Training: Petty Cash

Please read the following sections carefully. At the end of this tutorial, you will need to take the Online Petty Cash Quiz. You must have 3 or fewer incorrect answers in order to pass the quiz.

On this page:

1. What Is a Petty Cash Custodian?
2. Who Can Appoint a Petty Cash Custodian and How?
3. What Is Petty Cash and How Is It Used?
4. Stanford University Petty Cash Policies
5. The Dollar Limit on Petty Cash Transactions
6. What Petty Cash Can and Cannot Be Used for?
7. What Is an Appropriate Fund Size?
8. Expenditure Approval Policy
9. How to Document Business Meals and Entertainment Expenses?
10. Where the Petty Cash Box Should Be Kept?
11. Request a Check through iOU for Replenishment of Petty Cash Funds
12. Open, Close, and Resize a Petty Cash Fund
13. Transfer a Petty Cash Fund When a Custodian Changes or Goes on Vacation
14. Fill out a Petty Cash Receipt
15. Reconciling (Balance) Your Petty Cash Fund
16. Determine Which Kind of Receipts Are Acceptable
17. Document Lost Receipts
18. Handle a Shortage or Overage
19. Report a Theft
20. Petty Cash Online Quiz

What Is a Petty Cash Custodian?

A custodian is an employee designated by a department head to disburse, balance and replenish the department's Petty Cash fund, following University policies and procedures. The custodian is responsible for the proper handling of funds. Petty cash funds must be kept in a safe and secure place and be reconciled at least once per month. Mishandling of petty cash funds may result in disciplinary action up to and including termination of employment.

Who Can Appoint a Petty Cash Custodian and How?

The department head may appoint an employee to be a Petty Cash Custodian or transfer Custodial responsibility to a new custodian by submitting a HelpSU request to the Financial Support Center. Use the Request Description to enter the Petty Cash Fund number and the desired change. The new custodian must complete required training described below before assuming responsibility for the fund.

Getting certified as a custodian

1. Start by getting access to the iOU system.
2. Register and complete FIN-0464: iOU Petty Cash Online Tutorial.
3. Complete this Petty Cash Tutorial for policies and procedures associated with Petty Cash.
4. Complete and submit the Petty Cash Online Quiz at the end of the tutorial. Your quiz will be graded and you will be contacted regarding the results. You must miss no more than 3 questions on the quiz to pass.

To take the training

Before you begin this tutorial, have a copy of the following Administrative Guide Memos handy or refer to them online during the tutorial.

• 36.6 Petty Cash Funds
• 36.4 Reimbursement of Expenses
• 36.7 Travel Expenses

What Is Petty Cash and How to Use It

What is Petty Cash?

The purpose of a Petty Cash Fund is to allow for the reimbursement or purchase of minor, unanticipated business expenses when the University's present procurement system is not cost effective and when the dollar amount is under $100.00.

In general, the use of petty cash funds are discouraged and departments are strongly encouraged to use the Department Purchasing Card (PCard) or the current Reimbursement Request in iOU whenever possible.

What are the different types of Petty Cash Funds?

The University has three (3) types of Petty Cash Funds:

1. Petty Cash Fund – Petty Cash Funds are established for departmental use for incidental and emergency small-dollar purchases where the use of alternative means (e.g. PCard) is not feasible. Reimbursement for properly approved expenses may be obtained directly from this fund. The size of a Petty Cash Fund will be determined by the business needs of the requesting department, and, unless special written approval is obtained from the Treasurer, a single fund will be limited to no more than $500 in cash on hand.
2. Petty Cash Checking Account – Petty Cash Checking Accounts may be established in departments that make small disbursements by mail (e.g. purchase of subscriptions), or must make immediate payment (e.g. C.O.D. (cash on delivery) payment for goods delivered by UPS). The size of a Petty Cash Checking Account will be determined by the business needs of the requesting department, and, unless special written approval is obtained from the Treasurer, a departmental Petty Cash Checking Account will be limited to no more than $2,500.
3. Change Fund – Change Funds may be established by a department and used to give change to customers when they are paying for goods and/or services and is reconciled daily. The size of a Change Fund will be determined by the business needs of the requesting department. A written request with the details of the business needs must be submitted to and approved by the Treasurer.

Stanford University Petty Cash Policies

What is the general procedure for maintaining the department's Petty Cash Fund?

