Petty Cash Policies and

Procedures
Petty cash funds are for the convenience of University departments but are not
required. Seasonal petty cash funds can be set up if you only need petty cash for
specific functions during the year. You may wish to discontinue your petty cash fund
or reduce the amount of petty cash that you keep on hand and use the University
purchasing card instead.

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Petty Cash Funds

Purpose
This section prescribes the policies and procedures relating to the establishment,
administration, and discontinuance of petty cash funds.

General Definitions
Petty Cash Custodian: The employee in a department who has been authorized to
make payments from a petty cash fund and who is directly responsible for the
administration of the fund.

Security of Petty Cash Funds

Policy
Department Chairs/Directors are responsible for the proper safeguarding of petty
cash monies entrusted to their departments. Cash and receipts for unreimbursed
expenditures must be kept in a locked container such as a fire-proof file cabinet,
safe, or other suitable device to which unauthorized access is difficult.

The petty cash custodian is personally responsible for the cash which was
specifically issued to him/her. Therefore, access to the fund must be limited to
the custodian.

Establishing a Petty Cash Fund

Policy
 A petty cash fund may be established in a department to improve the efficiency of
departmental operations. These funds are available to purchase minor items when it
would be otherwise impractical to purchase items through the usual purchasing
methods.

These funds are subject to periodic audits. Recurring audit findings may result in the
petty cash fund being revoked.

The custodian is responsible for ensuring the cash on hand and receipts equal the
authorized amount of the fund at all times. Petty cash funds must be kept separate
from change funds, cash drawers, personal funds, and any other collected revenue.

Procedure
The Department Chair/Director submits the following items to the Manager of
Banking Operations and Auxiliary Accounting for approval:

 A memorandum justifying the need for a petty cash fund and designating the fund
custodian. This should include the identification number and an original signature of the
custodian.

 A check request payable to the designated fund custodian in the amount requested. The
check request should include the department name and be signed by the Department
Chair/Director.

The department custodian will receive a check payable to him/herself and the
current petty cash procedures. Petty cash checks may be cashed at the Cashiers'
Office.

Petty Cash Fund Purchases

Policy
Disbursements from petty cash funds must be properly documented and for a valid
University business purpose.

The University does not reimburse Michigan sales tax. Therefore, to save time and
confusion, it is wise to obtain the University's sales tax number from the petty cash
custodian before making a purchase. Use of the University sales tax number when
 purchasing items for other than University purposes is prohibited and may result in
disciplinary action.

Petty cash funds may NOT be used for the following:

 Items/receipts in excess of $200.00.

 Payment of sales or excise taxes on any purchases within Michigan since Michigan
Technological University is a tax exempt organization and does not reimburse Michigan
sales tax. The University is also tax exempt in Wisconsin and Florida.

 Cashing of personal checks or providing personal loans.

 Purchases which are required to be reported in a specific manner such as, but not limited
to, personnel services, travel expenses, payroll advances, and business meals.

 Purchase of items which are prohibited under petty cash procedures:

o advertising

o alcoholic beverages and tobacco

o animals (laboratory)

o automotive repairs (accident related)

o chemicals

o clothing

o controlled substances

o cylinder gases and liquid nitrogen

o donations

o flowers

o hazardous materials

o hospitality expenses greater than $5, such as meals or entertainment

o leases and rentals

o maintenance agreements

o Michigan sales tax

o personal items

o any items that are intended to be used or consumed by University Employees on or off
campus for other than University use.

o professional services

o renovations or remodeling (on campus)

o seminars and memberships

o telephones and cell phones

o university letterhead, business cards, and envelopes

o weapons and ammunition

Financial Services and Operations has the authority to make exceptions to the
above list when special or unusual circumstances apply. Approval for exceptions
must be received prior to purchasing items listed above.

Procedure
An employee purchasing items using petty cash funds does the following:

1. Obtains prior approval from the Department Chair/Director, supervisor, or fund custodian.

2. Obtains, when necessary, the University sales tax number from the petty cash custodian
since Michigan sales tax is not reimbursable.

