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Petty Cash Procedures

Policy 637 establishes the procedures for justification and authorization of the advancement of petty cash funds to MTSU department or budgetary heads. A petty cash fund is a fund established specifically for minor or low cost items.  The Petty Cash Fund Authorization Form must be completed and authorized by the necessary approvers. This will authorize the Office of Business and Finance to advance the department or budgetary head a petty cash fund, which will be maintained on a custodial basis. These advances are not chargeable to the department’s operating account, but are reflected on MTSU’s accounting records as an advance to the Department Chair/Director or budgetary head who will be accountable for proper fiscal and physical control of the fund.

Change Funds are considered a type of Petty Cash Fund. In order to set up a Change Fund, follow the same procedure as a Petty Cash Fund and select the “Change Fund” option as the Purpose for which the fund is needed.

A Petty Cash Fund is used for making “minor or low cost” purchases. This is defined in Policy 637 a single transaction from a vendor where the total is less than $50.00.

A Change Fund is used exclusively for making change.

A single Petty Cash Fund CANNOT be used for both disbursement and a change fund. If you have the need for both, then sperate Petty Cash Fund Authorization Forms must be submitted.

The custody of the petty cash fund may be delegated to the appropriate personnel. However, it is the responsibility of the designated Department Chair/Director  to ensure that funds are being used in accordance with MTSU policies.

The following controls should be put in place in order to ensure proper use of the funds:

  • Facilities for safekeeping must be available
  • Petty Cash Funds must be kept separate from all other cash funds, including personal funds. Separate funds should be requested if a change fund and disbursement fund are warranted
  • Petty Cash funds are subject to audit and therefore should be frequently balanced to ensure that cash and paid receipts are all accounted for. A Petty Cash Fund Reconciliation must be submitted by the Department Chair/Director or budgetary head when a request for reimbursement is submitted
  • A Petty Cash Fund Reconciliation Form should be prepared periodically and each time a Petty Cash Reimbursement Request is made.
  • Bank Accounts cannot be opened for petty cash funds without approval of the President and the Board of Trustees
  • Any change in the custody of the fund should be verified in writing by both parties.

  • Supplies that are available in the MTSU Bookstore may not be purchased using petty cash funds except in emergencies. If such purchases are deemed necessary, an explanation must be attached to the voucher
  • “… minor or low cost items” are defined as a purchase from any one vendor that is less than $50.00
  • Specific approval must be obtained from the Vice President for Business and Finance before petty cash funds can be used for purposes other than change funds or for the cash payment for minor item
  • Loans and advances to employees for personal use from petty cash funds are forbidden
  • The University cannot reimburse sales tax charged by the vendor, therefore Petty Cash cannot be used . If a purchase is for University Business Purposes and uses cash, please see the Tax Compliance page for information on how to obtain a Sales Tax Exemption form.
  • Meals, food, flowers, travel, personal services, contractor services, and dues or subscriptions cannot be reimbursed by petty cash funds

If at any time a petty cash fund or daily receipts should be over or short, the overage or shortage should be reported immediately via the Petty Cash Fund Reconciliation and providing an explanation of the circumstances.

Contact Information

Email:

boffice@mtsu.edu

Address:

Cope Administration Building,
Room #103
Middle Tennessee State University
Murfreesboro, TN 37132