304 - University of North Carolina at Chapel Hill Policy on Petty Cash Funds

Reason for Policy

Petty cash funds or change funds are used by the departments for cash payment of minor items or to make change to customers. This policy provides guidance for the authorization, establishment and maintenance of petty cash funds, including appropriate uses, safekeeping, audit and annual confirmation.

Policy Statement

Petty cash or change funds are authorized funds to enable the departments to manage minor departmental expenditures or to give change to customers when they are paying for goods and services.

Safekeeping and Control of Petty Cash Funds

The dean, director, or department chair is responsible for the proper safeguarding and use of petty cash monies entrusted to their departments. Administration of the fund may be delegated to a petty cash custodian within the department. The petty cash custodian is personally responsible for the cash which was specifically issued in the individual's name. Therefore access to the fund must be limited to the custodian. The funds must be secured at all times, preferably in a locked place.

Restrictions on use of petty cash funds

Petty cash funds are not established to bypass the University's accounts payable and purchasing policies and procedures. Specifically, petty cash funds must not be used to:

  • Purchase goods currently covered by University negotiated contracts
  • Make payments for personal services (i.e., typing, photography, entertainers, caterers, etc.) that would be considered either wages (salary) or independent contractor payments.

These payments have tax consequences and must be reported. All payments for personal services must be paid through either:

  1. The payroll system, or
  2. The accounts payable system, for making payment to an independent contractor.
    • Issue advances
    • Pay gifts, awards, prizes
    • Issue personal loans or cash personal checks
    • Pay travel reimbursements
    • Pay membership dues

Receipt of cash or checks by the department must not be commingled with petty cash funds.

Deposit of petty cash in a bank account

When the size and use of the fund warrants, and with approval of the University Controller, all or a portion of the petty cash fund may be deposited in a separate bank account, called an imprest checking account.

Escheat of checks

If the petty cash is deposited into a bank account and checks are issued to pay for minor expenditures, then the petty cash fund is subject to the Escheat Statute of the State of North Carolina. The Escheat Statute requires that uncashed checks are to be remitted to the State Treasurer's Office when the owner cannot be located and the custodial period has elapsed. All University departments and units must be in compliance with the Escheat Statute.

Audit of Petty Cash Fund

Petty cash funds are subject to periodic audits. Recurring audit findings may result in the petty cash fund being revoked. The custodian is responsible for ensuring the cash on hand and receipts equal the authorized amount of the funds at all times. Petty cash funds must not be commingled with personal funds, cash drawers, or any other collected revenue.

Annual Confirmation

Accounting Services will request an annual confirmation of the petty cash funds as of the last business day of the fiscal year end (June 30 or earlier). Timely return of the confirmation by the department is required as the reported information will be used in the University's Comprehensive Annual Financial Report.

Frequency of Reimbursement

The petty cash fund must be reimbursed at least once a month or when the cash is depleted to the extent requiring replenishment.

Overage, Shortage, or Theft

Overages, shortages, or theft must be handled on an individual basis. For instructions in the event of overages, shortages, or theft, contact Cash Management in Accounting Services.

Closing Petty Cash Fund

If petty cash funds are no longer required, then it must be closed. The petty cash custodian must complete the closing procedure, and the responsible person must notify and request the University Controller to close the petty cash fund.

Exclusions

None

Special Situations

None

Procedures

Additional Information

Frequently Asked Questions

Q: Can study subjects be paid with petty cash?
A: No, study subjects must be paid through imprest checking accounts or cash advances.

Related Data

  • Finance Policy 306 - University of North Carolina at Chapel Hill Policy on Imprest Checking (Bank) Accounts

Contacts

Policy Contacts
Subject Contact Telephone Fax E-Mail
Imprest Checking Accounts Cash Management 919-962-0036 919-962-3306 cash_management@unc.edu
Imprest Checking Reimbursement Disbursement Services 919-962-0748 919-962-0748 pettycash@unc.edu

History

Revised:

  • November 11, 2014: Added FAQ on paying study subjects.
  • March 29, 2010

Details

Article ID: 131491
Created
Thu 4/8/21 9:10 PM
Modified
Thu 5/5/22 2:30 PM
Effective Date
If the date on which this document became/becomes enforceable differs from the Origination or Last Revision, this attribute reflects the date on which it is/was enforcable.
11/11/2014 12:00 AM
Issuing Officer
Name of the document Issuing Officer. This is the individual whose organizational authority covers the policy scope and who is primarily responsible for the policy.
Issuing Officer Title
Title of the person who is primarily responsible for issuing this policy.
Cash Manager
Last Review
Date on which the most recent document review was completed.
11/11/2014 12:00 AM
Last Revised
Date on which the most recent changes to this document were approved.
11/11/2014 12:00 AM
Origination
Date on which the original version of this document was first made official.
01/01/1999 12:00 AM
Responsible Unit
School, Department, or other organizational unit issuing this document.
F&O-Finance