Petty Cash Fund Procedure

Purpose

The Petty Cash Fund Procedure has been created to provide guidelines for the appropriate establishment, use, and accountability of such funds. Procedures have been established to encourage effective administration and internal control of cash handling operations throughout the University. 

Summary

The majority of petty cash funds are established to enable departments to make small, emergency purchases where a purchase order is not cost effective or a purchasing card cannot be used. Other uses include the establishment of change funds for departments that collect cash receipts on behalf of the University and require change to appropriately complete the cash transactions. The amount of the petty cash fund is established at the time the fund is approved. Expenditures must meet the legal requirements of University funds and may not be used to circumvent current purchasing procedures.

Any individual handling university cash is responsible to Texas Woman’s University for proper security and accountability. Due to the personal liability involved in performing cash handling functions, it is important that only authorized employees handle monies for university business. Employees are required to appropriately safeguard, account for and document all cash maintained on behalf of the University. The cash must be maintained in a secure, locked device or some other location appropriately approved by Financial Services.

Applicability

This procedure is applicable to every University department, administrative office, and affiliated organization involved in handling any University cash. Employees with any type of cash handling function are required to be familiar with the requirements of this procedure.

Authority and Responsibility

Texas Woman’s University has delegated the authority and responsibility for establishing procedures for all cash handling activities to Financial Services. In carrying out this duty, Financial Services is responsible for:

1. Establishing and enforcing procedures governing the receipt, handling, custody, and disbursement of funds.
2. Requiring the establishment and maintenance of records accounting for funds received and paid by the University.
3. Performing periodic audits of departments with cash handling operations.
4. Establishing and authorizing banking depositories to be used for University funds.
5. Establishing and authorizing procedures for granting, maintaining, and terminating departmental petty cash funds.
6. Reconciling all petty cash funds on a monthly basis.

Segregation of Duties

Cash handling operations must be subject to daily supervisory review and management. To minimize the potential for mistakes or misappropriation of cash, the segregation of cash handling duties is recommended. The duties of collecting cash, maintaining documentation, preparing deposits, and reconciling records must be separated among different individuals. In departments where the separation of duties is not feasible, strict individual accountability and thorough management supervision and review is required.  

Written Departmental Procedures

In addition to the cash handling procedures established in this document, it is highly recommended that each department that manages a significant amount of cash, have its own specific procedures. Written procedures should minimally include authorization of person(s) to act as custodian, guidelines for the safekeeping of funds, procedures for usage of funds, steps for reimbursement of funds, and procedures for handling overages and/or shortages including instructions on notifying the appropriate campus authority in the event of a loss.

Safekeeping

Departments handling cash are responsible for the safekeeping of these University assets. The following general guidelines must be followed to maintain the integrity of the cash handling process: 

• Unauthorized persons are not allowed in areas where cash is handled. 
• Doors must be locked at all times in areas where cash is handled. Safe doors should be kept closed during working hours and locked at times when it is not necessary to be in and out of the safe. 
• Large sums of cash must be counted and handled out of sight of the general public.
• Departments must keep working funds to a minimum at all times. Excess funds should be in a locked device or deposited in the Bursar’s Office.
• Cash must NEVER be left unattended. This applies to cash registers, desk tops, and cash drawers. If an employee leaves his or her work station for any reason, regardless of how briefly, cash must be appropriately secured in a locked place. 
• For overnight storage and during other periods when cash is not being used, cash must be kept in a safekeeping device, either a safe or locked container. 
• Under no circumstance is an individual to keep University cash with their own personal funds, deposit University funds in a personal bank account or take University funds to one’s home for safekeeping.

Refunds

Refunds cannot be made directly through the use of petty cash funds, change funds, nor funds received from cash receipts unless specifically authorized by the Controller. All refunds must be processed through appropriate procedures as established by Financial Services, depending upon the type of transaction involved. These funds are not to be used to reimburse employees for out-of-pocket expenditures. 

Petty Cash Guidelines

• Adequate receipts and documentation must be maintained to support all transactions made from the Petty Cash Fund.
• Expenditures must meet the legal requirements attached to the source of University funds used to establish the account.
• The petty cash fund must not be used to circumvent University purchasing procedures.
• The following expenditures from petty cash accounts are prohibited:
• Travel-related expenses (e.g., parking)
• Sales Tax
• Alcoholic Beverages
• Donations
• Tips or Gratuities
• A petty cash fund may be revoked at the discretion of the Controller.
• The amount of the petty cash fund may be reduced or increased at the discretion of the Controller.

Duties of Petty Cash Custodian

Each petty cash fund established is specifically assigned to one individual who is designated as the fund custodian. This individual should have exclusive access to and control of the fund. In carrying out the duties assigned, it is the custodian’s responsibility to understand and follow the procedures below:

1. Petty cash funds must be properly safeguarded. The custodian is personally responsible at all times for the appropriate and adequate safekeeping of these funds. The money should be kept in a secured, locked location and must never be commingled with an individual’s personal funds or any other University funds. Only the custodian and the department head should have access to the keys or safe combination. 
2. The custodian is responsible for keeping accurate records of the fund.
3. Any individual using petty cash funds to make an allowed purchase must provide the sales receipts and any change to the custodian.
4. Custodians are required to reconcile daily, weekly, or monthly, depending upon the amount of activity involved and the dollar amount of the fund. The Petty Cash Reconciliation Log offers the recommended format for performing the reconcilement.  
5. The custodian must maintain appropriate records on a daily basis, as this petty cash fund is subject to audits at any time, with or without notice, by the Controller’s Office, the Internal Auditors, and State Auditors.
6. The custodian will be personally accountable for the Petty Cash Fund until all of the funds and/or receipts have been submitted to Financial Services and the account closed.

Establishing a Petty Cash Fund

• Complete a Petty Cash Account Certification Form. This form identifies the type of petty cash account requested and other necessary information such as custodian, requested amount, and departmental account number.
• Forward the certification form to Financial Services.
• Once the form has been reviewed and approved by Financial Services, a check will be issued to the custodian to establish the petty cash fund.
• The custodian will be notified when the check is available for pick-up.

Replenishing a Petty Cash Fund

Reimbursements should be requested as needed; however, departments are required to replenish the fund by August 15th of every year. The custodian must complete the Petty Cash Reimbursement Request, attach all receipts, and forward to the Accounts Payable Office on the TWU Campus in Denton. At that time, the receipts will be audited, expenditures will be recorded, and a check will be issued to the custodian for the amount of the receipts. Note: the remaining cash before replenishment, plus receipts, should equal the amount originally issued to fund the petty cash account. 

Changing the Custodian

To change the custodian on a departmental petty cash fund, the department supervisor must submit an updated certification form to Financial Services with a memo stating the reason for the change.

Closing a Petty Cash Fund

If it is determined that an existing petty cash fund is no longer needed the custodian must close the fund. The remaining cash, a Certification of Closure (Petty Cash Account Certification Form), and all receipts should be taken to the Bursar’s Office for deposit. Contact the Controller’s Office to obtain the appropriate account number before the deposit is made. Supporting documentation will be forwarded to Financial Services by the Bursar for reconciliation.

Overages and Shortages

Both overages and shortages should be noted and tracked by the custodian and then reviewed and certified by a department supervisor. Significant amounts should be immediately reported to the Department Head and Financial Services. If there appears to be a growing pattern or anything unusual or strange about the overages and shortages, that information must be disclosed immediately.

Approved December 2017 by the Controller