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

Purpose

To provide guidelines for managing imprest checking accounts, which are funds used by the university for small items of expenditure and restored to a fixed amount periodically, primarily used to provide payments to research participants, students, student financial processors, and other means when entities are not able to accept other more modern methods of payment such as electronic fund transfers like automated clearing house (ACH) or global digital disbursements, electronic gift cards, prepaid cards, or purchasing cards. 

Policy Statement

An imprest checking account is established at a commercial financial institution and is often used like a revolving loan. For example, start-up costs or payments to subjects participating in a research study might be paid through an imprest checking account, which would then be reimbursed from the Office of Sponsored Research or other appropriate funds. The initial funding for an imprest checking account is from the University's unrestricted endowment income pool and must be returned to the pool when the imprest checking account is closed.

The imprest checking accounts are authorized and established when timing of disbursements is sensitive and critical to management objectives.

Restrictions on Use

Departments should utilize campus vouchers and the accounts payable system for the following:

• making stipend payments
• making payments for personal services
• payment to vendors
• loans and advances to employees

Bank Account Balances

The balance in an imprest checking account should equal approximately two months' operating cash needs (i.e., two months' average expenditures and charges). Departments should periodically review activity and the balance in each imprest account to determine if the account is funded appropriately, and make changes accordingly. Any imprest bank account that becomes inactive or is not reconciled monthly will be closed by Accounting Services' Cash Management team.

Account Replenishment

Deposits into the imprest checking account should be done at regular intervals to ensure that an adequate revolving balance of funds, as close to the authorized amount as originally requested, is maintained.

Account Overdrafts

The department is responsible for maintaining a positive cash balance in the account. An overdrawn imprest account will be charged all applicable overdraft fees for each day the account is overdrawn. Frequent overdrafts are grounds for closing the account.

Documentation

Departments are required to maintain supporting documentation for each disbursement, including proper authorization for the disbursement, in accordance with University record retention policies.

Reconciliation and Check Retention

Departments are required to perform monthly reconciliation of the imprest checking account comparing the bank account balance to the authorized chartfield string in ConnectCarolina. The bank reconciliation should include the following controls:

• Identifying, resolving, and clearing reconciling items.
• Notifying Cash Management in Accounting Services of any unauthorized activity.
• Evidence of supervisor review and sign off on the reconciliation.
• Assigning the duties of writing checks and reconciling the imprest account to two different individuals.
• Documenting any communications or discussions with the bank employee regarding the account.

Voided Checks and Bank Charges

Departments will retain voided checks with their monthly bank statement.

Bank charges may include those for printing checks and deposit slips.

Interest credits, monthly service charges or other charges should not appear on the statement. If these charges appear, then it is the department's responsibility to contact Cash Management in Accounting Services by sending an email to cash_management@unc.edu.

Escheat of Checks

It is a requirement of North Carolina state law to escheat, or to send funds from uncashed checks to the State Treasurer of the intended recipients state of residence annually after the mandated holding period has been met.  For checks issued during the fiscal year, there is a holding period of one additional fiscal year.  Departments should report their unclaimed checks to Cash Management at the end of each fiscal year.  Contact Cash Management or send an email to cash_management@unc.edu for forms and assistance in escheating checks to the several states. Checks made payable to state agencies or the Federal government are not escheated.

Exclusions

None

Special Situations

None

Procedures

• Finance Procedure 306.1 - University of North Carolina at Chapel Hill Procedure on Establishing an Imprest Checking (Bank) Account
• Finance Procedure 306.2 - University of North Carolina at Chapel Hill Procedure on Maintaining and Closing an Imprest Checking (Bank) Account

Additional Information

Frequently Asked Questions

Q: How do I properly void checks?
A: Write the word "void" across the payee line in large clear letters. Use an ink pen so that the markings will be impossible to remove and cannot be erased.

Related Data

None

Contacts

History

Revised:

• July 25, 2016: Updated contact info.
• September 24, 2015: Updated language on ConnectCarolina system and processes.
• July 16, 2014: Updated information on account overdrafts.
• March 11, 2010
• March 27, 2023