Petty Cash Fund And Change Fund Procedures

replenishing the petty cash fund requires

Documenting disbursements and reimbursements – Written or printed receipts or “paid” invoices must be maintained to support each transfer of funds . Cash fund ongoing operations, such as cash register fund, is to be replenished to the original balance at the end of operations and stored in a secure place in accordance with Safekeeping guidelines. The cash fund may not be used to circumvent replenishing the petty cash fund requires university policies and procedures. Expenditures must meet the legal requirements attached to the source of university funds used to establish the cash fund. Check requests are processed by Supply Chain Management Accounts Payable and may require additional processing time. To inquire about payment status, contact Accounts Payable by creating a ticket with the SCM Response Team.

replenishing the petty cash fund requires

To replace funds, a memo/email should be written to General Accounting providing all details of the situation. General Accounting will initiate a check request to replace the missing funds.

Changing The Names Of Custodians

Vouchers and receipts that are older than 90 days will not be reimbursed. All exceptions must be approved by the Controller or by a designee. To ensure proper balancing of the petty cash fund, these funds cannot be combined with any other funds. In the event that Petty Cash or Change funds are lost or stolen, the money can be replaced, but the department will be responsible for the expense charge. In the case of theft, the custodian or department should notify University Police.

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. Imprest petty cash funds placed in the custody of responsible employees thus serve to maintain control over cash without burdensome procedures for small disbursements. Each petty cash fund is the responsibility of primarily one employee called the “Custodian” of the fund.

Standard Long-term Petty Cash Funds – Long-term, based upon an ongoing and revolving use of the funds for which replenishments are done on a frequent and regular basis. If the transaction involves dropping off cash, you can enclose the approved form with your cash in an envelope and place it in the secured drop box outside of Treasury Services at 220 Waterman. The funds are secured and not deposited in a separate bank account. Purchases of goods and services for more than $100 should not be made with petty cash. Purchases over $100 should be made using other procurement methods such as the purchasing card.

The amount of cash on hand plus unreimbursed receipts must equal the amount of the authorized fund at all times. The new petty cash custodian needs to complete the steps outlined in Establishing a New Petty Cash Custodian before the request is submitted. For example, a business that averages $200 of tax-deductible petty cash expenses per month, could potentially write off $2,400 from its annual tax bill.

Petty Cash Accounting

When the petty cash fund is established, a current asset account titled Petty Cash is added to the chart of accounts in the accounting system. Original requests for petty cash funds must be submitted to the Controller for approval using the “Request for Petty Cash” form. Petty cash funds may be initiated with balances of $25 or $50. Larger requests for petty cash will only be approved when supported by specific documentation regarding need. Access to the Petty Cash Fund must be restricted to the Fund Custodian,as described in Section 4. Responsibility for the fund must be specifically included in the employee’s job duties and acknowledged by the employee as a job duty. Security measures should be observed for Petty Cash Funds .

  • Responsibility for the fund must be specifically included in the employee’s job duties and acknowledged by the employee as a job duty.
  • Excess funds should be in a locked device or deposited using the department’s regular deposit procedure.
  • However, a request for an increase in a specialized fund may be granted if appropriate.
  • At all times, the total of all receipts plus the remaining cash should equal the total amount of the petty cash fund.
  • Treasury Services and Accounts Payable must retain petty cash replenishment requests, with original vouchers and receipts attached, for seven years.
  • All petty cash funds are subject to periodic quality assurance reviews by Treasury Services.

A change fund is established to make change at locations where sales are made involving cash. University change funds shall not be used to provide reimbursement for any expenditures. All petty cash funds must be maintained in a locked cash box and when not in use shall be kept in a secure place, preferably a fireproof safe, to prevent loss. Funds are not to be taken home or stored at a private residence or in a motor vehicle. Funds, even grouped funds, over $1,000 must be stored in a fireproof safe in an alarmed room.

Requiring the establishment and maintenance of records accounting for funds received and paid by the university. The custodian is responsible for the cash fund until all of the funds and/or receipts have been submitted to the Controller’s Office and the fund is closed or turned over to a new custodian. The petty cash fund is subject to audits, at all times, by the Controller’s Office, Audit Services, External Auditors and State Auditors. Custodians are required to maintain appropriate records and verify the cash fund on a daily, weekly, or monthly basis, 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 reconciliation.

