How Do I ... Establish and Use a Petty Cash Fund?
This NYU Steinhardt guideline covers establishing and administering a petty cash fund. A petty cash fund is an amount of physical cash held by a department or unit to quickly pay for "Permitted Minor Expenses" incurred outside of the University's regular purchasing and reimbursement systems.
A "research petty cash fund" is a petty cash fund used to make cash payments to research participants (see "How Do I ... Make Direct Payments to Confidential Research Participants?").
- Throughout this guideline, "petty cash fund" refers to research petty cash funds as well.
- If bank debit cards will be used to make incentive payment to human subjects, refer instead to How Do I… Obtain and Use Debit Cards for Payments to Human Subjects?
Here are a few general principles to keep in mind:
- The funds received to establish a petty cash fund are actually a loan from the general fund of the University that must be properly safeguarded and returned when the petty cash fund is no longer being used.
- Generally, the maximum amount of cash you are allowed to hold in a petty cash fund is $500. Requests for higher limits will be considered on a case-by-case basis.
- No more than $150 per item may be dispensed. Intentionally splitting a disbursement to circumvent this limit is not permitted.
- We use an 'imprest fund' system for petty cash funds. An imprest fund is one in which a cash fund of a fixed amount is established and the fund is periodically replenished to bring it back to that fixed amount.
- At all times:
|petty cash fund fixed limit =|
|cash on hand + receipts for disbursed cash to be replenished|
The Custodian and Approvers must be full-time employees.
The 'Fund Custodian' assumes sole control over the petty cash fund.
The 'Approver' authorizes the Fund Custodian's request to establish, modify, replenish, or disband a fund. The Approver must be a person other than the Custodian and must not be an employee supervised by the Custodian.
The responsibilities of the Fund Custodian include:
- Keeping the cash in a "security safe" within a secure, locked location.
- Being the sole individual handling the cash box.
- Keeping the fund separate and discrete — both physically and within the accounting system — from any other funds.
- Securing receipts for all expenditures.
- Ensuring that disbursements conform to the defined purpose of the fund, the University's rules on business expenses, purchasing, and reimbursement of minor expenses.
- Maintaining the Steinhardt Petty Cash Fund Log to track disbursements of cash to pay invoices or advance money to make purchases.
- Having the Steinhardt Petty Cash Fund Log available at all times for inspection by the University's Internal Audit and General and Restricted Accounting units.
- Replenishing the petty cash fund as needed.
- Limiting cash on hand to two weeks worth of anticipated expenditures.
- Reconciling receipts with cash on hand and submitting the completed Steinhardt Petty Cash Fund Reconciliation Form to the Approver.
- Notifying the Approver, Steinhardt's Office of Administration & Finance, and the CDV's Accounting and Reporting unit of any changes in the Approver, Custodian, petty cash fund limit, or location of the cash.
- Closing out the petty cash fund when it is no longer needed.
The responsibilities of the Approver include:
- Setting the fund limit.
- Serving as the liaison between the Custodian, Steinhardt's Office of Administration & Finance, and University offices, as needed.
- Assigning the Custodian and ensuring the assignment is up to date.
- Ensuring the security of cash and receipts and doing any related follow-up.
- Ensuring the Custodian maintains clear records of transactions and replenishments.
- Ensuring that disbursements conform to the defined purpose of the fund and the University's rules on business expenses, purchasing, and reimbursement.
- Reconciling the fund at least four times per year together with the Custodian.
- Closing out the petty cash fund when it is no longer needed.
- Complete an NYU Petty Cash Fund Start Up Form (EXP2000PA)form.
- The usual limit is $500. Higher limits will be authorized when justified. To minimize your own vulnerability as Approver or Custodian, it is in your interest to establish the fund limit at the minimal level actually needed.
- Be clear both on the form, and for your own sake and your unit's, about how the physical cash will be safeguarded.
- This form is also used to request a change in the petty cash fund's fixed limit.
- Complete an NYU Petty Cash Funds (Form EXP2000P).
- For payments to human subjects use Account 65295.
- The petty cash fund's Custodian and Approver must sign the EXP2000P.
- Send the forms to Phyllis Ginsberg (email@example.com) for approval in Steinhardt's Office of Administration & Finance. She will then forward the signed forms to NYU's Accounting and Reporting.
- Once establishment of the fund is approved, the Custodian is notified Accounting and Reporting to pick up the approved forms at 105 East 17th Street, 3rd Floor.
- A Petty Cash Fund Number that reads "Z..." will have been assigned. This ID number is used when reconciling, replenishing, or making changes to the fund.
- To obtain initial cash for the fund, the Fund Custodian presents both forms at the Petty Cash Window in the Bursar's Office at 383 Lafayette Street.
- Adhere to guideline on permitted minor expenses.
