Petty Cash and Cash Drawers

Petty cash/cash drawer fund controls and procedures ensure that petty cash/cash drawer funds are properly established, maintained, and that the university's assets are adequately safeguarded.

Petty Cash funds may be established for payment of minor or infrequent expenses where it is otherwise impractical to obtain a university check or use a procurement card.

See also: University Policy 3.21 Advances

Definition of Petty Cash

A minimal amount of cash kept on hand to pay for small expenditure items ($75 and under) when a procurement card cannot be used. Funds should be reconciled at least monthly and every time a Disbursement Voucher (DV) is requested to replenish the fund.

Administering Petty Cash and Cash Drawer Accounts

1. All small amounts of cash funds should be locked in a box and kept in a secure place.
2. Large sums of cash funds should be in a safe.
3. Receipts should be given for all payments from petty cash. The receipts should contain the date, name of individual receiving cash, amount of cash and business purpose.
4. Funds should not be used for personal expenses.
5. A reconciliation of the petty cash fund/cash drawer should be completed and reviewed by the custodian’s supervisor periodically.
6. Periodic unannounced audits of the petty cash/cash drawer fund should be conducted by the supervisor.

Responsibilities of Custodian and Supervisor

Custodians (Account Manager role) are responsible for:

1. Safeguarding the funds.
2. Maintaining receipts and detailed records to support all transactions.
3. Maintaining the proper cash balance on hand.
4. Ensuring that petty cash/cash drawer is always in balance (cash on hand and receipts are equal to petty cash total).
5. Completing a monthly reconciliation. See the Forms below for a reconciliation template.
6. Annually certifying with Accounting that the fund balance is equal to the account balance, that they are still the custodian, and that the fund is reconciled no less than monthly.

Supervisors (Account Supervisor role) is responsible for:

1. Periodically reviewing reconciliations.
2. Performing unannounced audits of the fund (receipts and cash on hand).
3. Annually certifying with Accounting the petty cash/cash drawer balance, and that they periodically audit the balance and reconciliation. Accounting will send a reminder in May each year.

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Establishing a New Petty Cash/Cash Drawer Fund

1. Complete the Establish a New Petty Cash/Cash in Drawer Fund or Change Initial Amount Form. Completing the form will send a request to Accounting where the request will be approved or denied.
2. Once approval has been received from Accounting, request a new petty cash/cash drawer account. See Set Up and Manage Accounts for instructions.
   1. Attach to the request the email approval you received from Accounting.
   2. Use the following information to complete your request:
      1. Sub Fund – BALSHT
      2. HEFC – PCSH for Petty Cash and CDRW for Cash Drawers
      3. Account Manager- Custodian (see responsibilities below)
      4. Account Supervisor – Supervisor of Custodian (see responsibilities below)
      5. Expense text- “No Expenses Allowed”
      6. Income text- “No Income Allowed”
      7. Purpose text- authorized amount and purpose i.e. “$200.00 Petty Cash fund for … to reimburse for small purchases.”
3. Set up the petty cash custodian as a Petty Cash Custodian Vendor Type (RF).
   1. Allows you to use payment reason "Petty Cash Custodian Replenishment," which has more object codes available than the "Reimbursement of Out-of-Pocket Expenses" payment reason.
   2. Isolating petty cash custodians as separate vendor types prevents us from sending a 1099 tax form.
4. Complete a DV with a payment reason of “Z” to the custodian (using their employee record instead of the Vendor record) of petty cash/cash drawer account. The amount is equal to the initial amount of the petty cash/cash drawer fund.
   1. For this transaction, use object code 1100-petty cash or 1101-cash drawer
   2. The account number is the new petty cash/cash drawer account.
   3. Use the custodian's name to pay as an employee (this differs from reimbursing, described below).
5. Cash the check when you receive it. The cash becomes the petty cash or cash drawer.

Accounting Entries

Used to record the original petty cash/cash drawer value. This account is not changed unless there is a change in the value of the petty cash/cash drawer. All entries to reimburse the petty cash are charged to an operating account, not the original petty cash account.

