**INACTIVE POLICY**

For Current Policies:
Policy Table of Contents

 

                      UNIVERSITY OF VIRGINIA
           FINANCIAL AND ADMINISTRATIVE POLICIES MANUAL



TITLE:  PETTY CASH, PETTY CASH CHECKING             POLICY:  IV.B.1x
        AND CHANGE FUNDS     
   
                                                                   
                        
DEFINITIONS AND DOLLAR LIMITS

PETTY CASH FUND:  This is the most common of the three types of
funds.  The actual currency and coin are kept on hand.  Effective
JULY 1, 1994 the dollar limit on petty cash fund requests is set at
$500.  Any requests requiring a fund balance greater than $500
require special written approval from the appropriate Dean or Vice
President.

PETTY CASH CHECKING FUND:  A petty cash checking fund is basically
the same as a petty cash fund, except that monies are kept in a
Bursar approved checking account.  All requests for petty cash
checking funds must have a "Bank Account Authorization" attached. 
Effective JULY 1, 1994 the dollar limit on petty cash checking fund
requests is set at $2,500.  Any requests requiring a fund balance
greater than $2,500 require special written approval from the
appropriate Dean or Vice President.

CHANGE FUND:  Change funds are similar to petty cash funds in that
currency and coin are kept on hand.  Change funds are most commonly
used by departments involved in some type of cashiering activity. 
Unlike petty cash funds, the balance in a change fund does not vary
and need not be reimbursed on a monthly basis.  Effective JULY 1,
1994 the dollar limit on change funds is set at $200.  Any requests
requiring a fund balance greater than $200 require special written
approval from the appropriate Dean or Vice President. 
                                           
ESTABLISHING AND OPERATING A PETTY CASH, PETTY CASH CHECKING OR
CHANGE FUND

This statement sets forth University policy for establishing and
maintaining petty cash, petty cash checking or change funds.

Policy contained herein applies to all University departments and
activities having a petty cash advance, petty cash checking advance
or a change fund from the University Bursar's Office or intending
to request such funds.

Generally all departments and activities of the University must use
the regular voucher system for making all disbursements.  This
system is administered by the Accounts Payable Department.  

However, it is recognized that situations may arise where it is
appropriate to establish a petty cash or petty cash checking fund
to permit small cash purchases or to provide change necessary for
normal operations.


No petty cash, petty cash checking or change fund shall be
established without the prior authorization of the University
Bursar.

AUTHORITY TO ESTABLISH A FUND

The head of a University department or activity must approve any
request to the University Bursar for the establishment of a petty
cash, petty cash checking or change fund.  Effective, July 1, 1994
fund balances in excess of approved limits will require approval
from the appropriate Dean or Vice President.

The head of a Medical Center department or activity must approve
any request to Medical Center Financial Services to establish a
petty cash, petty cash checking or change fund.

PETTY CASH AND PETTY CASH CHECKING FUNDS

A petty cash or petty cash checking fund is established by means of
a cash advance from the Bursar's Office.  The advance represents a
LOAN to the department in the name of the custodian.  At all times,
the account custodian must be able to account for the full amount
of the advance.  For example, a department requests and receives a
$100 petty cash advance.  At any given time, cash on hand,
reimbursements in process and outstanding items must equal $100. 
Petty Cash Checks should never be made out to "Cash".  Instead, all
checks must have a specific payee.  Any change remaining from a
petty cash or petty cash checking account transaction must be
redeposited.  The remaining change must not be used to operate an
unofficial change fund.  In addition, the account must be
reimbursed at a minimum of every 30 days, regardless of the dollar
amount of the reimbursement.  

To request establishment of a petty cash or petty cash checking
fund, a Request for Petty Cash, Petty Cash Checking, or Change Fund
(Form UT-50) must be prepared and submitted in accordance with
instructions.  Checking account requests must be accompanied by a
Bank Account Authorization.

See also Procedure 4-3, "Preparation of Bank Account
Authorization."

See also Procedure 4-4, "Preparation of Request for Petty Cash,
Petty Cash Checking, or Change Fund."

CHANGE FUNDS

A change fund is established by means of a cash advance from the                             
Bursar's Office.  The advance represents a LOAN to the department 
for the purpose of making change.  Unlike a petty cash fund, a
change fund does not require periodic reimbursement.  The amount of
a change fund remains constant.  To request establishment of a
change fund, a Request for Petty Cash, Petty Cash Checking, or
Change Fund (Form UT-50) must be prepared.

Change funds are not to be commingled with other cash funds nor are
they to be used for making petty cash disbursements or other cash
advances to employees. At the close of each day's business, the
change fund is to be removed FIRST from the total cash in the
register or cash drawer and be kept separately until used during
the following day's operations; the remaining cash in the register
or drawer is to be turned in as representing the current day's
receipts.  Thus, if the total cash at the close of the day does not
agree with the sum of the established change fund and the recorded
receipts, the difference is considered to affect that day's
receipts--NOT THE AMOUNT OF THE CHANGE FUND.

