Petty Cash Fund and Change Fund Procedures

INTRODUCTORY STATEMENT

All established petty cash funds or change funds are the property of Bowling Green State University and are subject to handling and accounting policies established by the University.

A petty cash fund is established for the payment of small (less than $10) charges or for non recurring charges, such as freight. Petty cash funds are not to be used for travel or entertainment expenses.

A change fund is established to make change at sales locations. These funds are not to be used for the payment of small and/or non recurring charges.

Petty cash and change funds are not used to make a loan to any person or group. A loan includes but is not limited to: I.O.U's, notes, post-dated checks, or checks presented for cash but not deposited at the end of the normal business posting period.

Neither petty cash nor change funds are to be created or replenished from departmental cash collections of any variety.

Authorization to establish a departmental cash collection on behalf of the University is required from the Treasurer's Office. A request is to be made in writing to the University Treasurer, outlining the reason for the departmental cash collection.

• Petty Cash Fund Procedure
• Change Fund Procedure
• Cash Collections and Other Cash-Handling Procedures

 

PETTY CASH

Definition

Some departments find it necessary to establish a Petty Cash Account to pay for small expenditures where vendors will not allow merchandise to be charged to the University. Where possible, petty cash accounts should be centralized within a department or college to better utilize and control the cash funds.

University petty cash funds are prohibited by the Ohio Revised Code from being used for making loans of any type. Petty cash funds are also not to be used for the cashing of personal checks or for reimbursement of travel or entertainment expenses.

Application Procedures

A request to establish a petty cash account is accomplished by completing a University Cash Fund Application Form (Attachment A). The completed Application is submitted by the budget administrator to the Business Office.

Approval Procedures

A request to establish a petty cash fund and its amount will be reviewed for need and will be granted or denied by the Director of Financial Accounting. Denied requests may be appealed to the Office of the Treasurer. Once a petty cash fund has been approved, a check will be prepared by the Business Office for the approved amount. The check must be picked up in the Business Office by the account custodian. The top portion of the Custodial Record (Attachment D) must be completed by the custodian.

Increasing Petty Cash Funds

Increasing an existing petty cash fund requires the completion of a Cash Fund Increase Application Form (Attachment B). Increases to petty cash funds will be considered by the Director of Financial Accounting. Denied requests may be appealed to the Office of the Treasurer.

Termination or Reduction of Petty Cash Funds

A petty cash fund should have on the average, activity equal to one third of its fund balance per month, or it may be considered as excess and its balance reduced. Example: A $100.00 petty cash fund should have at least $33.00 of activity per month on an annual basis. The Director of Financial Accounting or the Treasurer may reduce or eliminate a petty cash fund based on the fund inactivity or violation of petty cash handling procedures.

It is recommended that a petty cash fund be surrendered if it will not be used for thirty (30) days or more, such as a closed dining facility or closed academic office for the summer.

A petty cash fund may be eliminated or reduced at any time at the request of the budget administrator. To close a petty cash fund, the cash balance on hand and all receipts for the petty cash are to be returned to the Business Office. A Payment Order is to be prepared for any outstanding bills not yet replenished to the petty cash fund. If the total of the cash to be deposited plus the Payment Order does not equal the total amount authorized for the petty cash account, an explanation must be provided. The bottom portion of the Custodial Record (Attachment D) needs to be completed.

Security of Funds

All petty cash funds must be maintained in a locked cash box and when not in use shall be kept in a secure place, preferably a fireproof safe, to prevent loss. Funds are to be secured only in University buildings. Funds are not to be taken home or stored at a private residence or in a motor vehicle. Funds, even grouped funds, over $1,000 must be stored in a fireproof safe in an alarmed room. Contact Public Safety, Investigations Division, for further questions regarding security.

Audit Procedures

All petty cash funds are subject to audit by the Internal Auditing Office and the external auditors--audits may be scheduled or unannounced.

Transfer of Custodial Responsibilities

When custodial responsibilities are transferred to another person, a Transfer of Custodial Responsibilities Form (Attachment C) must be completed. Send the original copy of the Transfer form, signed by both the outgoing and the new custodian, to the Manager of the Business Office. A copy of the Transfer form is to be kept in a departmental petty cash file.

Loss of University Funds

Petty cash losses shall be reported by the custodian to the budget administrator, Public Safety and Internal Auditing immediately so that a complete investigation and report can be made of the circumstances involved. When the required documentation and security procedures have been in place and a theft or mysterious disappearance of cash/checks occurs, a $500 deductible per incident will apply. The $500 deductible or the total loss, whichever is less, will be charged to the departmental budget. The remainder of the loss may be reimbursed to the department by the Risk Management Department, upon notification from Internal Auditing.

If one or more of the following conditions are identified during Internal Auditing's review of the cash loss, the custodian may be held personally responsible for the loss and for the reimbursement of the total loss:

 

1. The petty cash fund has not been properly registered with the Business Office.
2. The money in the petty cash fund has been commingled with revenue collected by the department that should have been deposited with the Bursar's Office.
3. The money in the petty cash fund has been commingled with personal funds, change funds, and/or BGSU Foundation funds.
4. An on-going ledger of receipts and disbursements has not been maintained.
5. Payments have been made from the petty cash fund without an original receipt.
6. The money in the petty cash fund has not been secured in a locked cash box and/or fireproof safe.
7. Payments for which the petty cash fund is not authorized (including, but not limited to: personal check cashing, travel advances, personal use, or payment of sales taxes).

 

Tax Exemption

Since the University is tax-exempt, petty cash accounts may not reimburse for any taxes paid. Any taxes paid by an individual become the personal responsibility of the purchaser. Should an inappropriate payment of taxes be made from a petty cash fund, the custodian is personally liable for replenishing the fund for the improper reimbursement.

