university sealEditor's notes:

POLICY TITLE: Carnegie Mellon University Petty Cash Policy

DATE OF ISSUANCE: This policy was approved by the President's Council on March 23, 1999.

ACCOUNTABLE DEPARTMENT/UNIT:  Specific questions about policy content should be directed to the Office of the Controller at ext. 8-5904.

ABSTRACT: Carnegie Mellon University permits departments to maintain a petty cash fund for non-travel, out-of-pocket expenditures.


Carnegie Mellon University Petty Cash Policy

Policy Statement

Carnegie Mellon University permits departments to maintain a petty cash fund, as described by this policy.

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. 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;
  • Travel advances;
  • 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 purchase order was issued;
  • Payments to independent contractors, consultants, awards, etc., to non-university employees;
  • Payments to employees for services, awards, bonuses, etc.;
  • Payments of a taxable or non-taxable benefit to an individual;
  • Payments to university service centers (e.g., Bookstore, etc.);
  • Sales tax on purchases;
  • Personal borrowing.

 

Initiating a Petty Cash Fund

A staff or faculty member, in coordination with the business manager of that department, should send an e-mail to the Controller’s Office.  The email 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, between $25 and $300, though individual departmental circumstances may dictate a need for a higher limit. In all cases, the Controller’s Office 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.

 

The Controller’s Office must be notified if there is a change in the petty cash custodian. In order to ensure accountability to the new custodian, the Controller’s Office 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 University Purchasing 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 the Controller’s Office.   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 oracle string to be charged.
  • Tape original receipts onto an 8-1/2x11sheet, 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 in the Oracle Financials 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 object 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 reconciliation and send it, along with a request to replenish the fund, to the Controller’s Office. Before being submitted, this reimbursement request must be approved by the immediate supervisor of the fund custodian. The Controller’s Office will audit the request to ensure that proper documentation (as described in the Documentation section, above) has been provided. It should be further noted that reimbursements will not be made for the items detailed in the prohibitions section. 

 

Once the audit is completed and the reimbursement request approved, a check will be prepared for fund replenishment.

 

Changing the Fund Amount

If there is a situation where it is determined that the size of the petty cash fund should be increased or decreased, an email should be forwarded to the Controller’s Office, requesting this change. This should be done prior to requesting a replenishment of funds.  An increase to a petty cash fund is subject to the approval of the Controller’s Office, 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 the Controller’s Office 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, the Controller’s Office 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 Cash Operations, completing a Financial Services receipt form, and being sure to credit the petty cash account.  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 Controller’s Office, including the copy of the Financial Services receipt form containing the Cash Operations date stamp.

 

Audit

Petty cash accounts will be subject to audit by the Controller’s Office.  In addition, University Audit Services will perform periodic unannounced audits of the fund to ensure proper control is maintained.

The department is required to provide the Controller’s Office 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.

 



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