FN04 Petty Cash and Change Funds

NOTE: The implementation of SIMBA requires the evaluation of all University Financial Policies and Guidelines.  After consultation with key constituencies, work will be underway to update, consolidate, and improve our policies to better serve you. Please be aware that due to volume, all policies may not be updated to reflect changes which have been communicated; however, policies will be updated with appropriate and applicable effective dates. Thank you for your patience as we work through this process.

Contents

• Purpose
• Petty Cash Funds
• Change Funds
• Establishment and Term of a Fund
• Custody of a Fund
• Restrictions
• Safeguarding Cash
• Petty Cash Expenditures
• Reimbursement of a Petty Cash Fund
• Increasing a Fund
• Reducing a Fund
• Closing a Fund
• Further Information
• Cross References

PURPOSE:

To outline the University's policy on petty cash and change funds.

PETTY CASH FUNDS:

Petty cash funds are used for minor local purchases and other expenditures (excluding postage stamps) which individually do not cost more than $50.00. Purchases of this nature are made only if it is not practical to obtain the items through the University purchasing procedures. A purchase (or purchases) from a single source that exceeds the $50.00 limit may not be broken up on separate receipts to avoid this limit. The University Purchasing Card should also be used for the convenience of minor purchases. (Refer to Policy BS14 - Penn State Purchasing Card.)

Because of the distance involved from Mailing Services, non-University Park locations may acquire postage stamps from their local Post Offices through the Petty Cash funds or Operating Cash funds, using the Receipt for Petty Cash Expended form. Refer to Procedure BS2008 - University Mailing Services, for information on postage stamps.

CHANGE FUNDS:

Change funds are used in cash register operations or other areas where cash collections take place and the need for having change-on-hand exists.

ESTABLISHMENT AND TERM OF A FUND:

A petty cash, change fund or other advance may be established on a long term or short term basis. Funds established for an indefinite period of time should be recorded as a long term advance.

Funds may be established in two ways:

1. Direct Custodian: As an advance to the petty cash or change fund custodian, who will obtain a temporary or long-term advance directly in their name, by processing a Special Request for Check (SRFC), with appropriate approval from the custodian’s budget administrator and Financial Officer. The SRFC should credit:
   1. Short Term (temporary) Advances - Account 0206
   2. Long Term (permanent) Advances - Account 0207
2. Sub-Custodian: As a Request for Cash Advance through the Financial Officer’s Operating Cash Fund. The custodian of the petty cash or change fund will be treated as a sub-custodian within the Operating Cash Fund.

CUSTODY OF A FUND:

The person to whom the petty cash or change fund is advanced is the custodian of that fund. These funds are non-transferable. Another custodian may be designated by:

1. Direct Custody: Notifying the Bursar in writing to change the name of the custodian with approval from the Financial Officer, upon a full reconciliation of the change or petty cash fund signed by both the old and new custodians. Alternatively, the old custodian can close out their advance and the new custodian can open a new advance.
2. Sub-custodian: Old custodian would close out the Request for Cash Advance and the new custodian would establish a new Request for Cash Advance with the Financial Officer.

RESTRICTIONS:

Petty cash and change funds are to be kept intact and never intermingled. Such funds must be kept in separate bags or lockboxes. They are not to be used for cashing employee paychecks or personal checks. Petty cash and change funds are not to be used for making any cash advances.

SAFEGUARDING CASH:

It is the custodian's responsibility to make whatever provisions are necessary to properly safeguard the fund.

Any amount of cash on hand that exceeds $1,000 must be maintained in a vault or an approved safe (fireproof, bolted to floor or otherwise immovable). Amounts of $1,000 and under must be maintained in a file safe or reinforced file cabinet with a pad lock and bar that secures all drawers. Cash should not be retained in desk drawers or standard file cabinets since they are easily accessed with nominal forcing or readily available keys.

PETTY CASH EXPENDITURES:

Each petty cash expenditure must be supported by a Receipt for Petty Cash Expended.

REIMBURSEMENT OF A PETTY CASH FUND:

Whenever the cash balance is low in the fund, reimbursement of the exact amount of expenditures should be requested by submitting store / cash register receipts to support proof of purchase and completed Receipt for Petty Cash Expended forms, with a Special Request for Check (SRFC).