- Enter all disbursements from the Petty Cash Fund into the Steinhardt Petty Cash Fund Log. Record in it cash advanced to make a payment, direct payments of small invoices, along with any cash replenished.
- University policy prohibits reimbursement from petty cash funds for:
- If disbursements from this petty cash fund will be made to research subjects, follow the How do I ... Make Direct Payments to Confidential Research Participants? guideline.
To replenish the petty cash fund complete a Petty Cash Funds (Form EXP2000P).
- Expenditures must be replenished within 60 days.
- Research participant incentives: If a research incentive over $150 was given, attach an explanation.
- Remember that the Payee and the Approver cannot be same person.
- The chartfield used in box 7 of the EXP2000P will be the one for the source to which you are charging this expense. For payments made to human subjects it will include Account 65295.
- Attach to the EXP2000P any receipts and related documentation (e.g., MapQuest printouts for local auto mileage claimed).
- For payments made to research participants, documentation should not reveal recipient identity. See How do I ... Make Direct Payments to Confidential Research Participants?
- Disbursements to students of less than $25 may be reimbursed without a valid receipt — if a sufficient explanation is attached to the EXP2000P.
- For $500 or less, the EXP2000P must be approved by the department or unit administrator. Larger amounts must be approved by the Office of Administration and Finance.
Petty cash funds are reconciled periodically in order to verify the accuracy of the fund and prevent or resolve discrepancies.
- Email the completed Steinhardt Petty Cash Fund Reconciliation Form and the Steinhardt Petty Cash Fund Log for the interval since the previous reconciliation was submitted just to Phyllis Ginsberg (firstname.lastname@example.org).
- December 20th
- April 30th
- June 30th
- August 25th
- Whenever there is a change in either the Approver or the Custodian. This must be done while the outgoing individual is still employed by NYU.
As we use an imprest system for petty cash funds, remember:
petty cash fund fixed limit =
cash on hand + receipts for disbursed cash to be replenished
To change the petty cash fund Custodian or Approver follow the steps above used to reconcile the fund.
- On the Steinhardt Petty Cash Fund Reconciliation Form the person relinquishing his/her position with the fund must sign at the time the fund is reconciled.
- Complete the NYU Petty Cash Fund Transfer of Custodial Responsibilities form.
- Administration and Finance will sign off on the change.
- Send both forms to:
- If the person newly assuming his/her position with the fund cannot be present when the predecessor prepares to leave, the fund should be closed. Open a new fund when the new Custodian or Approver is in place.
When a petty cash fund is no longer needed, even if there is no cash on hand, it must be formally closed out. To do so:
- Replenish the fund, so that its full cash limit is on hand.
- Bring the cash with a completed Transmittal for Funds to be Deposited form to the Banking Window in the Bursar's Office.
- This two-part form is only available in hard copy from the Banking Department.
- Use chartfield: 10350-10-00000
- Send the completed Steinhardt Petty Cash Fund Reconciliation Form and Steinhardt Petty Cash Fund Log with an attached copy of the Transmittal for Funds to be Deposited form to:
- Petty cash funds linked to a sponsored project must be closed prior to the project’s final reporting. This is a step separate from the final reporting. It must be done while the Custodian and Approver are still employed by NYU.
If you discover cash missing from the petty cash fund, immediately notify those on the list below. Note the date and reference numbers assigned to any theft or loss report (and get copies of the report), including from the New York City Police Department, as they will be needed to replenish the funds.
- The Petty Cash Fund Approver
- Your Supervisor and Department Chair/Director
- NYU Office of Public Safety (who will contact the NYPD)
- NYU Department of Internal Audit
- David Wong
Steinhardt Office of Administration and Finance
Expenses permitted to be reimbursed from a petty cash fund include, but are not limited to:
- Miscellaneous office supplies with a total value of $150 or less per order, provided the items are not obtainable through any of the University's regular procurement methods
- Refreshments or meals in connection with business meetings or events
- Travel expenses under $150 (e.g., taxi fare, parking fees, tolls, business mileage when personal vehicle is used)
- Freight charges or postage due on incoming shipments
- Postage (only in extraordinary or special situations, and if the University's Mail Services is not able to accommodate requirements)
- Telephone calls made outside of University premises for business purposes
- Incentive fees given to human research subjects
A “security” safe is different from a “fire” safe. Generally, the door hinge on a “security safe” is on the inside as contrasted to a “fire” safe, which has the hinge on the outside.
A safe should be bolted to a wall and/or floor. Locate it away from public view. A good strategy is to keep a safe inside a file cabinet, overhead cabinet or closet.
At the time of posting, an example of a recommended safe is:
SentrySafe Security Safe 1.0 Cubic Ft. Capacity Security Safe
Staples Item: 708264
As of the date this information was posted, it is available from Staples via i-Buy for less than $90.
Updated October 19, 2016