Petty Cash
On this page:
- Purpose
- Requesting a petty cash float
- Conditions for using petty cash
- Petty cash imprest system
- Security and controls
- Petty cash administrator
Purpose of petty cash
A petty cash float (normally up to a maximum of £100, unless the Head, Accounting Services gives written consent to increase the limit) may be required by departments to defray minor expenses incurred by University employees on department activity.
The petty cash procedures aim to ensure
- Departments accurately account for their petty cash expenditure
- Control is maintained over both the nature and level of expenditure
- Security measures are in place to minimise the potential for fraud/misuse of petty cash
- Adherence to the University’s purchasing policy
Staff responsible for the petty cash float must ensure the records are always up to date, including making timely posting of petty cash journals and promptly inputting disbursements to UFS.
Requesting a petty cash float
Requests for a petty cash float and any permanent, or temporary, increases to an existing float must be made in writing by either the Head of Institution or Administrator to the Head, Accounting Services, clearly stating the amount of petty cash float required (this is normally a maximum of £100).
If approved, Cash Management will contact the department to make the arrangements. The Finance Division maintains a list of each department’s petty cash imprest.
Conditions for using petty cash
Petty Cash must be used exclusively for expenditure directly relating to University business. These shall be limited to items of expenditure below the cost of £25 unless the Director of Finance has given written dispensation to increase the limit.
Petty cash must not be used:
- To make payments to individuals (e.g., payments to visiting lecturers to defray expenses).
- To make payments to external suppliers for services rendered.
- For the regular purchase of items that could be obtained through iProcurement (e.g., the monthly replenishment of consumables such as tea and coffee, cleaning materials or light bulbs).
- To reimburse mileage or travel costs other than local bus fares between sites in Cambridge. In these cases, University Expense forms should be used.
- For personal expenditure even if the intention is to reimburse the float later.
- For internal business transactions within the University i.e., between departments (this includes the University Centre). In these circumstances, Internal Trading procedures via the UFS must be used.
Reimbursements
All payments from Petty Cash must:
- have had permission to incur the expense in the first place
- be supported by a receipted voucher; and
- be authorised by someone other than the claimant
Claimants receiving reimbursement must sign for receipt of monies.
Petty cash vouchers
Petty cash vouchers must be used to record the nature of the expense and to act as a receipt for the reimbursement. All the information in the example below is required
VAT and petty cash
Due to the complexities of the University’s VAT recovery rules, it is not normally cost effective to spend the time ascertaining whether a proportion of any VAT incurred can be reclaimed for these low value purchases. Therefore, petty cash items should be posted to department accounts or grants at the gross value even if you have a valid tax invoice.
Taxable benefits
Provided petty cash is paid out in accordance with the conditions of use detailed above there should be no taxable benefit. Further advice can be sought from the Payroll Manager.
Petty cash imprest system
Each department will need to establish a Petty Cash Imprest System for issuing petty cash to employees and recording all transactions. Each time the float requires replenishing a Petty Cash Imprest Form must be completed.
Completing the Imprest Form
A summary of the details for each petty cash voucher completed should be transferred to the Imprest Form. The form must be supported by receipted vouchers. These and the authorised imprest forms must be kept for in line with the documentation retention policy.
Any petty cash transactions relating to research grants should be recorded on a separate Research Grant Petty Cash form. The total of this form is then transferred to the Imprest Form.
Posting the items to UFS
The imprest form and the Research Grant Petty Cash form, if used, are the source document(s) for posting petty cash journals. Where items are to be recharged to a research grant, first enter a Grants journal in UFS, followed by a GL journal to reflect the Imprest Form transactions.
The imprest form journal should be authorised by the Department Administrator, expenditure should be charged to the relevant GL expenditure account and a corresponding credit entry posted to the department petty cash control account:
Debit U.XX.????.????.E???.0000 (Department expenditure code)
Credit U.XX.0000.0000.SPAA.0000 (Petty Cash Control Account)
The journals must be posted to UFS prior to the replenishment of the float and the journal posting reference should be written on the imprest form and authorised as complete.
Refer to the Finance Training GL guidance on raising a Petty Cash GL journal and Research Grant journal.
Collecting the petty cash float
Department petty cash floats should be replenished at least once a month if any activity has occurred. In cases where there has been no activity for a period of three months or more the department, together with advice from the Finance Division, should re-assess the need for and the level of the float.
The replenishment of petty cash floats must be arranged through the Cash Management team for collection direct from the bank unless otherwise arranged in advance by the Finance Division. Cash takings (e.g., from vending machines) must never be used to supplement or replenish petty cash floats.
Departments must have posted their petty cash journal(s) on UFS before the replenishment can be collected from the bank.
A copy of the completed imprest form should be emailed to the Cash Management team to order a replenishment. Please allow 3 days' notice.
The Cash Management team may refuse to issue petty cash floats if discrepancies with the imprest form are found, pending approval from the Director of Finance.
Security and controls
Heads of Institution are responsible for the security of the float and for ensuring that all expenditure is properly supported and authorised. There must be regular independent checks of petty cash balances and use and Departments are required to certify their petty cash float at half year-end and the financial year-end.
Storing petty cash
Departments should ensure petty cash is kept in either a suitable safe or a locked drawer within the department and access to it is given to both the member of staff responsible for maintaining it and their deputy. Petty Cash must never be left out unattended.
Lost/missing cash
In the event of petty cash being lost or missing, the Head, Accounting Services, must be notified immediately. If theft is suspected, report to the Security Office and the Finance Division Insurance team.
Monthly reconciliations of the imprest system
The member of staff responsible for the petty cash float must ensure the records are kept up to date and, including disbursements, posted to UFS. As part of the department’s month-end procedures the petty cash imprest system should be reconciled from the balance on the petty cash control account to the actual cash in hand. The control account must agree to the balance of cash in hand at the financial month-end/year-end.
Petty Cash Administrator
Actions required:
- Ensure petty cash is stored in a suitable safe or locked drawer and never left unattended
- Ensure the Imprest Form is completed and posted to the ledger, prior to replenishing the float
- Check each payment from petty cash has supporting documentation and is properly authorised
- Ensure every claimant has signed for receipt of monies
- Review the nature and level of expenditure to determine if petty cash is the appropriate method of payment
- Review petty cash limits and reduce where possible and as necessary
- Ensure petty cash is replenished at least once a month if any activity has occurred
- Certify the petty cash float and advances balances at half-year and year-end, ensuring cash in hand and advances agree to UFS
- Notify the Head, Accounting Services immediately of any lost or missing petty cash
- Ensure Handover Form is completed should you leave (see below)
Change of petty cash administrator
If the person responsible for administering petty cash should change, or the role holder will be absent (e.g., on holiday), the person taking over should ensure a suitable handover is done. The Petty Cash Handover form must be completed in all instances. Download from the Finance Division forms page.
If the petty cash administrator is part-time and there is a requirement for petty cash outside their normal working hours, then it is recommended the petty cash float is split between two role holders.
The Accounts Receivable team, as well as the Cash Management team and cashiers should be notified of the change in petty cash administrator