Wayne State University

Aim Higher

Policies-8

1.3.6 Petty Cash (Revised as of 8/5/16)

DESCRIPTION

The purpose of this policy is to provide users with detailed procedures regarding the establishment and administration of a departmental petty cash fund.

PURPOSE AND USE OF PETTY CASH FUND

The petty cash fund (the “fund”) is intended to provide departments with an amount of incidental cash for transactions of an infrequent or extraordinary nature in connection with approved University activities.  A petty cash fund can also be established specifically as a "change fund" in the department for handling ticket sales, etc. for specific events, where expenses are not incurred. An authorized employee may use the petty cash funds to purchase incidental supplies which require the department to make payment at the point of purchase.  Similarly, if the department does not have a petty cash fund for such transactions, the employee may personally make payment at the point of purchase and obtain reimbursement via the Direct Payment Request Form (DPR) in WayneBuy (See APPM Section 1.3.1 for guidance on employee reimbursements).  Petty cash should be used in this manner only when absolutely necessary and when normal purchasing practices are infeasible or impractical.  The fund cannot be used as a method to bypass the University's Procurement and/or Disbursement policies.

POLICY

1.3.6.1 Petty Cash Fund

Disbursements from a petty cash fund must be in compliance with University expense guidelines (See APPM Section 1.3.1) and it must be for a valid University business purpose with proper documentation.  WSU is a tax exempt entity and is allowed a Michigan sales tax exemption on certain purchases that benefit WSU to be used in its daily operations.  Use the following link to obtain the Michigan Sales Tax Exemption Form: http://fisops.wayne.edu/disbursements/mi_sales_tax_exemption_form.pdf.    Note, not all vendors will accept the exemption form especially if the form of payment is cash.  Use of the University sales tax exemption when purchasing items for other than university purposes is prohibited and may result in disciplinary action.

The petty cash fund cannot be used for repetitive purchases from the same vendor that should be handled via a blanket purchase order (See APPM Section 2.0).   Examples of valid petty cash fund usage include but are not limited to:  research subject payments (see example study participant form http://fisops.wayne.edu/disbursements/petty-cash.php) office supplies and materials, copying, postage and freight/shipping.

Petty cash funds may NOT be used for the following:

  1. Expenses associated with travel activities, including travel advances.  (See APPM Section 7.0 for Travel related reimbursement).
  2. Payments to vendors for invoices submitted directly to the department for non-PO purchases. These invoices should be processed for payment via a DPR (See APPM Section 1.3).
  3. Payments to independent contractors, consultants, awards, etc., to non-university employees.
  4. Payments to employees for wages, services, awards, bonuses, etc.
  5. Cashing of personal checks or providing personal loans (IOUs).
  6. Purchase of other items which are prohibited under petty cash procedures include:
    1. advertising
    2. alcoholic beverages and tobacco
    3. animals (laboratory)
    4. automotive repairs
    5. chemicals
    6. clothing
    7. controlled substances
    8. cylinder gases and liquid nitrogen
    9. donations
    10. flowers
    11. hazardous materials
    12. leases and rentals
    13. letterhead, envelopes business cards, and other printing
    14. maintenance agreements
    15. personal items
    16. post office box rentals
    17. professional services
    18. conference fees, seminars and memberships
    19. subscriptions
    20. telephones
    21. gasoline

1.3.6.2 Petty Cash Fund Establishment

To request establishment of a fund, a staff or faculty member, in coordination with their Dean/Director and the Business Manager of that unit must complete the Petty Cash Request/Approval Form  http://fisops.wayne.edu/disbursements/petty-cash.php in addition to compliance with the following items:

  1. Attach a memo to a completed SPA stating the purpose for the establishment of the Petty Cash Fund.  This memo must describe in detail the purpose and use of the fund in addition to the estimated level of expenditures.  It will need to include any supporting documentation from an approved grant in situations where the request is for subject matter payments.
  2. Confirmation a secure facility is available to safeguard the funds against theft.  The petty cash fund should be secured at all times.
  3. Confirmation there is not another Petty Cash Fund already approved in the area established for a similar purpose.
  4. The department is responsible to appoint a custodian, who is a member of the faculty or staff competent in financial matters, 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.  Access to the fund must be limited to only the custodian.  The custodian will be personally accountable at all times, upon an audit basis, to produce for examination and verification the full principal amount of the Fund.
  5. If a change of custodian is needed, the fund must be closed and a new one established.  In addition, the custodian will ensure that fund use is consistent with the manner described in the documentation that initially established the fund and is compliant with university policy.
  6. Personal IOU's are not permitted to the Fund, and Fund monies must not be commingled with personal cash or deposited for safekeeping in a personal checking account.
  7. In determining the desired principal amount of the Fund, consideration must be given from the point of security and the realistic ability to meet day-to-day requirements so that the need for replenishment may not be too frequent for operating convenience and too infrequent for accounting propriety.
  8. Changing the Fund Amount  -  Should a situation arise where it is determined that the size of the petty cash fund should be increased or decreased, the custodian must complete a new Petty Cash Request/Approval Form  http://fisops.wayne.edu/disbursements/petty-cash.php  and memo/SPA describing the purpose for increase requested.  Upon completion and required approvals the package should be forwarded to the Disbursements office requesting this change. An increase to a petty cash fund is subject to the approval of the Disbursements manager, as well as the department Business Manager, similar to when the fund is initially established.  A petty cash fund should be reduced if the amount of the fund exceeds the actual needs of the department.  The amount that is no longer needed should be deposited at the Cashiers' Office with a memo to Accounting indicating the fund is being decreased including receipts for any non-replenished expenses.
  9. The custodian is responsible for ensuring the cash on hand and non-replenished receipts equal the authorized amount of the fund at all times. Petty cash funds must be kept separate from change funds, cash drawers, personal funds and any other collected revenue.