INCREASING A FUND:

1. Direct Custodian: A Special Request for Check (SRFC) must be processed to increase a fund, with approval by the Financial Officer.
2. Sub-Custodian: The open Request for Cash Advance must be settled and a new Request for Cash Advance must be processed for the new required total.

REDUCING A FUND:

A petty cash or change fund must be reduced when the total amount of the fund exceeds the requirements of the area to which the fund has been issued.

1. Direct Custodian: A Report of Cash Receipts (ROCR) must be processed debiting the appropriate advance fund, with approval of the Financial Officer, with copy to the Associate Bursar and notation of the name of the custodian in the notepad.
2. Sub-Custodian: The original request is settled through the Financial Officer and a new Request for Cash Advance is processed for the reduced amount.

CLOSING A FUND:

All petty cash and change funds, whether they have been established for a specific or indefinite period of time, must be returned when they are no longer needed.

1. Direct Custodian: A Report of Cash Receipts (ROCR) must be processed debiting the appropriate advance fund with approval of the Financial Officer, with copy to the Associate Bursar and notation of the name of the custodian in the notepad.
2. Sub-Custodian: The original request is settled through the Financial Officer.

FURTHER INFORMATION:

For questions, additional detail, or to request changes to this policy, please contact the Office of Budget and Finance.

CROSS REFERENCES:

• Policy BS14 - Penn State Purchasing Card
• Policy FN05 - Operating Cash Funds
• Procedure BS2008 - University Mailing Services
• Request for Cash Advance form
• Receipt for Petty Cash Expended form
• Report of Cash Receipts (ROCR)
• Special Request for Check (SRFC)

Most Recent Changes:

• February 1, 2023 - Editorial changes. Changed all references to the Associate Vice President for Finance to the Associate Vice President for Budget and Finance, per the directive of the Senior Vice President for Finance and Business.

Revision History (and effective dates):

• January 5, 2023 - Editorial changes. Changed all references to the Office of the Corporate Controller to the Office of Budget and Finance, per the directive of the Associate Vice President for Finance
• September 2, 2022 - Editorial change to change Policy Steward from Associate Vice President for Finance and Corporate Controller to Associate Vice President for Finance
• November 8, 2018 - Subject Matter Expert added.September 20, 2018 - Editorial changes to update GURU hyperlinks from html formatting to cfm format.
• September 10, 2018 - Editorial changes to correct hyperlinks and to remove redundant Date Approved, Date Published, and Effective Date information.
• January 18, 2016 - Editorial change to the RESTRICTIONS section clarifying that petty cash and change funds must be kept in separate bags or lock boxes, to bring the policy in sync with Procedure CR2013 (Operating Cash Fund) verbiage.
• August 12, 2014 - Major revisions throughout the entire policy to reflect current handling of petty cash and change funds.
• September 25, 2013 - Editorial changes. Addition of policy steward information, in the event that there are questions or requests for changes to the policy.
• February 18, 2005 - Editorial change to eliminate "General Forms Usage Guide" and correct bad links.
• September 27, 2002
  • Account 0208 has been replaced by 0206.
  • Petty Cash section updated to reflect current purchasing methods
• September 7, 2001 - Changed requirements for safeguarding cash to be consistent with controls published in Policy FN01.
• February 7, 1995 -
  • Allow non-University Park locations to purchase postage stamps through petty cash and operating cash funds.
  • Allow group meals to be reimbursed from the Financial Officer's operating cash fund.
  • A Request for Cash Advance form now used in place of Special Request For Check form to establish funds.
• March 30, 1994 -
  • Increased petty cash fund limit from $20 to $50.
  • Can use petty cash funds to reimburse group meals and travel expenses up to $50.
  • Prohibits cashing of employee checks.
  • Added Travel Expense Accounts and Request for Reimbursement for a Group Meal forms to list of required forms.
• October 2, 1992 - Revised entire TERM OF A FUND section.
• March 25, 1992 - Substantial changes for editorial and form titles.
• July 24, 1986 - Increased petty cash fund limit from $15 to $20.
• March 26, 1985 - Prohibited purchase from a single source from being broken into smaller amounts to meet the $15 petty cash limit.
• July 27, 1983 - Location title change under ESTABLISHMENT OF FUND section.
• June 1,1982 - Consolidation of Policies CS-4 (September 29, 1978) and CS-5 (October 22, 1980).