Petty Cash Administration

Responsible Office: Treasury Services, Finance and Budget
Current Approved Version: 06/02/2021
Policy Type: Administrative

Policy Statement and Purpose

The purpose of the policy is to establish the proper administration of petty cash funds. Individual departments may need access to petty cash for change funds or participant studies. Departments may request a petty cash fund to be maintained within their department. Each petty cash fund is required to have an approved petty cash custodian who takes responsibility for the fund.

Noncompliance with this policy may result in disciplinary action up to and including termination. VCU supports an environment free from retaliation. Retaliation against any employee who brings forth a good faith concern, asks a clarifying question, or participates in an investigation is prohibited


Who Should Know This Policy
Definitions
Contacts
Policy Specifics and Procedures
Forms
Related Documents
Revision History
FAQ

Who Should Know This Policy

This policy applies to all employees (including faculty and staff) engaged in fiscal activity of the university.

Definitions

Approver

Dean / Dept Head or Designee to be responsible for overseeing and approving Petty Cash changes and reconciliations.

Change fund

A petty cash fund maintained for the purpose of giving change to customers when they are paying for goods or services.

Custodian

A full time VCU employee approved by Treasury Services to be responsible for the management and safekeeping of a departmental petty cash fund.

Designee

Person assigned by the Dean / Dept Head to carry out the approver’s role.

Participant study fund

A petty cash fund established for qualifying payments to human participants engaged in research activities.

Safekeeping

The storage of assets (including cash) in a protected area.

Contacts

Treasury Services officially interprets this policy. Treasury Services is responsible for obtaining approval for any revisions as required by the policy Creating and Maintaining Policies and Procedures through the appropriate governance structures. Please direct policy questions to Treasury Services at tresreport@vcu.edu.

Policy Specifics and Procedures

The Treasury Reporting office within Treasury Services is responsible for the establishment and oversight of all department petty cash funds. The petty cash custodian has sole responsibility for the safekeeping, maintenance and proper usage of funds for a department. Funds are subject to unannounced cash counts and verification by Treasury Reporting and Audit and Compliance Services.

1. Use of Departmental Petty Cash Funds:

Petty cash funds are issued to custodians justifying the need for cash to be held in the department for change funds or participant studies that require the ability to immediately pay study participants and/or maintain confidentiality of the participant receiving payment. Certain grandfathered petty cash funds may be used for small dollar (under $100) unanticipated business expenses. The custodian is responsible for ensuring that all expenditures made from the fund are reasonable and meet any internal or external restrictions placed on the Banner organization that will be charged. No purchases are allowed from petty cash change funds as the purpose of this fund type is to give change when customers are paying for goods or services.

The petty cash fund must be maintained at the authorized amount at all times, which can be a combination of cash and any unreimbursed receipts. The full value of any change fund must be maintained in cash at all times.

Petty cash funds cannot be used to cash checks.

2. Establish, Increase, Decrease, Close, Change Custodian or Location of a Petty Cash Fund:

Requests to establish, increase, decrease, close, change custodian or location of a petty cash fund must be approved by the dean/department head. Deans/department heads may give written authorization to be represented by a designee utilizing the Petty Cash Action form. This document will serve as a resource to facilitate a point of contact when questions or issues arise.

Requests to establish, increase, decrease, close, change custodian or location of a petty cash fund are documented by completing a Petty Cash Action form along with the appropriate attachment.

Requests to establish a new fund, increase or decrease an existing fund and changes to the physical location of a fund require the completion of the Petty Cash Action form and Attachment A, which documents the use of the fund and method for safeguarding the fund.

Requests to close the fund or change custodians require the completion of the Petty Cash Action form and Attachment B.

Forms must be sent to Treasury Reporting for processing and are subject to approval by the senior manager for Treasury Reporting.

3. Safekeeping of Petty Cash Funds:

The custodian identified for the funds is solely responsible for the safekeeping and maintenance of the fund and is the only individual with access to the fund. The custodian is not permitted to delegate this responsibility to another person without prior written approval from the senior manager for Treasury Reporting. The fund must be properly secured at all times and segregated from all other funds maintained by the department. Safe doors must be kept closed during working hours and locked at times when it is not necessary to be in and out of the safe. Safe combinations must be memorized or electronically stored in a secured password manager such as KeePass. Cash boxes must be locked when not in use. Keys to cashboxes and file cabinets where cash is stored must be secured away from the locked devices (not in the same office) or carried with the custodian.