3. Obtains, when necessary, a petty cash advance from the fund custodian. The advance is
provided to the employee only to purchase legitimate petty cash items. Each time an
advance is given, the custodian must maintain the following information:

o the amount of the advance

o the date

o the purpose

o the recipient

o the recipient's signature

4. Makes the purchase, paying for the item with personal monies or with the petty cash
advance and obtains an itemized receipt or cash register sales slip.
5. Presents the original sales receipt or cash register sales slip to the petty cash custodian.
The receipt(s) must include:

o description of the item(s)

o date of purchase

o place of purchase

o itemized amounts

o purpose

o signature of purchaser

6. Receives reimbursement for the purchase from the petty cash custodian when personal
monies are used or returns any unused portion of the petty cash advance to the petty cash
custodian immediately after the purchase is made.

Replenishment of Petty Cash Fund

Policy
Replenishment of the petty cash fund should be done on a timely basis but will vary
by department. All petty cash funds must be reimbursed at least quarterly during the
fiscal year, regardless of the dollar amount to be reimbursed. In addition, all funds
should be replenished at the fiscal year end so there are no outstanding receipts as
of June 30.

Procedure
The petty cash reimbursement request for the amount to be reimbursed must be
completed and faxed to Accounts Payable (7-2119) along with a copy of the original
receipts. Keep original receipts for seven days in case the faxed copy is not
readable.
The reimbursement request should include the following:

 Name, Department, and identification number of the fund custodian

 Date of each receipt

 Banner index and account code to be charged

 Amount
 Each receipt should be listed individually with the index, account code, and amount
included. The fund custodian's signature and department must also be completed.

A reconciliation of the petty cash fund must be done on a regular basis. Complete
the Petty Cash/Change Fund Reconciliation Form to insure the receipts plus cash on
hand is equal to the amount of the authorized petty cash fund.
If receipts plus cash on hand are less than the authorized amount, this is an overage
and must be deposited in the Cashier's office crediting the original index with an
account code of E909, cash over/short.

If the receipts plus cash on hand are less than the authorized amount, this is a
shortage. If the amount is significant, it should be report to Public Safety immediately
for investigation. If the amount is less than $25, report this on your petty cash
reimbursement request, charging the original index with an account code of E909,
cash over/short.

Transferring Petty Cash Fund Custodianship

Policy
The Department Chair/Director is responsible for reporting any changes in petty
cash custodians to Financial Services and Operations.

Procedure
1. When a new custodian is to take charge of a petty cash fund, the former custodian
replenishes the fund so that the fund has the established amount of cash on hand.

2. The Department Chair/Director sends a memo to the Manager of Banking Operations and
Auxiliary Accounting which indicates:

o removal of the former custodian from the fund

o the new fund custodian's name and identification number

o signature of the new custodian

This memo must be sent to Financial Services and Operations prior to any petty
cash replenishments to the new custodian.
Accounts Payable will not reimburse a petty cash custodian unless the name is on
file as the current custodian.

Increasing/Decreasing/Closing Petty Cash Funds

Procedure
Increasing a petty cash fund: When additional petty cash funds are needed, the
Department Chair/Director sends a memorandum to the Manager of Banking
Operations and Auxiliary Accounting justifying the increase. Submit a check request
payable to the fund custodian in the amount of the requested increase.
Decreasing a petty cash fund: A petty cash fund should be reduced if the amount
of the fund exceeds the actual needs of the department. The amount which is no
longer needed should be deposited at the Cashiers' Office, crediting the original
index with an account code of A001, along with a memo indicating the fund is being
decreased.
Closing a petty cash fund: When a petty cash fund is no longer needed, the fund
custodian should replenish the fund to the authorized amount. This amount must
then be returned to the Cashiers' Office, crediting the original index with an account
code of A001, indicating the fund is being closed.
Petty cash funds must NEVER be deposited into a revenue account code.