A. SUMMARY OF ADMINISTRATIVE PROCEDURE
This statement outlines procedures for establishing and maintaining a departmental petty cash fund.
1. Purpose of petty cash. Departments are encouraged to use petty cash funds to reduce time, paperwork and administrative expense for minor business expenditures. Petty cash may be used to reimburse authorized expenditures up to $200 per transaction for:
- Local retail purchases
- Meeting expenses
- Business meals
- Local transportation expenses (i.e., day trips)
- Similar expenses
2. Advance Payments to Employees. In some cases, the petty cash Custodian may find it necessary to advance up to $200 cash to an employee for non-overnight travel or for miscellaneous business supplies. Under no circumstances will petty cash advances be allowed (1) for overnight travel, (2) for more than 48 hours before the expense is anticipated, (3) for more than $200, (4) without a signed receipt (Petty Cash Voucher), (5) to a student or other non-employee, (6) for non-business purposes, or (7) outstanding for more than 4 days. Contact Accounts Payable immediately if advances are not resolved fully within 4 days.
3. When petty cash may not be used. Petty cash may not be used:
- For transactions over $200 (splitting one transaction over $200 into 2 or more parts is specifically not allowed)
- To make personal loans
- To pay employees or non-employees compensation for services rendered (including honoraria or other stipends)
- To pay moving expenses
- To buy hazardous materials or controlled substances
- As a check-cashing service
- To pay for expense that is personal or otherwise not allowable according to current USNH or campus policy, procedure or practice.
Receipts of cash or checks by the department may not be commingled with petty cash funds; all receipts are to be deposited in tact with the campus Cashier/Bursar within two business days.
4. Establishing a petty cash fund. Each petty cash fund is the responsibility of primarily one employee called the "Custodian" of the fund. There may be only one Custodian per petty cash fund. The Custodian is personally responsible for the value of the fund and to ensure that all policies and procedures are adhered to. Requests to establish petty cash funds must be approved by the responsible Department Head, the campus Chief Financial Officer (CFO), and the USNH Controller. Petty cash policies/procedures at a campus or department may be more restrictive than those of USNH but may not be less restrictive. All funds are subject to periodic surprise audits of cash and records by USNH internal and external auditors. Petty cash funds will be established at an amount not to exceed $1,000, unless specifically approved by USNH Controller. Petty cash funds require monthly reconciliation (and monthly replenishment, if un-replenished receipts exceed $300). Petty cash funds are established and replenished with a check or cash issued to the fund Custodian by the USNH Controller. The USNH Controller maintains a list of all approved petty cash funds.
5. Revocation of a Petty Cash Fund. If it is determined that a petty cash fund is being misused or not properly accounted for, the fund will be closed. The campus CFO, or USNH Controller may close petty cash funds at any time without reason.
6. Operating procedures. Detailed USNH petty cash operating procedures as published by the USNH Controller follow.
B. DETAILED OPERATING PROCEDURES
1. Purpose and Background Petty cash funds provide a useful and inexpensive way to make prompt cash payments for minor business expenses. Petty cash may be used for most authorized institutional expenses up to $200 per transaction that otherwise would require a Banner requisition (REQ), a direct pay invoice (INV), a travel expense voucher (TEV) (except where a travel advance was previously issued by the campus travel center), or a non-travel cash reimbursement. By establishing a petty cash fund, a department or unit which normally incurs a large volume of minor expenses may realize a significant reduction in administrative work. In addition, payees will receive payment faster and employees may no longer walk to the campus Cashier/Bursar for reimbursement. For these reasons, departments are encouraged to establish petty cash funds where there is demonstrated need. Petty cash funds are established on an imprest basis -- that is, at a fixed amount which is restored to its authorized level at frequent intervals by replenishing the cash in an amount equal to the expenditures made from the fund. Imprest petty cash funds placed in the custody of responsible employees thus serve to maintain control over cash without burdensome procedures for small disbursements.
2. Establishing a Petty Cash Fund
a. Requesting a Petty Cash Fund - Requests to establish petty cash funds are submitted via a Cash Fund Request, Form USNH-F44, and must be approved by the responsible department head, the campus CFO, and the USNH Controller. See Procedure 4-004, Preparation of Cash Fund Request, for detailed instructions and requirements. The amount of the petty cash fund is not charged to the department's budget. Rather, the fund is established by means of a loan to the department in the name of the petty cash Custodian. The departmental accounts are charged when petty cash expenditures are replenished or if loss of cash funds occurs.
b. One Petty Cash Fund per School/Major Department - It is not necessary or desirable to have separate petty cash funds for each budgeted or sponsored project account. Petty cash funds should be centered around geographical boundaries when possible rather than around accounting areas of responsibility. This provides the greatest utility of the funds while reducing the number of separate funds. However, consideration may be given to maintaining separate petty cash funds when the custodian does not have electronic Banner approvals for a particular Banner area.
c. Size of a Petty Cash Fund - A petty cash fund should be a small enough amount to require replenishment at least once a month. This allows the petty cash expenses to appear on monthly Banner expenditure reports for the correct fiscal period. On the other hand, the amount should be large enough so that replenishment will not be needed more than twice a month. In no case will a petty cash fund be established in an amount exceeding $1,000 unless specifically approved by the USNH Controller.
d. Special Petty Cash Funds -
i. Human Subjects - Departments or programs making studies which require human subjects may establish a petty cash fund from which one-time payments may be made to subjects. Contact the USNH Assistant Controller for details.
ii. Imprest Checking Accounts - In some cases it may be more efficient for departments to have petty cash in a USNH imprest checking account (personal checking accounts are not allowed). An imprest checking account requires the additional approvals of the USNH Controller and Vice Chancellor. See Procedure 4-002, Imprest Checking Accounts, for further details.