1. An employee presents the custodian with valid expense receipts and completed Received of Petty Cash forms. This form is available through SmartMart in iProcurement, item number "TOP3008" or keywords "Petty Cash". The information on the "Received of Petty Cash" form includes:
• Business purpose of the expense, including names of attendees or name of group, for a meal or event
• PTAEO to be charged
• Signature of a person authorized to sign on the account charged


2. The custodian reimburses the employee with money from the Petty Cash box. The employee signs the "Received of Petty Cash" form to acknowledge receipt of the amount on the "Received of Petty Cash" form when he or she receives the cash.
3. When the fund needs to be replenished, the custodian enters the information from each receipt online in iOU and balances the fund. For detailed explanation see Replenishing Petty Cash.
4. The custodian completes the iOU Petty Cash transaction and faxes in copies of the "Received of Petty Cash" forms and the receipts following the directions on the iOU Confirmation and bar code page.
5. Travel & Reimbursement in Disbursements verifies allowability of the expenses, expenditure types, receipts and the "Received of Petty Cash" forms.
6. Disbursements sends the check to the custodian by ID mail or holds it at the Will Call desk as per the instructions on the iOU transaction. There is a Will Call charge for checks to be picked up at Disbursements.
7. The custodian cashes the check.
8. The custodian puts the cash in the Petty Cash box.
9. The custodian periodically counts and reconciles using the Petty Cash Reconciliation Form.

The Dollar Limit on Petty Cash Transactions

What is the dollar limit on Petty Cash transactions?

The limit per each Petty Cash reimbursement is $100.00. See Administrative Guide Memo 36.6 Section 1.

When Petty Cash May be Used?

Reimbursements from petty cash are authorized for purchases and expenditures up to $100 per transaction. Special rules apply to the following uses of petty cash:

• Alcoholic Beverages – Purchases of alcoholic beverages may not be reimbursed by the federal government, either directly on a contract or grant account, or indirectly through the indirect cost rate calculation. When alcohol is served as part of a business meal, the restaurant receipt must identify the amount charged for the alcoholic beverages. List the alcohol amount, plus the associated portion of sales tax and tip, separately on the reimbursement documentation, charging the expenses to a non-sponsored PTA using the appropriate unallowable expenditure type.
• Capital Equipment Fabrications – When the item purchased is to be used in the fabrication of a piece of capital equipment, the Fabrication Number must be shown on the reimbursement documentation. (For more information on capital equipment fabrication, see the Stanford Property Management Manual).
• Accounting Accuracy – Reimbursement for petty cash must be the exact amount of the expense. Splitting one transaction over $100 into several parts, or requesting reimbursement of less than the full amount of the expense are specifically not allowed.

What Petty Cash Can and Cannot Be Used for

What Petty Cash can and cannot be used for?

Read Administrative Guide Memos 36.6 Section 3b, and 36.4 Section 1a.

What can Petty Cash be used for?

Some of the items that can be reimbursed are:

• Expendable materials and supplies
• Departmental and lab supplies
• Professional membership dues
• Business meals
• Local transportation (i.e. taxi), parking, bridge tolls, and mileage, totaling less than $100
• Books and periodicals
• Photocopy services
• Postage and mailing services
• Fabricated capital equipment
• The fabrication number must be entered on the online iOU Petty Cash request in the Remarks field or shown on the reimbursement documentation (faxed backup). For more information on capital equipment fabrication, see the Stanford Property Management Manual.
• Necessary and reasonable food (such as sandwiches and beverages) brought into the office for meetings, totaling $100 or less, including tax, tip and delivery.

What cannot be reimbursed with Petty Cash?

• Payment for services performed by employees or non-employees. These payments are tax-reportable; the Petty Cash system is not designed to report or withhold taxes. (Administrative Guide Memo 36.6; Memo 35: University Payroll; Memo 36.5: Payments to Non-employees).
• Gifts (Administrative Guide Memo 36.6)
• Personal loans and cashing personal checks ( Administrative Guide Memo 36.6)
• Advances
• Buying hazardous materials (Administrative Guide Memo 54.4 Section 3f)
• Stanford Faculty Club dues (Administrative Guide Memo 36.4 Section 1c)
• Social or travel club dues (Administrative Guide Memo 36.4 Section 1c)
• University parking permits--personal expense ( Administrative Guide Memo 36.4 Section 1c)
• Traffic citations (Administrative Guide Memo 36.4 Section 1c)
• Personal expenses (Administrative Guide Memo 36.4 Section 1c)
• Interest charges (Administrative Guide Memo 36.4 Section 1c)
• Expenses over 120 days (anything older than 120 days must be reimbursed through iOU)
• Recurring expenses (e.g. employee business-related home internet or cell phone expenses) (Administrative Guide Memo 81.3)
• Amounts over $100. (Administrative Guide Memo 36.6)

Are there exceptions?

