The forms and worksheets described in these policies and procedures can be obtained by accessing Vanderbilt University's Forms Locator website, and searching by either the form name or the department name (Office of Financial Affairs). http://www.vanderbilt.edu/stop/forms. They can also be obtained on the Office of Financial Affairs's external website under the policies and procedures, section 305, Petty Cash. http://www.vanderbilt.edu/accounting. Note that these policies and procedures relate to the University's Petty Cash and Change funds. For those accounts that relate to the Medical Center, contact the Department of Finance.

Policy

I. Petty Cash Fund


Purpose and Overview

A petty cash fund is cash loaned in the Custodian's name for the purpose of making small purchases for the department when such purchases are impractical or unavailable through the University Procurement Department. Petty cash funds are established on an imprest basis or fixed amount. The fund is restored to its authorized level or fixed amount at periodic intervals by replenishing the cash in an amount equal to the expenditures made from the fund.

The department appoints a Custodian who is responsible for safeguarding and maintaining the petty cash fund. Maintaining the fund consists of disbursing funds, obtaining receipts, reconciling and replenishing the fund. When it is deemed that the petty cash fund is no longer necessary, the Custodian is responsible for ensuring that it is reconciled and closed.

Establishing a Petty Cash Fund

A department must request a petty cash fund by first completing Form 305-1, Petty Cash or Change Fund Application. Detailed instructions are attached to the form. The department then prepares the check request for the amount on the application, using account number 11240, center number 1-97-004-0000, and attaching the completed Form 305-1.

In establishing a petty cash fund, a department needs to consider and make decisions on the following:

• Determine the type of fund needed - In completing Form 305-1, determine whether your department needs a petty cash fund or a change fund. A petty cash fund is used for small purchases. A change fund is intended to provide cash to a department for the purpose of making change for a cashiering activity. No purchases are to be made from this fund. Change funds are explained in more detail below.

There are circumstances in which an imprest checking account needs to be established for a department to operate certain programs. The imprest checking account differs from a petty cash fund in that cash is not kept at the department location. Cash is deposited into a separate checking account established for a specific program and the department makes disbursements by issuing checks. It is similar to a petty cash fund in that the fund is periodically reconciled and replenished to a fixed amount. An imprest checking account is an infrequent arrangement that requires additional approvals and documentation. Therefore, they are not covered in these policies and procedures. Please contact the Office of Financial Affairs for more information regarding the imprest checking account.

• Justify the need for the fund - On the application, a department must indicate the following:

1. Justify the need for a petty cash fund
2. State the purpose of a petty cash fund
3. Describe or list the types of purchases that will be made.
4. State the reason that the PCard cannot be used as an alternative for the purchases.

Departments are encouraged to consider the Procurement Card System (PCard) as an alternative to establishing a petty cash fund. The PCard is an institutional credit card designed to give controlled buying power directly to the departments/division eliminating many purchase orders and demand check requests. Use of the PCard would eliminate the need, in many cases, to secure petty cash at the department and the subsequent paperwork involved in reconciling and replenishing the fund. Detailed information regarding this program can be found on the Procurement and Disbursement Services website. Vanderbilt University Procurement & Disbursement Services.

• Select a Custodian - The Custodian is an employee selected by the department to safeguard and account for the petty cash fund. The designee's name and signature is required on the petty cash fund application which represents the Custodian's agreement to accept responsibility for safeguarding the fund. There is only one Custodian per fund The Custodian remains accountable for the petty cash fund until custody is formally transferred to another employee by completing Form 305-2 (see "Change in Custodian," below) or until the fund is formally closed.

• Size of fund needed - The dollar amount of petty cash being requested must be entered on the application form. This amount should be enough cash to require replenishment of the fund at least once a quarter and no more than twice a quarter. The initial petty cash amount is established as a loan in the Custodian's name and posted to the petty cash cost center. The department cost center is charged when the Custodian submits the expenses via a check request to replenish the fund.

