2815 PR.01 Administering a Specialized Petty Cash Fund

Revision Date: 
May 23, 2017

Contents

  1. Overview
  2. Disbursement of Cash from a Petty Cash Fund
  3. Reconciliation and Replenishment of a Petty Cash Fund
  4. Changing the Custodian of a Specialized Petty Cash Fund
  5. Performing Final Reconciliation of the Fund
  6. Naming the New Custodian
  7. Closing a Specialized Petty Cash Fund
  8. Performing Final Reconciliation of the Fund and Returning Remaining Cash

1. Overview

A.  How is a specialized petty cash fund administered?

The fund custodian of a specialized petty cash fund is responsible for the day-to-day administration of the fund in accordance with University policy.

This involves not only the disbursement of funds, but also careful record-keeping, security provisions for the cash on hand, documentation of any change in the needs of the fund, and timely performance of occasional tasks including monthly reconciliation of the fund and replenishment of the fund when necessary.

B.  Who administers the fund?

The fund custodian of a specialized petty cash fund is responsible for all routine administrative functions related to the fund.

C.  What tasks must the custodian perform?

The fund custodian must routinely perform the following tasks, described in this procedure:

  • Disbursement of cash from the specialized petty cash fund.
  • Maintenance of complete and accurate records of all cash disbursed.
  • Regular reconciliation of the fund.
  • Request replenishment of the fund as needed.

In addition, the following tasks may be required on an occasional basis:

  • Transfer of authority to a new custodian.
  • Reporting lost or stolen funds to appropriate authorities.
  • Determination of whether a fund’s purpose has ended or substantially changed since its establishment, which would require closure of the fund.

Whenever cash is requested from a specialized petty cash fund, the fund custodian must determine whether the transaction may appropriately be reimbursed using petty cash before disbursing any cash.

The fund custodian must also keep accurate records of all cash disbursements, and collect all related bills and receipts for use in reconciling the fund.

B.  Determine whether a transaction is appropriate for petty cash

Petty cash may be used to reimburse small expenses (up to $300 per item) that are directly related to the fund’s stated purpose.  The custodian must use reasonable judgment in making this determination.

The recipient must provide adequate documentation (by original receipt whenever possible) to justify the reimbursement.

NOTE: Petty cash may be used to reimburse any University employee, or non-employees (including students) who are U.S. citizens or lawful permanent residents (green card holders) with a valid Yale I.D.

  • A non-employee who is not a U.S. citizen or lawful permanent resident cannot be reimbursed by petty cash, only by a Check Request.

C.  Necessary original receipts

To substantiate reimbursable expenses, Yale University requires that original receipts for the following types of expenses must always be presented:

  • Personal meals in excess of the established per diem rate
  • Business meals and/or entertainment
  • Major mode of transportation
  • Car rental
  • Lodging
  • Each direct payment for:
  • Goods less than $300
  • License fees
  • Conference fees
  • Subscriptions
  • Publications
  • Reprints
  • Memberships
  • Dues, etc.

A department administrator may authorize payments for expenses that are less than $75 and have no receipts. Please complete Missing Receipts Form (3301 FR.05) for payments.

D.  Expenditures that may not be paid from petty cash

The following types of transactions require IRS reporting or withholding, or are forbidden under INS regulations and federal immigration law, and may not be processed using petty cash:

  • Payment of salary or wages, benefits, honoraria, or other payments for services that are subject to reporting and withholding as taxable income.
  • Payments to individuals who are not U.S. citizens or permanent residents of the U.S. and who are also not Yale employees (except certain Yale affiliates and post-doctoral fellows).
  • Personal check cashing or personal cash advances.
  • Expenditures of more than $300.

Personal expenditures or borrowings in any amount by the custodian or staff are never appropriate, and can result in closure of the fund for inappropriate use.

E.  Expenditures not allowable by sponsored programs

Certain types of expenditures, such as the purchase of alcoholic beverages, are eligible for reimbursement through petty cash but are not allowable by sponsored programs. These must be noted separately as such, and an appropriate unallowable distribution code included, so as not to be charged to a grant or contract or allowable expenditure type when the petty cash fund is replenished.