Any requests for exceptions must be submitted in writing and approved by the University Treasurer.

What Is an Appropriate Fund Size?

The type and size of a petty cash fund will be determined by the business needs of the requesting department, and, unless special written approval is obtained from the Treasurer, will be limited to no more than:

• $500 for a Petty Cash Fund;
• $2,500 for a Petty Cash Checking Account;

See Administrative Guide Memo 36.6 Section 2b for complete details.

There will be only one Petty Cash fund per department allowed. Unless the department is very large or geographically dispersed, a single petty cash fund per department is usually adequate for all its petty cash transactions. See Administrative Guide Memo 36.6 Section 4a.

Expenditure Approval Policy

Each reimbursement is documented on a "Received of Petty Cash" form and must be approved by a person who has signature authority on the activity PTA being charged. Custodians may not approve their own expenses nor the expenses of anyone to whom they report, either directly or indirectly (approval should come from someone at a level above the person requesting reimbursement). See Administrative Guide Memo 36.6 Section 6c.

How to Document Business Meals and Entertainment Expenses

To document business meals and entertainment expenses, the following pieces of information are required:

• Business purpose (show relationship to University business)
• Date of event
• Amount
• Original receipt(s)
• Location, if significant (for example, mileage, parking, meals)
• Names of people attending (or name of group, if applicable for meals and events)

Note:  When alcohol is served as part of a business meal, the restaurant receipt must identify the amount charged for the alcoholic beverages. List the alcohol amount, plus the associated portion of sales tax and tip, separately on the reimbursement documentation, charging the expenses to a non-sponsored PTA using the appropriate unallowable expenditure type.

Where the Petty Cash Box Should Be Kept

To prevent a theft, Petty Cash should be kept in a locked box and that box kept in a locked desk or cabinet. See Administrative Guide Memo 36.6 Section 5b. Only the custodian should have access to the keys.

Request a Check through iOU for Replenishment of Petty Cash Funds

Use the Petty Cash module in iOU to request a check to replenish your petty cash fund when the amount of cash runs low:

1. Only Petty Cash Custodians and alternates will have access to the Petty Cash module in iOU and must have completed the iOU training, FIN 0460, and passed the test for this class.
2. Select the Petty Cash module in iOU and,
   1. enter an expense line and an allocation line for each expense
   
   ~ OR ~
   2. complete and upload the iOU Petty Cash spreadsheet.
   
   
   To use the spreadsheet, click the Upload Lines button under the Expense Lines section on the Lines page.
3. Enter the required approvers on the Approver Routing page, at least one for each PTA being charged.
4. Click the Submit button and you will get the Confirmation page with the bar code and instructions for faxing backup into the iOU system.
5. The transaction will not route to approvers until you have faxed backup according to the directions on the bar code page.
6. Fax the receipts following the instructions on the iOU Confirmation page with the bar code. If you have problems faxing the receipts or the number of receipts is excessive, send an ID envelope with the receipts and a printout of the Transaction Review Page to: Attn: Travel & Reimbursements, Mail Code 8440.
7. If you are not going to fax receipts, you must answer NO to “Are you sending backup documents?” on the General Information page.
8. After the transaction is fully approved, it will be assigned to a processor in Travel and Reimbursement.
9. After the transaction has been reviewed and processed by Travel & Reimbursements, a check will be cut and mailed to the custodian at the address shown in the Payee Information on the General Information page in iOU. If additional Payment Handling is selected at the bottom of the General Information page, those instructions will take precedence (for example: Will Call).
10. Cash the check.
11. Lock the cash in your Petty Cash box.

For more information about replenishing your Petty Cash fund see Administrative Guide memo 36.6 Section 6e. We have arranged for the Stanford Federal Credit Union (SFCU) to cash Petty Cash replenishment checks using your Stanford picture ID card. Custodians who want more than one roll of coins (in any denomination) must email the Petty Cash Bank Replenishment Form to the branch one day before presenting the check for cashing.

The contact information at the branches follows:

• Tresidder Branch email: tresidder@sfcu.org
• Pampas Branch email: pampas@sfcu.org

Open, Close, and Resize a Petty Cash Fund

To open or close a Petty Cash fund or to increase or decrease the Petty Cash fund amount, the department head sends an email request to Cash Management via a HelpSU ticket:

Include the following information in the email to Financial Support Center (3-2772):

• Petty cash fund number (82XXX)
• Department name and location
• Custodian name
• Reason for request
• Amount requested

See Administrative Guide Memo 36.6 Section 4d.

