PURPOSE OF A PETTY CASH FUND
The purpose of a petty cash fund is to provide departments with available cash for the reimbursement of small expenditures such as stationary supplies, postage, groceries, hardware supplies, visitor parking, etc. The use of a petty cash fund is more efficient than issuing a large volume of small dollar cheques.
Expenses that are reimbursed through a petty cash fund are generally less than $25.00. For regular, large dollar, or frequently purchased items please use the Purchasing Card, Systems Contracting, the Travel Advance and Settlement Claim form, or the Request for Payment form.
A petty cash fund is not to be used for transactions such as the following; as a change fund for events, personal loans or personal expenditures, eg. I.O.U’s, cashing of personal cheques, travel advances or travel reimbursements, (i.e. reimburse for kilometres driven, accommodation, meals, etc.), emergency student loans, bursaries, honorariums, salaries or wages (including temporary services and student wages).
All compensation for services provided by individuals must go through Human Resources and the payroll system.
ESTABLISHING A NEW PETTY CASH FUND
- Determine how large a fund is needed. Too large of a fund will result in an inappropriate amount of cash sitting idle which would be better kept in a bank account. Too small of a fund will require constant replenishing. A petty cash fund is typically large enough to cover two months worth of expenditures.
- Designate an employee to be the Custodian of the petty cash fund. The Custodian must be an employee of the University of Waterloo.
- Complete a “Request for a New Petty Cash Fund” form, located on the Finance website at http://www.adm.uwaterloo.ca/infofin/Forms/forms.html.
- Obtain approval by the Dean, Chair/Director or Department Head
- The petty cash fund must be recorded in the department org unit, using fund 100 or 101, and object 1000. For example, XXXX-100-100-0000-000000-1000-0000-000.
- Forward the “Request for a New Petty Cash Fund” form to Gloria Pageau, Finance-ECH.
- Finance will process the request and issue a cheque payable to the Custodian.
- The cheque will be mailed to the Custodian to an on-campus address.
- The Custodian cashes the cheque at the CIBC branch in the Student Life Centre or at a personal bank.
- Store funds on-campus in a secure location.
ADMINISTERING AN EXISTING PETTY CASH FUND
Disbursements
- The Custodian should be satisfied the expense is a valid UW expense before dispursing funds from the petty cash ie expense was approved.
- The Custodian is responsible for disbursing the petty cash and obtaining a valid receipt or invoice to support the transaction.
- Each transaction should be recorded on the Petty Cash Expense Form denoting the appropriate expense account and reason for the expense.
- The Petty Cash Expense Form is located on the Finance website at http://www.adm.uwaterloo.ca/infofin/Forms/forms.html .
- The person being reimbursed must initial in the “Received By” column on the Petty Cash Expense Form as evidence of reimbursement.
- Expenses charged to research funds (105), should have the approval of the researcher.
Advances
It is not considered best practice to advance money from the petty cash fund.
Receipt of Funds
There should be no circumstances where the Custodian accepts cash or any other form of tender in the petty cash fund. Personal money or cash received for department sales and services should never be used to replenish the petty cash fund.
REPLENISHING THE PETTY CASH FUND
- When the fund is substantially completed, the Custodian counts the cash on hand and totals the receipts. The total of receipts plus available cash must equal the petty cash fund total. If the total of receipts and available cash does not equal the petty cash fund total a mistake has been made. The Custodian should make a reasonable attempt at trying to find the mistake and correct it. If after a reasonable attempt has been made and the Custodian still cannot identify the mistake, the cash over/short amount should be recorded to a department account using cash over/short object 4005.
- Ensure the Petty Cash Expense Form is completed properly. Attach support for all expenditures, i.e. invoices, receipts, etc.
- The Custodian signs the Petty Cash Expense Form to indicate the form is completed and to confirm he/she is indeed the Custodian on record.
- The Custodian’s Supervisor must sign the completed Petty Cash Expense Form as evidence of approval. The approval indicates that the accounts used are acceptable. The Supervisor should review the expenses that have been reimbursed to ensure acceptable for reimbursement. Any questionable expenses should be discussed with the Custodian.
- Retain a copy of the Petty Cash Expense Form for back-up in the department.
- Send the original signed Petty Cash Expense Form along with original receipts to Finance-Accounts Payable, ECH, in order for the petty cash fund to be replenished. Forms which are incomplete or not properly authorized may be delayed.