Understanding The Cash Flow Statement

Other uses include establishment of a change fund for departments that collect cash receipts on behalf of the University and require change to appropriately complete the cash transactions. The University requires each petty cash fund to have an approved Custodian, who documents expenditures, keeps receipts, and safeguards the funds.

The petty cash log should include the items purchased, the date of purchase and the amount. Also, require your custodian to review the petty cash register before replenishing the petty cash fund.

Capture expense receipts, sales tax, expense category and other information at the point of sale. Emilie is a Certified Accountant and Banker with Master’s in Business and 15 years of experience in finance and accounting from corporates, financial services firms – and fast growing start-ups.

Petty cash reimbursements may not be used to circumvent current university procedures. It is the responsibility of the custodian and supervisor to confirm the expenditure is an appropriate charge and is in compliance with all applicable procurement policies and procedures. AttachmentScan appropriate receipts or disbursements log and attach to the request. If payment is made to anonymous research subject, the receipt or log must be signed by the Project PI. The replenishment may not exceed 50% of the total fund.

Money Orders: When And Where To Get One, And How To Cash One In

Only during the accounting period does the company make an entry in the journal. A petty cashier might be assigned to issue the check to fund the petty cash drawer and make the appropriate accounting entries. The petty cash custodian is charged with distributing the cash and collecting receipts for all purchases or any uses of the funds. As the petty cash total declines, the receipts should increase and add up to the total amount withdrawn. Petty cash is a small amount of cash that is kept on the company premises to pay for minor cash needs. Examples of these payments are office supplies, cards, flowers, and so forth. Petty cash is stored in a petty cash drawer or box near where it is most needed.

If there’s a shortage or overage, a journal line entry is recorded to an over/short account. If the petty cash fund is over, a credit is entered to represent a gain. If the petty cash fund is short, a debit is entered to represent a loss. The over or short account is used to force-balance the fund upon reconciliation.

  • All custodians must complete the Petty Cash Training module in TMS.
  • For guidance on how to replenish a fund, please refer to thePetty Cash Web-Based Training.
  • If a fund is not used for a large portion of a year, the fund should be deposited until it is needed again and a copy of the Money List should be sent to the Financial Services accounting office.
  • The English word “petty” derives from the French petit, which means “small” or “little.” Likewise, “petty” means minor or insignificant.
  • Establishing and enforcing policies and procedures governing the receipt, handling, custody, and disbursement of funds.
  • Too large a petty cash fund encourages abuses such as unauthorized “borrowing” and payment for costly items that should be handled through issuance of checks.

To protect the company’s cash, petty cash is usually a low amount – just enough to cover unanticipated incidental expenses. A journal entry is an accounting transaction that either debits or credits accounts to document how funds are used and allocated throughout a company’s accounting books. Departments should evaluate their business needs and limit the petty cash account to the lowest amount that will meet those needs in a 30-day period. The custodian of the petty cash fund will monitor the fund balance on a regular basis. When the cash balance in the fund is low, the custodian prepares a request for replenishment check. Attached to this request are the receipts from the cash box for all expenditures made from the fund. The request will indicate the general ledger account where the expenses for each receipt are to be charged.

General Accounting

A fixed balance is maintained in the account, and it is replenished routinely. The reconciliation process ensures that the fund’s remaining balance equals the difference between the original balance minus charges detailed on receipts and invoices. If the remaining balance is less than what it should be, there is a shortage.

replenishing the petty cash fund requires

This is a credit to the petty cash account, and probably debits to several different expense accounts, such as the office supplies account . The balance in the petty cash account should now be the same as the amount at which it started. When a petty cash fund is in use, the custodian records the petty cash transactions on financial statements. No accounting journal entries are recorded when purchases are made using petty cash. Journal entries are only recorded when the custodian needs more cash. In exchange for the receipts, they will receive the new funds. The journal entry for providing the custodian with more cash is a credit to cash and a debit to the petty cash fund.

The check must be picked up in the Business Office by the account custodian. The top portion of the Custodial Record must be completed by the custodian. A petty cash fund is established for the payment of small (less than $10) charges or for non recurring charges, such as freight. Petty cash funds are not to be used for travel or entertainment expenses. There are times when a custodian might make errors when handling the fund or receive incorrect amounts back from the requester or the employees who use the money. These errors cause the cash in the fund to be more or less than what the amount of the fund should be.

Once approval is received to increase your petty cash/cash drawer, complete a DV, payment reason “Z”, for the additional funds using the employee record instead of the Petty Cash Vendor record. The object code for this transaction is petty cash or cash drawer.