Policy #: 6431:00
Subject: MCCS Cash Management (Petty Cash)
Section: Business Operations
Effective: Ongoing
Introduction
Petty cash funds are often necessary to make small purchases on behalf of the MCCS in situations in which it would be impractical or inefficient to produce a purchase order. Advances from a petty cash fund also are necessary, on a less frequent basis, to issue timely refunds to students. Because these disbursements may be frequent or large, it is important to have procedures for the control of petty cash funds.
Administrative Policy
Petty Cash Replenishment - The process by which the local petty cash fund is replenished and disbursements from petty cash are recorded to the correct account codes, funds, schools, and specific units in the accounting system.
Petty Cash Advances - A check advance to an employee or vendor in order to carry out authorized purchases or disbursements through the petty cash fund.
Petty Cash Receipt/Request - A prenumbered receipt which evidences transactions into and out of the petty cash fund.
Authority and Responsibility
Each Campus Director and the Executive Director are responsible for the local administration of petty cash funds. Local administrative responsibility should be delegated to the Campus Business Office or the System Office Finance and Administration Division. Authority to establish local petty cash accounts is assigned to the Director of Finance and Administration.
Guidelines and Procedures
- Petty Cash Advances – Petty cash fund requests must be submitted in writing from the Campus President or System President to the Director of Finance and Administration. Requests for the establishment of a local petty cash fund must include the purpose, the amounts, and the duration.
- Petty cash Account Control – Local petty cash advances must be maintained in local bank accounts separate from any other local bank account. Advances from petty cash accounts must be on a check basis evidenced by a prenumbered receipt/request form showing the amount, the date, the purpose, the payee, and the authorized signature of a responsibility center manager. Returns of cash to the petty cash fund must be processed by the use of a prenumbered receipt showing the amount returned, the date, and the returner. Petty cash accounts must be reconciled monthly with supporting documentation on file for annual audit purposes. Local petty cash funds must be replenished at least monthly in order to record all expenditures or other financial transactions from the petty cash fund to the proper account codes, funds, schools, and specific units in the accounting system.
- Authorized Disbursements- Advances from the petty cash fund must not exceed 200.00 and must be used for purchases in which the use of a purchase order is impractical or inefficient. Petty cash fund advances may also be used to expedite student refunds or to make emergency travel advances to employees.
- Unauthorized Disbursements- Petty cash funds must not be used for payroll payments or other expenditures requiring Internal Revenue Service reporting. Disbursements from the petty cash fund must not be made for the purpose of avoiding the normal purchasing procedures or to circumvent established commitment authorization procedures such as the reimbursement of employee travel expense vouchers. Advances from the petty cash fund also must not be made for repetitive purchases from the same vendor which can be handled more effectively with a blanket purchase order.
- Signature Authority- Signature authority on local petty cash bank accounts will be limited to the System President, Campus President, Campus Finance Directors, the Director of Finance and Administration, or their designees.
- Interest Earnings- Interest earnings on local petty cash accounts must be credited at least monthly by a cash receipts journal to fund 1, school 1, default 00000. If interest earnings on petty cash accounts are not credited at least monthly, the System Office will charge the local campus an amount equal to the average investment earnings for the month times the outstanding balance of the petty cash account at the close of the month.
- Normal Balance- The normal balance in the petty cash account should not exceed $5,000.00 for disbursements other than student refunds. When the need for student refunds ceases, the additional cash for student refunds must be returned to the System Office by means of a deposit to the concentration bank account. This will return the petty cash account to its normal balance.
Authorization-
Each Campus President or the System President must have on file written documentation of the names and titles of those persons having the authority to sign check disbursements from the local petty cash fund. The Director of Finance and Administration has the authority to approve the establishment of local petty cash funds. Requests for disbursements from the local petty cash fund may be authorized by the Director of Finance and Administration or his/her designee, or by the campus Finance Director, or his/her designee. Local petty cash accounts may only be established in the name of the System President, the Campus President, the Director of Finance and Administration, or the Campus Finance Director.
References: *20-A, MSRA S 12709 (8) Last changed: Feb 25 2008 at 3:35 PM
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