See also Procedure 4-4, "Preparation of Request for Petty Cash,
Petty Cash Checking, or Change Fund."

DEPARTMENT REFERENCE

      Bursar's Office          Questions and forms pertaining
      982-6000                 to establishment, increase,
                               decrease, closure and change of
                               custodian for petty cash, petty
                               cash checking and change funds.

      Accounts Payable         Questions regarding allowable 
      924-4365                 expenses and reimbursement forms.

      General Accounting       Questions regarding 1099 reporting
      924-4351                 and remittance of unclaimed petty
                               cash checks (unclaimed property).
       
RESTRICTIONS AND GUIDELINES

Specifically, petty cash and petty cash checking funds can be used
for any purchases which could be processed on a Limited Purchase
Order (LPO) (see Policy VII.A.2), as well as for purchases of food
supplies or restaurant meals that qualify as business meals. 
Purchases from these funds cannot be used to circumvent the
University's procurement policies.  

Payments which are allowable include:

      Limited travel expenses for day trips, e.g. tolls, parking
      and mileage.  

      Reimbursements for meals incurred locally or during day trips
      which qualify as BUSINESS MEALS.  Generally, if an employee
      is acting as an official representative of the University's,
      a meal can be deemed a business meal.  This situation
      requires that the employees act as an official
      representative when discussing business WITH 
      representatives of the State, with employees of other
      agencies, with private consultants, or with prospective
      employees or students, etc.  The expenses must be
      commercially rather than socially motivated and more than one
      person must have attended the meal.  See Procedure 6-25 and
      6-26 for further details.

      BUSINESS MEALS as defined above paid through petty cash funds
      should have the receipts attached, an explanation of the
      business purpose of the meal and a list of the attendees
      shown on the petty cash slip.  For meals incurred during day
      trips outside the employee's home area, the supervisor's
      signature is also required.  Object code 34551 - Meals, Day
      Trips or Object code 36835 - Meals, Non-Travel, should be
      used when reimbursing the petty cash fund to ensure these
      payments are not picked up as reportable income on a W-2.

      Internal Revenue Service (IRS) 1099 reportable payments such
      as rents, royalties, awards and personal services can only be
      made with petty cash funds if the payment is to a corporation
      or a non-profit organization.  Corporations and non-profit
      organizations are exempt from IRS 1099 reporting.  The petty
      cash custodian is responsible for verifying the business'
      non-profit or corporation status.  This can be done by either
      referencing a CAPPS vendor number on the petty cash slip
      (provided an N or C entity code is listed on the vendor file)
      or attaching a completed W-9 form.

      Payments such as subscriptions, registration fees, supplies
      and Federal Express/UPS charges are allowable from petty cash
      funds and are not restricted as to type of vendor.  These
      categories of expenditures are not 1099 reportable.

      Human subject payments are the ONLY personal service that may
      be paid through petty cash.  However, a consent form 
      detailing the payee's name, address, tax identification 
      number and signature or a Form W-9 showing the same
      information must be attached to the reimbursement request. 
      In addition, the custodian will be asked to provide a listing
      of human subject payments on a quarterly basis to General
      Accounting.  This listing should preferably be in an
      automated format and should contain the payee's name, tax
      identification number and the amount paid.  General
      Accounting will issue quarterly requests for this information
      with more specific guidelines included.  Should a human
      subject payee exceed the $600 reporting requirement, the
      petty cash custodian will be asked to provide their address
      as well.  

      NOTE:  Failure to provide this information in a timely manner
      can result in the closing of the petty cash or petty cash
      checking fund.

Payments in the following categories ARE NOT ALLOWABLE from petty
cash and petty cash checking funds:

      Personal services other than human subject payments.

      Advances to employees, check cashing or other non-operating
      disbursements.  

      Gifts, cards or flowers for an employee or non-employee. 
      These payments must be processed using a Combo form.

      IRS 1099 reportable payments including rents, royalties,
      awards and services paid to OTHER THAN a non-profit
      organization or corporation.  (See also page 4.2.1.4).

      Any expenses incurred during overnight travel.  These must be
      reimbursed using a Travel Expense Reimbursement Voucher.

      Meals that do not qualify as BUSINESS meals.  These must be
      reimbursed using a Travel Expense Reimbursement Voucher and
      are tax reportable income to the recipient according to the
      IRS.

Other restrictions involving petty cash and petty cash checking
funds include:

      Keep petty cash and petty cash checking funds apart and
      separate from all other funds.

      Do not combine petty cash and petty cash checking funds with
      personal funds, miscellaneous cash receipts, or collected
      revenue of any type.  

      Do not use petty cash and petty cash checking funds as a
      means of bypassing the University's procurement policies.

      NOTE:  If an unallowable purchase is made through petty cash
      funds, the custodian will be held personally responsible for
      reimbursing the petty cash fund.

