637 Cash Purchases and Petty Cash Funds
Approved by President
Effective Date: June 5, 2017
Responsible Division: Business and Finance
Responsible Office: Business and Finance
Responsible Officer: Associate Vice President, Business and Finance
This policy establishes procedures for justification and authorization of the advancement of petty cash funds to Middle Tennessee State University (MTSU or University) department or budgetary heads. The policy further establishes procedures for the proper use and care of those funds.
When the nature of certain departmental operations requires a change fund or a disbursement fund for purchases of minor, low cost items, the Vice President for Business and Finance will, upon proper justification and completion of the Petty Cash Authorization Form, authorize the Office of Business and Finance to advance the department or budgetary head a petty cash fund, which will be maintained on a custodial basis. Such advances are not chargeable to the department’s operating account when issued but are reflected on MTSU's accounting records as an advance to the Department Chair/Director or budgetary head who is accountable for proper fiscal and physical control of the fund.
II. Proper Custody and Control of Petty Cash Funds
The custody and control of petty cash funds may be delegated to appropriate personnel; however, accountability and responsibility for proper use and care of the funds remain with the designated Department Chair/Director or budgetary head.
A. Facilities for safekeeping, commensurate with the size of the fund, must be available.
B. Petty cash funds, other than advances used in making change, must be kept separated from all other funds, including personal funds, and not co-mingled therewith. Separate funds should be requested if a change fund and disbursement fund are warranted.
C. Petty cash funds are subject to audit and should be frequently balanced to ensure that the cash plus paid receipts on hand equal the established amount of the fund. A Petty Cash Fund Reconciliation must be submitted by the Department Chair/Director or budgetary head when a request for reimbursement is submitted.
D. A Petty Cash Fund Reconciliation form should be prepared periodically and each time a Petty Cash Reimbursement Request is made. This form should be reviewed and signed by the Department Chair or budgetary head.
E. Bank accounts cannot be opened for petty cash funds without prior approval of the President and the Board of Trustees (Board).
F. Petty cash funds will be verified in writing by both parties, custodian and Department Chair/Director, when responsibility and custody of the fund are changed.
III. Limitations on Use of Petty Cash Funds
A. Supplies and materials which are available from the Bookstore may not be purchased through the petty cash account except in emergency situations. If such purchases are necessary, an explanation must be attached to the voucher.
B. Petty cash can be used only when the purchase from one (1) vendor is less than fifty dollars ($50.00).
C. Specific approval must be obtained from the Vice President for Business and Finance before petty cash funds can be used for purposes other than change funds or for the cash payment for minor items.
D. Loans and advances to employees for personal use from petty cash funds are forbidden. Personal check cashing is prohibited except from specified check cashing funds established on campus.
E. As an arm of the State, the University is exempt from the payment of state sales tax and consequently, cannot reimburse for any such tax that is billed by the vendor. Exemption forms are available from Accounting Services.
F. Meals, food, flowers, travel, personal services, contractor services, and dues or subscriptions cannot be reimbursed by petty cash funds.
G. One (1) petty cash fund may not be used as both a change fund and a disbursement fund.
IV. Securing of Proper Receipts for Petty Cash Expenditures
Receipts for petty cash expenditures must be obtained. The following requirements must be met:
A. The receipts must set forth a complete description of the materials purchased or the services rendered.
B. Receipts must be originals. The only exception is where a firm uses standard business forms and issues their receipt on a standard multi-part form which has imprinted hereon "Customer’s Invoice" or like designation.
C. The receipt must be positive evidence of payment. When vendor’s printed invoice forms are used as receipts, the invoice must clearly indicate that it has been paid, either by being stamped with the official paid stamp of the firm or by being marked paid and signed or initialed by the clerk. If a firm’s cash register tape is used, it should either show cash sale imprinted on it or be signed or initialed by the clerk. Items on a cash register tape must be identified.
D. Receipts cannot be accepted or processed which bear evidence of alteration.
V. Request for Reimbursement for Petty Cash Expenditures
A. Frequency of reimbursement request. Whenever the cash in the fund is depleted to the extent requiring replenishment, the receipts/vouchers should be attached to a Petty Cash Reimbursement Request form and should be submitted to Accounting Services for reimbursement. On June 30 of each fiscal year, a reimbursement request must be submitted for any paid receipts/vouchers on hand. Vouchers held over to the following fiscal year can be reimbursed only on the specific approval of the Vice President for Business and Finance.
B. Approvals and account charges. The index and account to be charged should appear on the request for reimbursement, along with the signature of the approving authority.
VI. Cash Purchases from Personal Funds
Upon occasion, it may be necessary for staff or departments which do not have a petty cash fund to make cash purchases from personal funds. Such expenditures will be reimbursed if proper receipt is obtained and presented for reimbursement, along with a Payment Authorization, and submitted to Accounting Services for processing.
VII. Cash Overage and Shortage
If at any time a department’s petty cash fund or daily receipts should be over or short, the overage or shortage should be reported to the Office of Business and Finance immediately by completing the Petty Cash Fund Reconciliation and providing an explanation of the circumstances.