Responsibilities of the Custodian

1. Duties of Custodian - The Custodian is responsible for the safeguarding and accounting of the petty cash fund. The Custodian is responsible for reconciling the fund and verifying that the petty cash fund balance plus receipts pending reimbursement, at all times, equals the total amount of the original advance. Additionally, the custodian is responsible for submitting the appropriate documentation to replenish the fund. For details concerning the procedures to perform these responsibilities, see "Maintaining the Petty Cash Fund" below.

2. Safeguarding the fund -The fund should be the responsibility of one person, the Custodian, and secured in a locked location at all times. At no time should the fund be kept on one's person, deposited in a personal bank account or taken to one's home for safekeeping. In case of theft, the campus security should be notified.

3. Change in Custodian- One Custodian may not be changed to another Custodian without notifying the Office of Financial Affairs. Complete Form 305-2, Revision Request for Petty Cash or Change Fund. After completing the form, submit it to the Office of Financial Affairs. Be sure to physically count and reconcile the fund before it is transferred to and accepted by a new Custodian.

Maintaining the Petty Cash Fund

1. Accounting for Petty Cash Transactions - Proper accounting for a petty cash fund requires that the Custodian disburse funds only for authorized payments, obtain receipts and record expenditures. All disbursements must be supported by proper documentation i.e. an original invoice or register receipt, with a written notation clearly indicating the business purpose of the purchase. Petty cash expenditures are subject to all University policies and procedures related to proper expenses, authorization, accounting and documentation.

2. Reconciling Petty Cash Funds- The Petty Cash fund should be reconciled before replenishing, changing the Custodian or amount, and closing the fund. Reconciling the account means that the total cash on hand plus total receipts and reimbursement requests in process equal the authorized amount of the petty cash fund. Complete Form 305-4, Petty Cash and Change Fund Reconciliation Worksheet for reconciling the fund. This worksheet is maintained by the Custodian. If the fund does not balance, i.e. the summed total does not equal the authorized amount of petty cash, then call the Office of Financial Affairs for assistance.

3. Replenishing the Fund - When cash in the fund is low, the Custodian should submit a check request to replenish the fund. First, reconcile the account by completing Form 305-4, Petty Cash and Change Fund Reconciliation Worksheet. The custodian is responsible for maintaining the worksheet. If the account is in balance, then the amount to be requested should equal the total dollar amount of the receipts. Next, prepare the check request. For payee, indicate the Custodian's name followed by "Petty Cash." For example, Jane Doe, Petty Cash. The description should indicate "reimbursement of petty cash funds." Group the receipts by account and center number and list each grouping on the check request. Be sure to use the account number to which the reimbursement relates. For example, if stamps were purchased, then use account 60030. Do not charge the expenses to account 11240, center 1-97-004-0000 as this account and center is used only for establishing, revising or closing the fund. The check request should be signed by the individual authorized to sign check requests. Complete all other required areas of the check request in compliance with University policy and procedures.

Review of the Petty Cash Fund

1. Audits - All petty cash funds are subject to periodic audits. The Office of Accounting will send a letter to the Custodian each year requiring that the Custodian conduct a self-audit of the fund. The letter must be signed by the Custodian and one of the following: the Dean, Director or Department head. Also, the Office of Financial Affairs and Internal Audit reserves the right to conduct surprise, onsite audits as it deems necessary.

2. Revocation of Funds- Misuse or improper accounting of the fund will, at a minimum, result in the fund being closed.

Changes to the Petty Cash Fund

Due to changes in the Department, it may be necessary to to transfer responsibility of the fund to another Custodian or to revise the original authorized dollar amount of the fund. In these instances, Form 305-2, Revision Request for Petty Cash or Change Fund must be completed and sent to the Office of Financial Affairs for approval. The form must include the change being requested, i.e. the new amount or the new Custodian's name and the reason for the change. Detailed instructions are attached to the form. Be sure to complete Form 305-4, Petty Cash and Change Fund Reconciliation Worksheet before requesting the change to ensure the fund is in balance. This will verify the balance prior to a change in amount or transfer to a new Custodian. The Custodian is responsible for maintaining the completed worksheet.