4. Petty Cash Fund Reconciliation:

The custodian is required to prepare a written monthly reconciliation of petty cash funds for internal records. Reconciliations may be prepared more frequently, depending on the operating cycle of the department and/or the size of the fund.

Written reconciliations must be reviewed and approved monthly in writing by the dean/department head or designee. The Monthly Petty Cash/Patient Study Fund Reconciliation form is available for use. Monthly reconciliation support documents must be stored in an electronic format that cannot be altered after completion and accessible to the custodian and dean/department head or designee for reference. DocuSign is available for use.

Any overage or shortage in the fund must be reported immediately to the senior manager of Treasury Reporting.

Treasury Services requires receipt of an annual reconciliation prior to each fiscal year end to verify the petty cash fund. All discrepancies must be resolved prior to the end of the fiscal year (June 30). The department’s vice president, dean/department head and Audit and Compliance Services are notified by Treasury Reporting if the annual reconciliation is more than 30 days past due.

5. Petty Cash Reimbursement:

Employees are responsible for knowing and complying with established university and state policies and procedures for business expenditures. A Petty Cash – Subaward form must be utilized for a petty cash reimbursement. The petty cash custodian must be the vendor. Expenditures less than $25 should be consolidated and reimbursed quarterly. Expenditures equal to or greater than $25 must be reimbursed monthly at a minimum. Petty cash replenishment checks must be cashed at the Cashier’s Office or at the university’s primary bank. If utilizing the Cashier’s Office, contact cashop@vcu.edu or call 828-8774 before visiting to ensure adequate cash is available. The university will not reimburse fees incurred to personal accounts as this is a non-allowable transaction.

6. Loss or Theft of Petty Cash Funds:

Any loss or theft from the petty cash fund must be reported to the VCU Police and Treasury Reporting as soon as it is discovered.

In the event of a loss or theft, the department is responsible for reimbursing or replacing the fund from one of its local Banner orgs. Departments with a significant loss or theft could be reimbursed by filing an insurance claim. Departments should contact the manager of Insurance and Risk Management for any questions related to filing the insurance claim.

Any suspected misuse of a petty cash fund must be reported to the senior manager for Treasury Reporting.

7. Suspension or Termination of Petty Cash Funds:

Failure to comply with the requirements established for the petty cash fund may result in the suspension or termination of the fund. If one or more of the following conditions are identified during an audit by Treasury Reporting or Audit and Compliance Services, the fund may be suspended up to 6 months. Multiple occurrences of conditions below may result in longer suspension or immediate termination based upon Treasury management review:

Funds not maintained at the designated level
Change of custodian forms not submitted
Monthly reconciliations not completed
Monthly reconciliations not appropriately reviewed
Annual reconciliation not completed by June 30

If one or more of the following conditions occur during an audit by Treasury Reporting or Audit and Compliance Services, the fund may be immediately terminated and any missing funds will be charged to the department:

The money in the petty cash fund has not been secured in a locked cash box, locked file cabinet or safe.
There has been inappropriate or unauthorized use of the petty cash fund (including but not limited to check cashing, personal loans to staff or personal use).
The money in the petty cash fund has been commingled with personal or other departmental funds.
Any portion of the petty cash fund is missing.
The fund has been inactive for more than six months.
There has been a recurrence of a condition that led to a previous suspension of the fund.

8. Petty Cash Training:

Petty cash training is offered as a Canvas course. The custodian, dean/department head and if applicable, designee must complete the mandatory training and test prior to receiving a petty cash fund. Custodians and the dean/department head or designee must complete the training and test annually.

Forms

Revision History

This policy supersedes the following archived policies:

8/24/2017 Treasury Services, Policies and Procedures

FAQ

1. Why must my petty cash fund be reconciled monthly?

Petty cash funds must be reconciled at least monthly as an internal control for fraud prevention and to ensure that funds are being used appropriately.

2. Are there any limits to how much petty cash I can take out?

There is not a firm limit, but it must be appropriate to the business purpose with regular replenishments to maintain a revolving fund.

3. Is a custodian allowed to have multiple petty cash funds?

Yes, it is possible for a custodian to have multiple petty cash funds. Often this occurs when a researcher is working on multiple projects. The custodian must request each petty cash fund individually and must replenish, reconcile and close each fund separately.

Policy Program

Integrity & Compliance Office