Transfer a Petty Cash Fund When a Custodian Changes or Goes on Vacation

Changing custodians

If a custodian will be changed permanently, the department head must submit a HelpSU ticket to the Financial Support Center (formerly the Buying and Paying Support Center). Use the Request Description to enter the desired Petty Cash change. The new custodian must have completed the Petty Cash Training.

If the address or phone number changes, the HelpSU Request should indicate the corrections.

See Administrative Guide Memo 36.6 Sections 4c, 6a and 6b.

Custodian on Vacation

Before a custodian goes on vacation, the department head and custodian should discuss whether the money will be disbursed or the fund will be replenished while the regular custodian is away. If so, the department head must notify Financial Support Center (3-2772) identifying a temporary custodian who has completed the "Petty Cash" training and associated quiz in advance.

• Together the custodian and the appointed temporary custodian inventory the Petty Cash box by preparing a list of cash, receipts and reimbursement requests submitted, but not yet received, if any. The total of these three amounts should total the fund amount. Click here to download the template to assist with the reconciliation.
• The temporary custodian and the regular custodian both sign this inventory and gives it to the regular custodian keeps it as his or her receipt.

Upon the return of the regular custodian, the box is inventoried again, with the temporary custodian keeping the signed inventory sheet as a receipt.

See Administrative Guide Memo 36.6 Sections 6a and 6b.

Fill out a Petty Cash Receipt

Before an employee receives Petty Cash, an employee must complete the "Received of Petty Cash" form signed by an authorized approver.When cash is received the recipient must sign the form on the "received by line". See Administrative Guide Memo 36.6 Section 6c.

Number:  Required. (Department System Number. Each department must create their own system for numbering the Petty Cash Receipts, and recording those numbers.) Date Completed:  Date form is completed not date of receipt. Business Purpose:  Description of purpose, or business purpose of expense. Persons in Attendance:  If for a business meal, first and last name of persons in attendance. PTA & Expenditure type to be charged. Signature of person having signature and authority on the account, not the person receiving reimbursement, and not a direct or indirect report to the recipient. Signature of person receiving reimbursement for expense. Signature of person receiving the cash disbursement from the Petty Cash Custodian.

Reconciling (Balance) Your Petty Cash Fund

One of the most important steps in replenishing your fund is balancing it.

Example of Reconciling (Balancing)

	Description	Amount
	Count cash in Box	$88.25
	Add Receipts and Petty Cash Chits in Box	$37.50
	Add any uncashed Petty Cash checks	$30.00
	Add iOU Petty Cash Requests submitted for reimbursement but not yet reimbursed	$44.25
	The Total of the above should equal the Original Fund Amount	$200.00

Note:  You must complete the Petty Cash Reconciliation Form and it must be signed by the department manager or the department manager's written designee.

Determine Which Kind of Receipts Are Acceptable?

Mileage Reimbursements

You do not need a receipt or Lost / Missing Receipt Form to reimburse for mileage, but if there is more than one trip being reimbursed, a mileage log with odometer readings, travel dates, destinations and business purpose must be faxed in lieu of a receipt. See Administrative Guide Memo 36.6 Section 6c.

Other Receipts

Receipts must show vendor, date of purchase, amount of purchase, and list the items purchased. Only ORIGINAL RECEIPTS are acceptable (not photocopies) for submission.

Document Lost Receipts

When an original receipt is not available, you must complete a Lost / Missing Receipt memo.

On the form:

• Indicate the complete business purpose
• Indicate the date of expense
• Certify that the purchase was for official University business
• Certify that the expense amount is accurate
• Certify that no other reimbursement of the expense will be sought or accepted
• Include signature of person incurring expense
• Include signature of approver

Handle a Shortage or Overage

If you have more or less cash than you should have to balance, contact the Financial Support Center (3-2772). See Administrative Guide Memo 36.6 Section 6d.

Report a Theft

In case of theft:

1. Contact your department head and the Stanford Police, 650-723-9633 and obtain a police report.
2. Notify Treasury Director of the theft and send a copy of the police report.
3. Enter the information in iOU Petty Cash as an expense line item. If amount is more than $100, submit in iOU Reimbursements.
4. Fax the police report as back-up supporting the iOU transaction.

Petty Cash Online Quiz

When you are ready, you may start the Online Quiz by clicking here. Please remember that you must not make more than 3 questions to pass the quiz. Good luck!