Ohio University

Petty Cash and Change Funds

DEFINITIONS

  • CHANGE FUND – set amount of money used by a department to make change for customers who are purchasing goods or services.  The selling of such goods or services must have been previously approved through appropriate channels. This fund should never be used for making purchases, cashing checks, giving loans, or for travel advances.  TEMPORARY CHANGE FUNDS can be requested for short term sales events.
     
  • PETTY CASH FUND – set amount of money held by a department and used to make small, incidental purchases of not more than fifty dollars from a local vendor where the normal route of payment is not cost effective or appropriate.  Using other forms of payment is recommended, therefore the number of active petty cash funds is restricted.
     
  • FIDUCIARY – The department head or budget unit manager who is authorized to approve expenditures from the department’s accounts. The fiduciary is responsible for insuring that the funds are physically secure, should report any unusual activity to the controller or internal audit department, conducts periodic unannounced cash counts, and ultimately has the financial responsibility for the fund and will resolve any unexplained discrepancies.
     
  • CUSTODIAN – The department employee who is responsible for the day-to-day operation and maintenance of the fund, ensures deposits or replenishments are prepared timely, and should report any unusual activity to the controller or internal audit department.
     
  • BACK-UP CUSTODIAN – The back-up custodian’s duties and responsibilities are the same as the custodian’s when he or she is unavailable.

PROCESSES

 

  • RECONCILING CHANGE FUNDS – Change funds should be balanced each day of use or at least once per week on a Reconciliation Form and records kept.
     
  • RECONCILING PETTY CASH FUNDS - Petty cash funds should be balanced at least monthly on a Reconciliation Form and records kept.
     

TIPS TO AVOID COMMON AUDIT FINDINGS

  • Complete reconciliations as required.
     
  • Change combination to safe or key location at least annually or each time a fund officer changes.
     
  • Make timely deposits and maintain cash receipt records used for reconciliation to cash.  Receipts greater than $1,000 need to be deposited by the next business day and receipts less than $1,000 need to be deposited within 3 business days.
     
  • Overages and shortages should be recorded to object 770720 using the appropriate departmental cost center.  Chronic overages and shortages may indicate an internal control deficiency and should be analyzed for possible process improvements.
     
  • Update forms and email them to fmsreporting@ohio.edu when an employee responsible for a fund leaves the department or University.
     
  • Determine if a fund should be closed or reduced based on changes to cash receipt frequency or small purchase frequency.
     
  • Each petty cash fund and each change fund should be segregated from all other cash funds.
     
  • Confirm that the Bursar has a Departmental Cash Collection Application on file which verifies your approval to collect cash.
     

FOR FURTHER GUIDANCE

Questions? Contact General Accounting and Financial Reporting at fmsreporting@ohio.edu or 740-597-3133