F.  Petty cash vouchers

For every petty cash transaction, a voucher must be completed.  Use either the Petty Cash Quick Voucher (2815 FR.02) or the Petty Cash Voucher (2815 FR.01).

G.  Complete the Petty Cash Quick Voucher

Include on the completed voucher:

  • Voucher number
  • Date (in the format DDMONYYYY)
  • Requestor’s name
  • Dollar amount of the transaction
  • Reason for the expense
  • Chart of Accounts
  • The amount being charged to this account
  • Recipient’s address (if recipient is not a Yale employee)
  • The requestor, the approver and the recipient must sign the voucher.

H.  Complete the Petty Cash Voucher

  • Obtain a voucher number and enter it in the space provided.
  • Enter all requested information in the header, including any related Travel Requisition (TR) number.
  • Itemize expenses, giving the date, description, and amount of each item.
  • Enter numbers and amounts for all meal expenses being claimed at the per diem rates, and for any vehicle mileage being claimed.
  • Enter all totals if necessary.
  • Enter the appropriate Chart of Accounts and the amount being charged to each.
  • Enter the authorizer’s name and department.

The authorizer, the requestor and the recipient must sign the voucher.

I.  Verify recipient’s ID when paying cash on a voucher

A Petty Cash Voucher or a Petty Cash Quick Voucher can be cashed by:

  • A central cashier, or
  • The custodian of any specialized petty cash fund whose purpose allows the kind of expense recorded on the voucher.

If recipient goes to…

Then…

Central Cashier

  1. Recipient signs the voucher in the presence of the cashier.
  2. Recipient presents a valid employee ID.
  3. Cashier prints the recipient’s name (as given on the ID) in the “ID Validation” field below recipient signature.
  4. Cashier gives the recipient the requested cash.

Departmental custodian

  1. Custodian verifies the purpose of the fund allows this reimbursement.
  2. Recipient signs the voucher.
  3. If the custodian does not know the recipient by sight, recipient presents a valid employee ID.
  4. Custodian prints the recipient’s name in the “ID Validation” field below recipient signature.
  5. Custodian gives the recipient the requested cash.

J.  Copies of the voucher

The custodian keeps the original completed voucher.

  • When the custodian requests replenishment of the fund, the original voucher must be sent to AP.
  • The custodian should then keep a copy of the voucher on file.

The recipient may keep a copy of the completed voucher if desired.

K.  Record keeping

The custodian must maintain adequate records to document all transactions and reconcile the fund. All disbursements should be logged, vouchers should be kept with related receipts, and all documentation must be stored securely.

L.  Departmental oversight

A department administrator who is not the fund custodian should perform routine checks of petty cash disbursements and documentation to ensure the proper administration of the fund.

The fund custodian must make all documentation available to the departmental administrator for this purpose.

Whenever the cash in a specialized petty cash fund runs low, the fund custodian may request replenishment of the fund. Allow sufficient time between submitting a request for replenishment and receiving the replenishment check from Accounts Payable.

Reconciliation of the fund is a formal part of the replenishment procedure. The custodian must specify on the Petty Cash Replenishment form:

  • Petty cash disbursements made since the previous replenishment
  • Pending reimbursements
  • Remaining cash on hand.

The fund can then be replenished up to its approved amount.

Even if replenishment is not frequently required, the fund custodian should reconcile the fund every month as part of the administrative routine, to ensure that all funds are properly accounted for and all errors in record-keeping are spotted and corrected in a timely manner.

B.  Obtain the Petty Cash Replenishment form and transaction number

  • Obtain the Petty Cash Replenishment form (2815 FR.04) from the Quick Forms web site.
  • Obtain a 6-digit transaction number from the Transaction Control Number system.
  • Enter the number in the PCV# field on the form.

C.  Complete the Petty Cash Replenishment form.

Enter the custodian’s

  • Full name
  • Department
  • Phone number
  • Campus address
  • Email address
  • Vendor number

Itemize petty cash transactions that have occurred since the establishment or most recent replenishment of the fund (whichever is more recent), including for each

  • Name of the individual receiving the money.
  • Amount of money in each transaction.
  • Charging instructions COA
    • If the voucher indicates multiple charging instructions for a single transaction, use multiple lines of the replenishment form to record it.