On the DV, use payment reason “Z”, and make payable to the custodian of the petty cash/cash drawer account. Include a copy of the approval.

OR

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Increasing/Decreasing Petty Cash/Cash Drawer Funds or Closing an Account

Increasing Funds

1. Complete a Establish a New Petty Cash/Cash in Drawer Fund or Change Initial Amount Form. Completing the form will send a request to Accounting where the request will be approved or denied.
2. Once approval is received to increase your petty cash/cash drawer, complete a DV, payment reason “Z”, for the additional funds using the employee record instead of the Petty Cash Vendor record. The object code for this transaction is 1100- petty cash or 1101- cash drawer.
3. If there are receipts that need to be credited against the account, prepare a Distribution of Income and Expense (DI) e-doc, and attach the receipts as backup.

Accounting Entries

Used to record an increase in the petty cash/ cash drawer balance authorized. This account is not changed unless there is a change in the value of the petty cash/cash drawer. All entries to reimburse the petty cash are charged to an operating account, not the original petty cash account.

On the DV, use payment reason “Z”, and make payable to the custodian of the petty cash/cash drawer account. Include a copy of the approval.

OR

Decreasing Funds

1. Complete a Establish a New Petty Cash/Cash in Drawer Fund or Change Initial Amount Form. Completing the form will send a request to Accounting where the request will be approved or denied.
2. Once approval is submitted to decrease your petty cash/cash drawer, complete an Advanced Deposit (AD) e-doc and deposit the cash on hand. The object code for this transaction is 1100- petty cash or 1101- cash drawer. 
3. If there are receipts that need to be credited against the account, prepare a Distribution of Income and Expense (DI) e-doc, and attach the receipts as backup.

Accounting Entries

Used to reduce the petty cash/cash drawer on hand. This account is not changed unless there is a change in the value of the petty cash/cash drawer. All entries to reimburse the petty cash are charged to an operating account, not the original petty cash account.

On an AD e-doc, credit the petty cash/cash drawer account.

OR

Closing an Account

1. Complete an account edit in KFS to close the petty cash/cash drawer account. See the instructions at Set Up and Manage Accounts.

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Changing the Names of Custodians

Complete the Transfer of Petty Cash/Cash in Drawer Fund Accountability Form. The new custodian will also need to be set up as a vendor in KFS.

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Replenishing Petty Cash Funds

At the completion of each sales day, the cash drawer needs to reconcile. The amount in the cash drawer needs to equal the balance that it was established with. If the remaining funds do not equal the exact amount of the day sales, an additional line may be added to the sales deposit to account for this. The sales amount would either be increased (overage, +amount) or decreased (shortage, -amount) for that day using object code 6400 Over/Short – Cash.

Accounting Entry

Used to replenish the cash in the petty cash account. This account is not changed unless there is a change in the value of the petty cash/cash drawer. All entries to reimburse the petty cash are charged to an operating account, not the original petty cash account.

On the DV, use payment reason “K” payble to the custodian of the petty cash account using vendor type Petty Cash Custodian. You must attach copies of the receipts with the DV.

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About Petty Cash in the Kuali Financial System (KFS)

Within KFS, a petty cash account is represented by the balance of an object code within a KFS account.

• KFS object 1100 – Petty Cash
• KFS object 1101 – Cash in Drawer

In KFS, a distinction is made between Petty Cash accounts and Cash in Drawer accounts. Prior to KFS, both petty cash and cash in drawer were considered petty cash.

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Forms

• Establish a New Petty Cash/Cash in Drawer Fund or Change Initial Amount Form
  Complete this form to establish a new Petty Cash/Cash in Drawer fund or to increase or decrease the fund dollar amount. Approval for new accounts or increases in the amount must be obtained in advance from Accounting.
• Transfer of Petty Cash/Cash in Drawer Fund Accountability Form
  Complete this form to update Petty Cash/Cash in Drawer fund custodian information. Departments should notify Accounting when a petty cash custodian changes, and send a reconciliation of the account.
• Petty Cash Reconciliation Form (XLSX, 20 KB)
  Use this form to reconcile Petty Cash/Cash in Drawer accounts at year-end.

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