT:
Carnegie Mellon University
Policy Statement
Departments are responsible for adequate security and control of their petty cash funds. The fund should be secured at all times in a locked place. Because no insurance is available to cover losses from the fund, theft and any other losses of petty cash are the responsibility of the department/college.
Purpose and Use
Petty cash can be used to reimburse individuals for non-travel, out-of-pocket expenditures (including those less than $20, which are currently handled through Cash Operations in the HUB). Petty cash can sometimes be used in place of the university purchasing process where appropriate, for example, as reimbursement for small, incidental department expenses when it is infeasible or impractical to use normal purchasing means. Petty cash should be used in this manner only when absolutely necessary. A petty cash fund can also be used as a "change fund" in the department for handling ticket sales, etc., where expenses are not incurred.
Prohibitions
Petty cash should not be used for the following:
- Travel expense reimbursements. Continue to use the travel expense report.
- Travel advances. All travel activities need to be reported through the travel reimbursement process.
- Payment for items that are to be purchased through the purchasing system according to the university purchasing policy.
- Payments to vendors for invoices submitted directly to the department where a mini-order or purchase order was issued. Continue to send these invoices to Accounts Payable for processing and payment.
- Payments to independent contractors, consultants, awards, etc., to non-university employees. These should be processed through the Special Services payment process.
- Payments to employees for services, awards, bonuses, etc. These should be processed through the Special Services/Payroll process.
- Payments of a taxable or non-taxable benefit to an individual. These should be processed through the appropriate Benefit or Accounting process.
- Payments to university service centers (e.g., Bookstore, etc.). Use the proper requisition form.
- Personal borrowing (IOUs).
Initiating a Petty Cash Fund
A staff or faculty member, in coordination with the business manager of that unit, should send a memo or e-mail to the petty cash coordinator, Accounting Services. The memo must detail the purpose and use of the fund, identify the custodian and their supervisor, and request an amount for which the fund will be established. The dollar limit for each use of the fund is set at the department's discretion. As a general rule, the total fund balance is likewise set at the discretion of the department, usually somewhere between $25-$300, though individual circumstances may dictate a need for a higher limit. In all cases, Accounting Services will review each request for appropriateness based on documentation provided at the time of the request.
Petty Cash Custodian
Appointment
The petty cash fund should be secured at all times. The department is responsible to appoint a custodian, who is a member of the faculty or staff, to monitor its use and replenishment. Appointment and approval should be made by the department's business manager or higher; a custodian cannot appoint or approve himself/herself. In addition, there should be limited access to the fund.
Accounting Services must be notified if there is a change in the petty cash custodian. In order to ensure accountability to the new custodian, Accounting Services will audit and document the fund at the time of the change.
Responsibilities
It will be the responsibility of the custodian to ensure that this fund is used to cover only those expense reimbursements for which it is not possible, or is infeasible, to use normal purchasing methods such as the Tartan Trust Card or purchase order. In addition, the custodian will ensure that fund use is consistent with the manner described in the documentation that initially established the fund. The petty cash custodian is also responsible to enforce university policy regarding sales tax, which is not reimbursable.
The custodian is responsible to perform a full reconciliation of the fund at least quarterly, which he/she will provide to Accounting Services. The custodian also handles fund replenishment (see the section on Reimbursement Process).
The custodian is responsible for reporting all instances of loss of funds, including filing a report with Campus Police, as soon as the loss is discovered.
Documentation
Properly document each transaction in the following manner:
- Submit a detailed journal of all transactions, identifying all pertinent information (who, purpose, transaction detail and date of expense). Identify each cost and the center/account to be charged.
- Tape original receipts onto an 8-1/2x11 sheet, referencing each receipt's corresponding transaction on the detailed journal.
- Submit a summary page that shows only the total amount charged to each center/account code. This data will be the basis for entry of transaction detail in the university accounting system.
It is important to remember that it will be the custodian's responsibility to determine whether an expenditure is allowable as a direct research cost (where applicable) or indirect cost (based on purpose, receipts, general research restrictions) and to use the proper account codes for unallowable costs as appropriate.
Reimbursement Process
When the fund is reduced to a balance that can support approximately 5-7 business days of activity, the custodian should perform a reconciliation and send it, along with a request to replenish the fund, to the petty cash coordinator in Accounting Services. Before being submitted, this reimbursement request must be approved by the immediate supervisor of the fund custodian. Accounting Services will audit the request to ensure that proper documentation (as described in the Documentation section, above) has been provided.
Once the audit is completed and the reimbursement request approved, a check
will be prepared for fund replenishment. The check is made payable to the
custodian and, with campus ID, a Carnegie Mellon-issued check can be cashed at
the 5th and
Changing the Fund Amount
Should a situation arise where it is determined that the size of the petty cash fund should be increased or decreased, a memo should be forwarded to the petty cash coordinator, Accounting Services, requesting this change. This should be done prior to requesting a replenishment of funds, at which time the arithmetic on the form will reflect the change. An increase to a petty cash fund is subject to the approval of Accounting Services, as well as the department business manager, similar to when the fund is initially established.
Closing a Petty Cash Account
The petty cash fund should be closed with Accounting Services when the purpose for which the fund was established has been completed, as determined by either the department business manager or the petty cash custodian. In addition, Accounting Services reserves the right to conduct periodic usage reviews and, based on the results, can request closure or reduction of the fund. When closing the fund, the custodian should deposit all remaining funds at the HUB, completing a Financial Services receipt form, and being sure to credit the petty cash account (currently 1-00000-1110). Along with the final reconciliation of expenses, this will relieve the balance in the petty cash fund as established for this use. The final reconciliation of funds and expenses must be provided to the petty cash coordinator in Accounting Services, including the yellow copy of the Financial Services receipt form containing the HUB date stamp.
Audit
Each reimbursement request will be subject to audit by Accounting Services. In addition, the Internal Audit department will perform periodic unannounced audits of the fund to ensure proper control is maintained.
The department is required to provide Accounting Services with a full reconciliation of the fund on, at minimum, a quarterly basis. This can be done as part of the request for reimbursement process (see above) but must be done at least quarterly.
Contact
Any questions concerning the petty cash fund or this policy can be directed to James F. Gartner, director of financial services, via e-mail at jg25@andrew.cmu.edu, or by phone at x86469.