Petty cash, petty cash checking and change funds are established
for the specific period of time the funds are ACTUALLY NEEDED. 
They may be established for an indefinite period of time if the
requirements for the funds are of a permanent and continuing
nature.  

OVERALL RESPONSIBILITIES

It is the responsibility of both the fund custodian and the
department or activity head to:                 

     Limit the use of the fund to legitimate and allowable
     University related revenue refunds and/or expenses.

     Provide for the balancing of the fund at a minimum of every
     30 days regardless of the dollar amount of the reimbursement.

     Acquire a thorough knowledge of these policies and related     
     procedures.

RESPONSIBILITIES -- PETTY CASH, PETTY CASH CHECKING AND CHANGE
FUNDS

All petty cash, petty cash checking and change funds shall be
subject to periodic audit by the University's external auditors and
by the University's Internal Audit Department.

The head of each department or activity must designate a specific
individual(s) to act as custodian of the fund.  Custodians must be
salaried employees of the University of Virginia.  Custodians may
not be undergraduate students, graduate students, wage or temporary
personnel.  The custodian shall be responsible for acquiring a
thorough knowledge of these procedures and for maintaining the fund
in accordance with the guidelines contained herein.  Access to the
fund should be restricted to the custodian only.  Petty cash funds 
are non-transferable, i.e., anytime there is to be a change of
custodian, a new request (Form UT-50) should be submitted to the
Bursar's Office PRIOR to the time the predecessor custodian is to
be relieved of responsibility.  The Accounts Payable Department
will not reimburse a petty cash fund unless a Request for Petty
Cash, Petty Cash Checking, or Change Fund is on file indicating the
name of the CURRENT custodian.

NOTE:  This process is required for temporary changes as well.  The
former and new custodians should perform a petty cash fund
reconciliation at the time of transfer, and both should sign the
reconciliation form. 

Both the head of the department or activity and the custodian of
the petty cash fund shall be jointly responsible for insuring that
the funds are properly safeguarded.  When not in use, the funds
should always be stored in a secure, locked container.  If a loss 
of these funds occurs, such loss, depending upon the circumstances,
may have to be paid from the department's own funds.  The
University Police Department should be contacted for advice on the
proper methods for safeguarding the fund.  All thefts MUST be
reported to the University Police Department, Office of Risk
Management, and the Internal Audit Department immediately.         

Petty cash funds must be reimbursed no less often than every 30
days during the year.  All petty cash funds must be reimbursed at
fiscal year-end, so that no unreimbursed vouchers remain
outstanding at June 30.  The custodian and the head of each
department or activity will be required to confirm to the Bursar's
Office the amount of petty cash currency and coin on hand as of
June 30 each year.  Surprise counts of petty cash funds will be
made periodically by the Internal Audit Department.  All petty cash
funds must also be reimbursed by December 31 to allow for proper
reporting of taxable payments.  

All unclaimed checks from petty cash funds are considered unclaimed
property.  If any check is not cashed by the payee within the
designated time, and the payee cannot be contacted for disposition,
the funds must be remitted to the Commonwealth.  Remittance of
unclaimed checks is to be coordinated through the General
Accounting Department.

INCREASING, DECREASING, OR CLOSING FUNDS

INCREASING A FUND

The amount of a petty cash, petty cash checking or change fund may 
be increased by a supplemental request provided the increase is
justified.  The justification must show that the fund is not
adequate even though the policies on restrictions and frequency of
reimbursement are being met.

See also Procedure 4-4, "Preparation of Request for Petty Cash,
Petty Cash Checking, or Change Fund."         

DECREASING A FUND

A petty cash, petty cash checking, or change fund must be reduced
whenever the total amount of the fund exceeds the actual needs for
the department or activity.  That portion of the fund in excess of
the department's needs should be returned to the Bursar's Office
with a supplemental request indicating the amount by which the fund
is being decreased.

See also Procedure 4-4, "Preparation of Request for Petty Cash,
Petty Cash Checking, or Change Fund."

CLOSING A FUND

All petty cash, petty cash checking or change funds, regardless of
whether established for a specific or an indefinite period of time,
must be returned to the Bursar's Office when the funds are no
longer needed.  Petty cash funds must be reimbursed before being
returned.  Under no circumstances should a petty cash fund be
deposited into a departmental account.

See also Procedure 4-4, "Preparation of Request for Petty Cash,
Petty Cash Checking, or Change Fund."

CHANGE OF CUSTODIAN

The Bursar's Office must be notified whenever a change of custodian
occurs.

See also Procedure 4-4, "Preparation of Request for Petty Cash,
Petty Cash Checking, or Change Fund."

OPERATION OF A PETTY CASH FUND

For a petty cash transaction to be complete, it must include a
petty cash reimbursement voucher and documentation of expenditures. 
A detailed explanation of these subjects is contained in Procedures
4-1, "Preparation of Petty Cash Voucher" and 4-2, "Preparation of
Petty Cash Reimbursement Voucher."

                                                                   
ISSUED BY:                                                 04/05/94

University Bursar              4.2.1.1