University Business Policies and Procedures Manual

7210
PETTY CASH FUND
Effective Date: November 1, 1991
Revised: 12/06/93, 07/01/04
Subject to Change Without Notice 

1. General

This policy applies to the establishment and operation of a Petty Cash Fund. A Petty Cash Fund may be authorized by the University Controller for departments that make frequent small value purchases (typically less than $25). Violation of this policy will result in the closing of a department's Petty Cash Fund.

A Petty Cash Fund is used either to reimburse an employee who made authorized purchases for the department out of personal funds or to advance cash to an employee to make an authorized purchase for the department. All Petty Cash purchases must be approved in advance by the employee's supervisor. A Petty Cash Fund must never be used for personal advances, loans, IOUs, or cashing checks. Items not authorized for reimbursement through Petty Cash include salary payments, payments for outside services, travel costs, and any unallowable expenditures. Refer to "Allowable and Unallowable Expenditures" Policy 4000, UBP for a description of unallowable expenditures.

A Petty Cash Fund may be used for departmental purchases of $100 or less per day/per vendor without having to go through the normal procurement procedures. Incremental purchasing, splitting one large purchase into several small purchases, is illegal. Employees may make authorized purchases for a department out of personal funds and be reimbursed by the University Cashiers Office. Refer to "Purchasing Goods Off Campus" Policy 4320, Section 6., UBP for policies and procedures on making purchases with petty cash.

2. Establishment

To establish (or increase) a Petty Cash Fund, submit a justification memo and Petty Cash Receipt to the Controller's Office for approval. Include a justification for the Petty Cash Fund, the name of the Fund Custodian, the location of the fund, and the amount of the fund. The amount of a Petty Cash Fund should be limited to the minimum amount required for efficient operations. This limits risk and loss of interest income. A fund may be decreased or eliminated by making a deposit to the Petty Cash Fund index number. 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 accounting office. The Controller's Office must be notified in writing if a fund is to be permanently closed.

3. Safekeeping of Fund

A department that has a Petty Cash Fund is responsible for the safekeeping of the Petty Cash and for the safety of employees who handle the money. Access to the fund must be restricted to the individual responsible for the fund. 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 (for example, place cash boxes in a safe or locked file cabinet, memorize safe combinations instead of writing them down, etc.). University Campus Police Department will provide an escort for any fund reimbursement upon request. Campus Police Department will also inspect and recommend security measures for departments that handle cash.

4. Fund Custodian

The Fund Custodian is responsible for insuring that the total amount of the fund is intact at all times and should reconcile the Petty Cash Fund once a week. The UNM Petty Cash Fund Reconciliation form (Exhibit A.) should be used for this purpose. The Reconciliation form must be signed by the Fund Custodian and maintained for two (2) years.

4.1. The Petty Cash Fund must be reconciled whenever the Fund Custodian changes. The outgoing Custodian reconciles the fund listing its contents. Both the outgoing and incoming Fund Custodians sign the UNM Petty Cash Fund Reconciliation form. Forward a copy of the reconciliation form to the accounting office and indicate the Fund Custodian changed.

5. Disbursements

5.1. To reimburse an employee from a departmental Petty Cash Fund, prepare a Petty Cash Receipt form. The approved Petty Cash Receipt form is given to the Fund Custodian and the employee is reimbursed. Petty Cash Receipt forms can be obtained from the appropriate accounting office.

5.2. A Petty Cash Advance form (Exhibit B.) should be used when the department advances cash to an employee to make authorized purchases. The form must be signed by the Fund Custodian, the employee receiving the Petty Cash, and the employee's supervisor. The form will be canceled when the employee provides a receipt for the authorized purchase. The receipt must be returned to the Fund Custodian no later than the next working day after receiving the advance.

6. Replenishing the Petty Cash Fund

Fund Custodians should replenish the Petty Cash Fund within ten (10) days of the date of purchase. Refer to "Purchasing Goods Off Campus" Policy 4320, Section 6.1., UBP for policies and procedures on reimbursements. To replenish the Petty Cash Fund, the Fund Custodian prepares a Petty Cash Receipt. The white copies of the Petty Cash Receipt form(s) processed for employee reimbursements and the canceled Petty Cash Advance forms must be attached. The Fund Custodian's name will appear in the "person being reimbursed" section on the Petty Cash Receipt form. The employee picking up the money from the University Cashiers Department must sign the form under "Receipt of Funds Acknowledged." The pink copy is retained by the department.

7. Attachments

Exhibit A. - UNM Petty Cash Fund Reconciliation Form
Exhibit B. - Petty Cash Advance Form

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