NOTE:  If multiple transactions occurred that are chargeable to a single University account, it is permissible to aggregate the transactions on the form rather than to list them all individually. If transactions are aggregated, however, information on individual transactions will not be available for reporting purposes.

In the Total Expenditures field, enter the sum of all itemized voucher amounts

In the Reimbursement(s) Pending field, enter the dollar amount for reimbursements that have been requested but have not been paid

In the Cash on Hand field, enter the amount of cash actually on hand.     

D.  Reconcile the fund

To reconcile the petty cash fund, add together:

  • Total expenditures.
  • Total reimbursements pending.
  • Cash on hand.

The sum should equal the total approved amount of the fund.

If…

Then…

The sum equals the total approved amount of the fund

You have successfully reconciled the fund.

  • Enter the sum in the Total Approved Petty Cash Fund field.

The sum does not equal the total approved amount of the fund

The fund has not been reconciled. Before continuing the procedure, you must:

  • Locate the error in reconciliation.
  • Take steps to correct arithmetic, obtain missing documentation, or carry out other appropriate actions to fix the error.
  • Report any lost or stolen funds to the Yale University Police and replace the balance via a Check Request.
  • Fill out a corrected form that documents a properly reconciled petty cash fund.

E.  Attach supporting documentation

For each transaction recorded on the form (either itemized or in an aggregate entry), attach the relevant:

  • Petty cash fund voucher, and
  • Original receipts

F.  Obtain signatures of custodian and departmental authorizer

The custodian must sign and date the completed form.

Only a form that has been approved by a departmental administrator other than the custodian or an authorized designee may be submitted to Accounts Payable.

  • Enter the departmental authorizer’s name in the space provided.
  • The authorizer must sign and date the completed form before it is submitted.

G.  Submit the replenishment form

Submit the signed replenishment form with all attached supporting documentation to:

Accounts Payable at 25 Science Park, 5th Floor.

H.  Receive and record replenishment funds

After processing the replenishment request, Accounts Payable issues a check for the amount needed to replenish the fund up to its approved amount.

The fund custodian should then:

  • Cash the check.
  • Add the replenishment cash to the existing supply in its secure location.
  • Log the replenishment of the fund in the regular record of fund activity.

A.  Overview

Because the function of the fund custodian is essential to the administration of a specialized petty cash fund, each fund must have a reliable fund custodian at all times.  Whenever a fund custodian vacates the position, steps must be taken to ensure a seamless transition to a new custodian.

B.  Who is responsible for changing the fund custodian?

The outgoing fund custodian must perform a final reconciliation of the fund before the transition. If the outgoing fund custodian is unavailable, the department administrator or business manager must perform the final reconciliation of the fund.

The department administrator must designate the new fund custodian.

C.  When does a fund custodian need to be changed?

It is necessary to designate a new custodian for a specialized petty cash fund when:

  • The fund custodian is no longer able to carry out the functions of the position
  • There is a change of personnel in the position

Before transferring authority to a new custodian, either the outgoing fund custodian or the department administrator (in cases when the outgoing custodian is unavailable) must perform a final reconciliation of fund activities to date, so that the new custodian receives a reconciled fund.

B.  Obtain the Petty Cash Replenishment form

The Petty Cash Replenishment form (2815 FR.04) is available from the Quick Forms web site.

C.  Reconcile the fund

  • Complete the Petty Cash Replenishment form and reconcile the fund as described in Section 3, above.
  • It is recommended that, whenever possible, the incoming custodian should also participate in the outgoing custodian’s final reconciliation of the fund and that both should count out the cash on hand together, to ensure a smooth transition and establish an agreed starting-point for the new custodian’s administration.

