Petty Cash Funds
Petty cash funds are advances (loans) from the College to individual regular full-time employees for the benefit of the institution. Petty cash funds are not to be established for travel advances.
- A custodian of a petty cash fund is authorized to make cash disbursements from the fund only for the purpose for which the fund was established. (For example, custodians may not use petty cash funds for expenditures if the account was established for making change.)
- Petty cash funds are not to be commingled with other College or personal funds.
- As a part of the annual College audit, all petty cash funds must be reconciled using the “Reconciliation of Petty Cash Fund” form and a copy of the reconciliation forwarded to the Controller within 7 business days of year end.
Allowable Types of Petty Cash
Petty cash funds are established to enable departments of Hamilton College to achieve their assigned objectives. They may only be established for the following specific purposes:
- Change Funds: Change funds are generally used in cashiering functions on the campus (for example, in Student Billings and in the Library). Most often advances of this type are of a permanent nature. Change funds custodians may exchange cash for different denominations directly through the College’s Business Office.
- Small Purchase or Expenditures Funds: Expenditures made from a petty cash fund must follow the College’s purchasing regulations. Custodians responsible for this type of petty cash fund must be thoroughly familiar with regulations to insure that disbursements are allowable.
Reimbursements of the petty cash fund should occur at least monthly but not more frequently than once a week. Supporting documentation for expenditures is essential to obtain reimbursement. A petty cash reimbursement form charging the appropriate departmental account must be sent to our Senior Accountant/cashier with the receipts attached. Supporting documentation should include:
Copy of the receipt.
Petty Cash Voucher with:
Description of the goods or services.
Purpose for which the goods or services were purchased.
Establishing Petty Cash Funds
- Only regular full-time employees may request custodianship of a petty cash fund. To obtain or increase a petty cash fund, complete a “Request to Establish or Increase Petty Cash Fund” form. Also, a petty cash reimbursement form, should be completed. The custodians’ department head must approve both forms.
- Forward all requests to the Associate Controller for approval. Upon approval, the Senior Accountant/Cashier will issue funds equal to the amount of the petty cash reimbursement form.
- The initiation of the request by the department head acknowledges that the designated custodian has been informed of the responsibilities involved in controlling a petty cash fund (i.e., safekeeping, reconciliation, and proper documentation of expenditures) and that the custodian has agreed to carry out these responsibilities.
Limitation on Petty Cash Fund Amount: A petty cash fund is limited to an amount that is reasonable and necessary to carry out the essential activities for which the fund is authorized. Petty cash funds established to disburse monies for goods and services should not exceed 45 calendar days of estimated expenditures.
- Limitation on Duration of a Petty Cash Fund: A fund may be requested on a continuing basis or for a specified period of time, depending on the requirements of the fund. Any fund may be recalled at any time by the Controller.
Responsibility for Petty Cash Funds
- Each petty cash fund established is assigned to one individual who is designated as the fund custodian and who has exclusive access to and control of the fund. The fund custodian is responsible for these funds and for making whatever provisions are necessary to properly safeguard the fund.
- If the petty cash fund must be maintained in cash, the custodian, in conjunction with the department head, is personally responsible at all times for appropriate and adequate arrangements for safekeeping these monies.
- The custodian is responsible for keeping accurate records of the fund. the most important types of records are those supporting disbursements, such as invoices stamped or marked “paid” and receipts. Proper supporting documentation is necessary to secure reimbursement of the monies spent from the fund.
- At the end of each month, the custodian must reconcile the petty cash fund to ensure that all monies are accounted for. The monthly reconciliation in no way relieves the custodian of being accountable for the fund at all times.
- The custodian continues to be personally accountable for the fund until he or she either: a) returns the funds to the Business Office or, b) transfers the funds to another custodian approved by the Controller.
- Custodians may not transfer any portion of their cash funds to other individuals without the advance approval of the Controller.
Control of Petty Cash Funds
The following controls over a petty cash funds should be exercised by the custodian:
Counting Funds: Funds must be counted and the amount certified monthly (as part of the reconciliation process) and whenever they are transferred from one person to another.
Documenting disbursements: A petty cash voucher must be completed and attached to each paid receipt or invoice.
Accounting for overages and shortages: A supervisor must review and certify all overages and shortages. Overages are deposited with other cash receipts and shortages are documented as reconciling items in the fund. All overages and shortages should be reported to the attention of the manager who can also help with instructions on reimbursing shortages.
Limiting access to funds: Access to petty cash funds must be limited to the person responsible for the fund.
When not in the physical possession of the responsible person, funds must be secured in containers to which access is limited by key or combination.
Replenishing Petty Cash Funds
For a petty cash fund that supports the purchase of goods and services, replenishment is made by preparing a reimbursement request. The reimbursement request must summarize the supporting documentation by budget line. The check request must be sent to the Cashier and accompanied by supporting documentation. Upon submission to the Business Office, the Cashier will issue funds equal to the amount of the check request.
For change funds, currency and coin orders can be placed directly through the Business Office Cashier.
Responsibility for the effective management of the fund lies with the custodian. Reimbursement should be at least monthly but not more frequently than once a week. The Business Office performs periodic and annual reviews of petty cash funds. Failure to demonstrate effective fund management could result in partial or total withdrawal of the fund.
Changes in Custodianship
Transfer of custodianship of a petty cash fund may be made by completing a “Request to Change Custodianship of Petty Cash Fund” form. The request should be forwarded to the Controller as outlined in the guidelines for establishing the petty cash fund.
The custodian of record is not relieved of responsibility and accountability for the fund until the change has been approved.
Terminating Petty Cash Funds
Authorized use terminates when the original authorization period expires, the need for the fund no longer exists, or the fund custodian leaves the College. Furthermore, the Controller may withdraw authorization any time it is deemed to be in the best interest of the College.
To terminate an account, the custodian must first secure reimbursement for any outstanding expenditures, if applicable. Then the total cash should be remitted to the Business Office using a College deposit slip.
Reconciliation of Petty Cash Funds
At the end of each month the custodian must reconcile the petty cash fund to ensure that all money is accounted for using the “Reconciliation of Petty Cash Fund” form. Cash on hand and receipts for unreimbursed disbursements must total the amount of the funds. Reconciliations must be kept on file and readily available for review by the Controller, as requested. The Business Office maintains a listing of all fund custodians and the name and amount of each fund for which each custodian is responsible.
A supervisor should review and authorize all overages and shortages. Overages should be accounted for as miscellaneous income on a College deposit slip.
All losses of College money must be reported, regardless of the cause or amount.