Closing the Petty Cash Fund

If it is deemed that a petty cash fund is no longer necessary, then complete Form 305-3, Close Petty Cash or Change Fund. After the petty cash fund is reconciled, the remaining cash should be deposited with the cashier. Attach a copy of the Cashier's receipt and the unreimbursed cash disbursement receipts to the form. Be sure that the receipts are properly documented with the business purpose of the purchase and the account and center number to be charged. Obtain the signatures as noted on the form and submit it to the Office of Financial Affairs.

 

II. Change Fund

Purpose and Overview

A change fund is intended to provide cash to a department for the purpose of making change for a cashiering activity. The amount of a change fund remains constant. It differs from a petty cash fund in that it does not require periodic reimbursement. Purchases or advances from this fund are prohibited. It is similar to a petty cash fund in that cash is advanced to a department and the safeguarding and accounting for the fund is the responsibility of an appointed Custodian.

Establishing a Change Fund

To establish a change fund, first complete Form 305-1, Petty Cash or Change Fund Application. Next, the department prepares the check request, attaching the completed application. Refer to the instructions attached to the application for detailed information for preparing the form.

In establishing the change fund, a department needs to consider and make decisions on the following:

• Justify the need for the fund - An explanation of why the fund is needed and justification for the amount requested are required on the application.

• Select a Custodian - The Custodian is an employee selected by the department to safeguard and account for the change fund. The Custodian's name and signature is required on the application, which represents the Custodian's agreement to accept responsibility for safeguarding the fund. There is only one Custodian per fund. The Custodian remains accountable for the fund until custody is formally transferred to another employee by completing Form 305-2 (see "Change in Custodian" below) or until the fund is formally closed.

• Size of fund needed - The dollar amount of change being requested is required on the application form. This amount should be established at an amount no greater than that needed to conduct normal cash sales transactions

Responsibilities of the Custodian

1. Duties of the Custodian - The Custodian is responsible for the safeguarding and accounting of the change fund. The cash balance remains constant. It not used for the purpose making purchases or advancing cash. When the change funds are not in use they must be locked in a safe or cash register.

2. Accounting for the Fund- The Custodian is responsible for verifying that the cash amount remains fixed. At the close of each day's business, the change fund is to be removed first from the total cash in the register and kept separately for the next day's operations. The remaining cash in the register is deposited at the Cashier's Office representing the current day's receipts. If the total cash at the close of the day does not agree with the authorized change amount plus the recorded receipts, the difference affects that day's receipts, not the amount of the change fund.

3. Safeguarding the fund -The fund should be the responsibility of one person, the Custodian, and secured in a locked location at all times. At no time should the fund be kept on one's person, deposited in a personal bank account or taken to one's home for safekeeping. In case of theft, the campus security should be notified.

4. Change of Custodian- One Custodian may not be changed to another Custodian without notifying the Office of Financial Affairs. Complete Form 305-2, Revision Request for Petty Cash or Change Fund. After completing the form, submit it to the Office of Financial Affairs. Be sure to physically count and reconcile the fund before it is transferred to and accepted by the new Custodian.

Review of the Change Fund

1. Audits - All change funds are subject to periodic audits. The Office of Financial Affairs will send a letter to the Custodian each year requiring that the Custodian conduct a self-audit of the fund. The letter must be signed by the Custodian and one of the following: Dean, Director or Department head. Also, the Office of Financial Affairs and Internal Audit reserves the right to conduct surprise, onsite audits, as it deems necessary.

2. Revocation of Funds- Misuse or improper accounting of the fund will, at a minimum, result in the fund being closed.

Revisions to the Change Fund

Due to changes in the Department, it may be necessary to transfer responsibility of the fund to another Custodian or to revise the original authorized dollar amount of the fund. In these instances, Form 305-2, Revision Request for Petty Cash or Change Fund must be completed. The form must include the revision being requested i.e. the new amount or the new Custodian's name. It must also include the reason for the revision. Detailed instructions are attached to the form.

Closing the Change Fund

If it is deemed that a Change Fund is no longer necessary, then complete Form 305-3, Close Petty Cash or Change Fund. Count the cash prior to closing the fund per the instructions on the form. After being counted, the cash should be deposited with the cashier. Attach a copy of the Cashier's receipt to the form and submit the form to the Office of Financial Affairs. For more details see the instructions attached to the form.