6. Naming the New Custodian

A.  Criteria for selecting a new fund custodian

The same criteria that apply to the selection of a new fund’s initial custodian must also be considered in selecting the new custodian for an existing fund. The person selected to be a petty cash fund custodian should be:

  • A permanent University employee classified as:
  • Faculty
  • Managerial and Professional
  • Clerical and Technical
  • Service and Maintenance
  • Familiar with the transactions the fund is intended to handle
  • Available at the times the fund is normally used
  • Responsible, trustworthy, and detail-oriented

B.  Complete a new Request for Petty Cash Fund form

In order to name a new fund custodian for an existing specialized petty cash fund, it is necessary to complete and submit a new Request for Petty Cash Fund form.

C.  Obtain a copy of the form

The Request for Petty Cash Fund form (2815 FR.03) is available online. Please obtain a Petty Cash Signature Authorization card from Treasury Services or Accounts Payable and submit both forms to Treasury Services.

D.  Required information

Enter the following information at the top of the form:

  • Department.
  • Today’s date (in the format DD/MON/YYYY).
  • New custodian’s name, phone number, and e-mail address.

Check the box “Change of Custodian” at the top of the Request for Petty Cash Fund form.

Enter the exiting custodian’s ID/Vendor number.

Enter the following information on the lower part of the form:

  • Complete distribution code (COA) to which the fund will be charged.
  • Actual physical location of the fund (building and room number).
    • NOTE: all replenishment checks will be delivered to the location indicated here.
  • Description of how and where the funds will be secured.
  • Departmental authorizer’s name, phone number, and department.
    • NOTE: the authorizer must be an individual other than the custodian.
  • Exiting custodian’s name

Obtain dated signatures of:

  • Authorizer
  • New custodian
  • Exiting custodian (if possible)         

E.  Complete a vendor setup request form

To operate a specialized petty cash fund, it is necessary that the new fund custodian be set up as a vendor in the Accounts Payable system. The Request for Petty Cash Fund form (2815 FR.03) is available online.

Complete the vendor setup request form according to the form instructions, with the new custodian as the vendor, and obtain the authorizing signature.

F.  Submit all forms

Submit the original signed Request for Petty Cash Fund form to Treasury Services.

After approval by Treasury Services, attach and submit to Accounts Payable:

  • The signed Petty Cash Replenishment form recording the exiting custodian’s final reconciliation of the fund.
  • All outstanding receipts and reimbursement vouchers.
  • A copy of the signed Request for Petty Cash Fund form.

G.  What if a new custodian cannot be named immediately?

An active specialized petty cash fund must always have an active fund custodian.

In case of an unavoidable delay between the time the outgoing custodian ceases to perform the functions of the position and the time a new custodian takes over, the department administrator or other designee may formally take on the responsibilities of custodianship on an interim basis.

In the unusual case that a department is unable to name a valid custodian to take over administration of the fund, the fund must be closed.

7. Closing a Specialized Petty Cash Fund

A.  When must a specialized petty cash fund close?

The custodian of a specialized petty cash fund must close the fund immediately if:

  • The purpose for which the fund was established ends.
  • The purpose for which the fund was established has changed significantly.

The department administrator must close a specialized petty cash fund if it is not possible to immediately replace an outgoing fund custodian with a new one.

A specialized petty cash fund may also be closed by Treasury Services at its discretion if quality assurance reviews reveal:

  • Mismanagement
  • Misuse of funds
  • Other violations of University policy.

B.  Who closes a specialized petty cash fund?

The fund custodian and the department administrator (or authorized designee) must perform the steps required to close the fund.

A.  Overview

Before a fund can be closed, either the outgoing fund custodian or the department administrator (in cases when the outgoing custodian is unavailable) must perform a final reconciliation of fund activities.

B.  Obtain the Petty Cash Replenishment form

Obtain the Petty Cash Replenishment form (2815 FR.04) from the Quick Forms web site.

C.  Perform final reconciliation

Complete the Petty Cash Replenishment form and reconcile the fund as described in Section 3, above.

Make sure to attach all supporting documentation to the form and obtain all necessary signatures.

D.  Submit form and return remaining cash

Submit the Petty Cash Replenishment form and all attached documentation to Treasury Services.

Send with it all remaining cash in the fund and any outstanding reimbursement vouchers.