3. Custodian Responsibilities
a. Assignment of Petty Cash Funds to Custodians - The USNH Controller's Office issues a check payable to the Custodian to establish the petty cash fund (see Procedure 4-004, Preparation of Cash Fund Request.) The Custodian remains accountable for the petty cash until custody is formally transferred to another employee or until the fund is formally closed. It is the responsibility of both the Custodian and the Department Head to acquire a thorough knowledge of the applicable policies and procedures and to ensure the funds are properly safeguarded.
b. Protection of Petty Cash - Access to cash funds must be restricted to the Custodian only. To prevent access by anyone except the Custodian, petty cash must be kept in a locked strong box in a locked desk or cabinet whenever not in use or whenever the Custodian is absent. In case of theft the campus security police and USNH Internal Audit must be notified. Loss of petty cash funds will be charged to the responsible Banner account as listed on the Cash Fund Request form. Petty cash funds must never be commingled with other USNH cash funds, personal funds, miscellaneous cash receipts, or collected revenue of any type. The Custodian's supervisor should periodically inspect the records and count the cash (in the continual presence of the Custodian) in the petty cash fund to ensure proper accountability.
c. Change of Custodian - Except on a temporary basis described in paragraph 3.d., one Custodian may not informally transfer a fund to a new Custodian without obtaining written approvals as required on the Cash Fund Request, Form USNH-F44. The petty cash fund must be physically counted and reconciled before it is accepted by the new Custodian.
d. Absence of the Custodian - During absence or vacation, a Custodian may place the petty cash fund with a temporary Custodian. The temporary Custodian and the regular Custodian must physically count the petty cash box and prepare a list of cash, receipts and replenishment requests in process. These must total the authorized value of the petty cash fund. The temporary Custodian signs a copy of the reconciliation as a receipt. This receipt is retained by the regular Custodian since that individual is transferring personal responsibility for the value of the fund. When the regular Custodian returns, the same procedures must be followed with the receipt retained by the temporary Custodian.
e. Change of Location or Purpose of Petty Cash Fund - If the physical location or the original purpose of the petty cash fund should change from that which was stated on the original Cash Fund Request, the Custodian should immediately submit a new Cash Fund Request to the USNH Controller's Office for approval.
f. Confirmation of Petty Cash Funds - Custodians may receive an annual request from the USNH Controller's Office to confirm the amount of the petty cash fund. Some funds are selected by the USNH Internal Auditors each year for a surprise audit of cash and records to ensure proper accountability of funds and proper application of policies and procedures.
g. Closing a Petty Cash Fund - If a petty cash fund is no longer needed the Custodian must close the fund. If a Custodian leaves without formally closing the fund and there are no receipts or records, the balance unaccounted for will be charged to the operating budget of the Custodian's department, reported to the IRS as income to the Custodian, and USNH may choose to prosecute.
4. Maintaining A Petty Cash Fund
a. Accounting for Petty Cash Transactions - Proper accounting for petty cash requires that Custodians make payments for authorized expenditures only, obtain receipts, and record expenditures. Each petty cash expenditure requires a Petty Cash Voucher, Form USNH-F45. See Procedure 4-005, Preparation of Petty Cash Voucher, for detailed instructions and requirements. Petty cash expenditures are subject to all USNH and campus policies, procedures and practices relative to proper expenses, authorization, accounting and documentation. Note that there generally must be an original sales slip, cash register tape, or other receipt attached to the Petty Cash Voucher for each expenditure. Also note that each Petty Cash Voucher must be approved by a person authorized to expend from the Banner account charged (i.e., Dean, Director, Department Head or Business Manager), as noted on the USNH Signature Card filed with the USNH Controller's Office. This may include the petty cash Custodian. However, an employee may not approve his or her own expenses.
b. Reconciling Petty Cash Funds - When payments by the Custodian deplete the amount of cash, receipts are added to account for the expenditures and keep the petty cash fund "in balance." At any time, the sum of the cash on hand plus the total receipts and replenishment requests in process should equal the authorized amount of the petty cash fund. Use the Petty Cash Replenishment Request, Form USNH-F46, to record the reconciliation. If the fund does not balance, Accounting Services in the USNH Controller's Office (862-1470) should be immediately contacted for assistance. A petty cash fund must always be balanced (i.e., reconciled) before a request is made for replenishment.
c. Replenishment of Petty Cash Funds - When cash in the petty cash fund is low or if un-replenished receipts exceed $300 at the end of any month, the Custodian should submit a Petty Cash Replenishment Request, Form USNH-F46, to Accounts Payable and enter a PV to replenish the fund. See Procedure 4-006, Preparation of Petty Cash Replenishment Request for details.
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