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Basic Cash Control: Petty Cash / Change Funds

What to Know
Explanation of Usage

Change Funds

  • Used by units who sell goods or services and hence need to be able to provide change when customers pay in cash (currency and coin).
  • Important:  Sales overages and shortages are reported on the cash deposit form and are NOT to be cleared through the change fund.

Petty Cash Funds

  • Used by units who have a need to provide funds to employeees or students to acquire low value goods and services from outside vendors on an immediate or short term basis.
  • Important: The total of cash available and outstanding receipts should ALWAYS EQUAL the amount of the fund.

NOTE: There are some restrictions regarding what can be purchased with Petty Cash Funds.

4 Critical Policy Activities

Custodians of Petty Cash and Change Funds are solely responsible for the funds entrusted to them. Therefore, the four critical policy activities for staff with these responsibilities differ from those of cashiers. The information below highlights the critical control activities related to petty cash and change funds.

Accountability

  • Campus policy requires that individuals who will be the custodian of a fund in excess of $750, successfully pass a fingerprint/ background check.
  • The custodian can be held personally liable for losses due to the custodian's negligence.

Separation of Duties

  • Occasionally, the supervisor or someone other than the custodian, performs a surprise count of the fund. The supervisor, unit head, or designee reviews and approves all forms related to the operation of the fund. This includes accepting responsibility for verifying the accuracy and appropriateness of supporting documentation and arithmetic totals, etc. This individual also ensures that the custodian manages the fund in accordance with established policies and procedures. 

Reconciliation

  • The custodian should regularly (monthly or quarterly - based upon the amount of the fund) ensure that the amount of the fund (cash and receipts) remains intact. Within 30 days of the ending reporting date, the fund custodian completes a reconciliation or verification (as appropriate) of the fund for General Accounting's review.

Physical Security

  • The fund should be locked up except when in use. For funds up to $1,000, be sure that the lock on the desk, file cabinet, etc. is NOT common on the campus. (Avoid S-100 locks). See Business and Finance BUS-49 for secure storage requirements for funds in excess of $1,000. Each fund is to be maintained and stored separately, for example, in it's own envelope, cash bag or cash box.

For detailed information on Petty Cash and Change Fund processes refer to the Cash Handling guides.

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