- It will be the responsibility of Finance-Accounts Payable to calculate and record the G.S.T. rebate to the GST recoverable account, 5220-100-100-0000-000000-9205-0000-000.
- Finance-Accounts Payable will issue a cheque. A cheque will not be issued to anyone except the Custodian.
- Replenishment of the petty cash fund should be done in a timely manner so that the total of expenses reimbursed never exceeds the total of the petty cash fund amount on record.
INCREASING THE PETTY CASH FUND
- The Dean, Director/Chair or Department Head should approve any request for an increase to the petty cash fund.
- Complete the “Request for an Increase in Fund Amount $” form located on the Finance website at http://www.adm.uwaterloo.ca/infofin/Forms/forms.html.
- Send the completed and signed form to Gloria Pageau, Finance-ECH.
- Finance will process the request and issue a cheque payable to the Custodian for the increased amount.
DECREASING THE PETTY CASH FUND
- For departments that are authorized to prepare bank deposits, include the excess petty cash funds in a bank deposit with a credit to the Department’s petty cash account, object 1000.
- For all other departments, take the excess cash to Student Accounts, Needles Hall, for deposit to the department’s petty cash account, object 1000.
- Indicate on the cash receipt for the purpose of the deposit, eg. “To decrease petty cash fund”.
CHANGING THE CUSTODIAN
- Complete the “Request for a Change in Custodian” form, located on the Finance website at http://www.adm.uwaterloo.ca/infofin/Forms/forms.html and send to Gloria Pageau, Finance-ECH.
- The request should be approved by the Dean, Chair/Director or Department Head.
CLOSING THE PETTY CASH FUND
When closing a petty cash fund, there can be up to two steps involved. The first is to ensure that the final expenses that have been reimbursed from the fund are recorded in the general ledger. The second is to deposit excess cash at Student Accounts, Needles Hall. The total of the two steps should clear the petty cash fund account to zero.
To Record Final Expenses:
- To record the final expenses please complete the Petty Cash Expense Form.
- Indicate on the Petty Cash Expense Form that the “Account is to be Closed”, so that the Custodian is not reimbursed by Accounts Payable.
- The last line on the Petty Cash Expense Form should indicate the AFF where the petty cash fund is recorded with brackets around the amount, so that the total adds to zero. For example:
5220-100-100-0000-000000-6540-0000-000
|
50.00 |
5220-100-100-0000-000000-6660-0000-000
|
50.00 |
5220-100-100-0000-000000-1000-0000-000
|
(100.00) |
|
0000.00 |
- Attach original receipts and send to Accounts Payable-ECH.
To Deposit Excess Cash:
- Deposit excess cash at Student Accounts, Needles Hall.
- Complete a cash receipt form for the amount deposited.
- Indicate on the cash receipt form that the “Account is to be Closed”.
- Write the AFF of the petty cash fund, eg. xxxx-100-100-0000-000000-1000-0000-000.
- Student Accounts will deposit the money and prepare the journal entry for the amount deposited.
REPORTING LOST OR STOLEN PETTY CASH
- If funds have been lost or stolen notify UW Police immediately.
- Prepare a Petty Cash Expense Form for the amount lost or stolen.
- Use a Department expense account, i.e. object 6540.
- Include a copy of the police report and forward to Finance-Accounts Payable, ECH for replenishment.
- Finance will follow-up with the department to ensure adequate controls are in place to safeguard the petty cash.
STORAGE OF THE PETTY CASH FUND
The petty cash fund should be kept on-campus in a locked box at all times and stored in a secure location, i.e. a safe. The Custodian should be the only one with the key to the locked box. Access to the petty cash fund should be restricted to only the Custodian.
ANNUAL CONFIRMATION OF THE PETTY CASH FUND
Annually, Finance will send a confirmation letter to each Custodian. The Custodian should sign the confirmation letter to declare the balance in the petty cash fund is correct. If the balance is not correct, indicate as such on the letter. Finance will follow-up to resolve the matter.
ANNUAL SPOT AUDITS
Finance will physically count a sample of petty cash funds on an annual basis. The audits will be unannounced. The Custodian must make available the petty cash fund for counting.
FORMS
The following forms are located on the Finance website at:
http://www.adm.uwaterloo.ca/infofin/Forms/forms.html
- Request for a New Petty Cash Fund
- Request for Change in Custodian
- Request for an Increase in Fund Amount $
- Petty Cash Expense Form