The custodian must use the Petty Cash Reconciliation Worksheet

  • to maintain reconciliation of the fund.  This worksheet must be completed monthly and forwarded to the Business Manager by the 10th business day of the subsequent month.  In addition, the Petty Cash Reconciliation for each quarter-end must be submitted to the Accounting Department by the 15th day of the subsequent month of the quarter-ended.
  1.  The custodian must submit receipts for replenishment or a reduction in the Fund amount within a timely manner.

The dollar limit for each fund is set at the department's discretion; however, funds are usually less than $500.  Individual circumstances may dictate a need for a higher limit.  The request form, approved by the Dean/Director and the Business Manager and incorporating the above points must be attached to a properly completed Special Payment Authorization (SPA), 10-102A (See APPM Section 1.3.2) for the principal fund amount and should be forwarded to the Disbursements Department.  In all cases, Disbursements will review each request for appropriateness based on documentation provided at the time of the request.

 Violation of any of these procedures will result in the termination of the Petty Cash Fund.

PROCEDURES

Responsibility

Action

Custodian

  1. Complete the Petty Cash Request/Approval Form http://fisops.wayne.edu/disbursements/petty-cash.php .
  2. Complete required SPA Form 10-102A.  All Funds established will be charged to the petty cash account (Index/Fund/Account Code: 011001/1100/1120).
  3. Attach the required documentation including a memo explaining the proposed use of the Fund.
  4. Forward for required departmental approvals.

Dean/Director

 

  1. Review and approve/deny the Petty Cash Request package
  2. If approved, forward to Business Manager

Business Manager

  1. Review and approve/deny the Petty Cash Request package
  2. If approved, forward to Disbursements

Disbursements

 

  1. Review and approve/deny the Petty Cash Request package.
  2. If approved, draft a letter to notify all of the approved establishment of the fund.
  3. Prepare a check payable to the Fund Custodian.

Custodian

  1. Cash the check and secure the funds.

 

1.3.6.3   Petty Cash Fund Replenishment

DESCRIPTION

The below procedures describe the steps to follow to reimburse a petty cash fund.  Replenishment of the fund to anyone other than the official Custodian will not be allowed.

PROCEDURES

Responsibility

Action

Custodian

  1. Prepare and submit a DPR using the appropriate index, fund, organization and account code.  Be sure to attach all receipts.
  2. Cash the check and return the money to the Petty Cash Fund.

1.3.6.4 Petty Cash Fund Closing

The Petty Cash Fund should be closed when the established Fund purpose has been completed, as determined by either the Fund Custodian or the department Business Manager, or when the grant period has ended (if applicable), or if a change of custodian is needed.   The Accounting Department reserves the right to conduct periodic usage reviews and/or verify the petty cash fund amount on hand with the Custodian 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 the Cashiers Office, completing the Petty Cash Reconciliation Worksheet and being sure to credit the petty cash account (Index/Fund/Account Code: 011001/1100/1120) on the memo, along with any remaining, non-replenished receipts. This will relieve the balance in the petty cash fund as established for this use.

PROCEDURES

Responsibility

Action

Custodian

  1. Deposit all remaining funds at the Cashiers Office, with a completed Petty Cash Reconciliation Worksheet and remaining vouchers.  Write “closing fund” at the top of the memo.

Cashier’s Office

  1. Review form for balancing and accept deposit to close petty cash account with remaining cash and non-replenished receipts.
  2. Forward information to the Accounting Department for closing of the Fund including receipts for expenses and the supporting memo.

Accounting

  1. Validate balancing and issue confirmation of Fund closure memo to Custodian and others.

1.3.6.5 Stolen Petty Cash

The Custodian must report any theft from the Fund immediately upon discovery.

PROCEDURES

Responsibility

Action

Custodian

  1. Immediately notify your Dean/Director and the area Business Manager of the theft and indicate the amount stolen.
  2. Inform WSU Public Safety of the theft and make an official police report of the incident.
  3. Forward a copy of the police report to your business office for creation of a DPR to replenish the Fund charging the departmental guarantee account for the loss.

Business Office

  1. Process and approve DPR

Disbursements

 

  1. Prepare a check, payable to the fund custodian to be picked up by, the fund custodian.

 

Custodian

    1.   Cash the check and return money to the petty cash fund.