Replenishment of Petty Cash

To replenish the petty cash funds, a Payment Order is to be prepared. Receipts must be secured for all payments; no reimbursement will be made without an original receipt. Each receipt (properly shown as paid and/or initialed by the person receiving the cash) must be attached to the Payment Order and forwarded to the Business Office for reimbursement. Retain copies of both the Payment Order and the receipts in a departmental petty cash file.

Bookkeeping Procedure

The custodian shall maintain a permanent, continuous ledger documenting every expenditure made and every reimbursement received from the Business Office. This ledger will allow easy determination of cash on hand and the amount of expenditures not yet reimbursed by the Business Office. The sum of these two amounts shall equal the authorized amount of the petty cash fund. The ledger and receipts must be kept in a separate location from the cash box.

The following format for recording the expenditures and reimbursements is recommended for your convenience and protection: Cash Date Transaction Expenses Receipts Balance 9/15/XX Established Petty Cash Fund, $25.00 $25.00 Check No. 5072 9/20/XX ABC Supply Company $ 4.50 20.50 10/15/XX Wood County Title Office 8.00 12.50 10/18/XX Easy-Does-It Freight Co. 10.00 2.50 10/30/XX Business Office Reimbursement 22.50 25.00 Check No. 5078

Assistance

Questions concerning the handling and accounting policies established by the University should be directed to the Internal Auditing Office.

Inquiries and assistance pertaining to procedures involving petty cash accounts can be obtained from the Manager of the Business Office.

Information related to the security of funds should be directed to Public Safety, Investigations Division.

CHANGE FUND

Definition

A change fund is established to make change at locations where sales are made involving cash. University change funds shall not be used to provide reimbursement for any expenditures.

University change funds are prohibited by the Ohio Revised Code from being used for making loans of any type. Change funds may not be used for the cashing of personal checks.

Application Procedures

A request to establish a change fund account is accomplished by completing a University Cash Fund Application Form (Attachment A). The completed Application is submitted by the budget administrator to the Business Office.

Approval Procedures

Requests to establish a change fund and its amount will be reviewed for need and will be granted or denied by the Director of Financial Accounting. Denied requests may be appealed to the Office of the Treasurer. Once a change fund has been approved, a check will be prepared by the Business Office for the approved amount. The check must be picked up in the Business Office by the account custodian. The top portion of the Custodial Record (Attachment D) must be completed by the custodian.

Increasing Change Funds

Increasing an existing change fund requires the completion of a Cash Fund Increase Application Form (Attachment B). Increases to change funds will be considered by the Director of Financial Accounting. Denied requests may be appealed to the Office of the Treasurer.

Termination or Reduction of Change Funds

It is recommended that a change fund be surrendered if it will not be used for thirty (30) days or more, such as a closed dining facility or closed academic office for the summer. A change fund account may be eliminated or reduced at any time at the request of the budget administrator. In addition, the Director of Financial Accounting or the Treasurer may reduce or eliminate a change fund based on the fund inactivity or violation of change fund handling procedures.

To close a change fund, the change fund must be returned to the Business Office. If a shortage exists, a Payment Order will be prepared charging the departmental budget for the shortage. If an overage condition exists, an entry will be made crediting University Miscellaneous Income. The bottom portion of the Custodial Record (Attachment D) shall be completed by the custodian.

Security of Funds

All change funds must be maintained in a locked cash box and when not in use shall be kept in a secure place, preferably a fireproof safe, to prevent loss. Funds are to be secured only in University buildings. Funds are not to be taken home or stored at a private residence or in a motor vehicle. Funds, even grouped funds, over $1,000 must be stored in a fireproof safe in an alarmed room. Any further questions regarding security should be directed to Public Safety, Investigations Division.

Audit Procedures

All change funds are subject to audit by the Internal Auditing Office and the external auditors--audits may be scheduled or unannounced.

Loss of University Funds

Change fund losses shall be reported by the custodian to the budget administrator, Public Safety and Internal Auditing immediately so that a complete investigation and report can be made of the circumstances involved. When the required documentation and security procedures have been in place and a theft or mysterious disappearance of cash/checks occurs, a $500 deductible per incident will apply. The $500 deductible or the total loss, whichever is less, will be charged to the departmental budget. The remainder of the loss may be reimbursed to the department by the Risk Management Department, upon notification from Internal Auditing.

If one or more of the following conditions are identified during Internal Auditing's review of the cash loss, the custodian may be held personally responsible for the total loss:

 

1. The change fund has not been properly registered with the Business Office.
2. The money in the change fund has been commingled with revenue collected by the department that should have been deposited with the Bursar's Office.
3. The money in the change fund has been commingled with personal funds, petty cash funds, and/or BGSU Foundation funds.
4. An on-going record of activity has not been maintained.
5. The money in the change fund has not been secured in a locked cash box and/or fireproof safe.
6. Payments have been made for purposes for which the change fund is not authorized (including, but not limited to: personal check cashing, travel advances, lunches, personal use, or petty cash transactions).

 

Bookkeeping Procedure

The custodian shall maintain a permanent record detailing the activity of the change fund. The record shall contain the date the change fund was used, any overage or shortage conditions and the signature of the custodian of the fund. This record must be maintained in a location separate from the change fund.

The following format for recording change fund activity is recommended for your convenience and protection:

Date ___________________

Beginning Balance ___________________

Ending Balance ___________________

Over/(Short) ___________________

Custodian___________________

Assistance

Questions concerning the handling and accounting policies established by the University should be directed to the Internal Auditing Office.

Inquiries and assistance pertaining to procedures involving change funds can be obtained from the Manager of the Business Office.

Information related to the security of funds should be directed to Public Safety, Investigations Division.