Michigan State University
Controller's Office

305 Administration Bldg
East Lansing, MI 48824
517 355-5020

SECTION 60: Petty Cash Funds

Last updated: November 2001
  1. General
  2. Types of Cash Advances
    1. Issued by Voucher Processing Office
    2. Issued by Cashier's Office
  3. Obtaining Money for a Petty Cash Fund
    1. Departmental Funds
    2. Agency or Registered Student Organization Funds
  4. Use of Petty Cash Funds
  5. Replenishing Petty Cash Funds
  6. Repaying Petty Cash Funds
  7. Security
  8. Exhibits/Forms

I. General

  1. The custodian of a petty cash advance must repay the entire outstanding balance of the petty cash advance to the Cashier’s Office upon any of the following circumstances: on or before the due date of the advance, the custodian’s transfer to another University department, termination of the custodian’s employment at the University, or at the request of the issuing office.
  2. It is the responsibility of the custodian and/or unit administrator to inform the issuing office in writing when there is a change of a staff member who is responsible for the petty cash fund. A new note must be signed by the individual assuming responsibility of the fund whenever a change in custodian occurs.
  3. Petty cash advances are not charged to the department's account, but are carried as receivables by either the Voucher Processing Office or the Cashier's Office.  The department's account is charged as reimbursement vouchers are submitted.
  4. Refunds can be made only from petty cash funds obtained by departments for that purpose. Reimbursement vouchers must be used to record the signatures of persons receiving refunds through a petty cash fund.
  5. The unit administrator and custodian acknowledge that they have read and are aware of the following responsibilities.  Any penalties or interest incurred as a result of lack of adherence to the following will be the responsibility of the department.
    1. Payments in any amount to a non-resident alien must be reported to the IRS.  All payments made to non-resident aliens must comply with Section 77.
    2. Payee tax identification is required for reportable payments.  You will need to report the name, address and tax identification number of the payee on the reimbursement voucher.  Payments totaling more than $600 (either individually or cumulatively) during a calendar year are reportable to the Internal Revenue Service.  For additional information, please refer to Section 75 I. C. 2
  6. Departments should also consider the MSU Purchasing Card (MasterCard) as an alternative to a Petty Cash Advance. For additional information, please refer to Section 270 of this manual.
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II. Types of Cash Advances

  1. Issued by the VOUCHER PROCESSING OFFICE:
    1. IMPREST – On-going research projects, generally for large dollar amounts, that must be sustained and replenished for the duration of the grant and/or project.  Requests should first be routed to the Contract and Grant Administration office for their approval.  Due date should be within 1-2 months after the end date of the grant.  Process original receipts on a reimbursement voucher made payable to: (NAME OF CUSTODIAN).   Make sure advance number is clearly stated on the front of the voucher and has been circled in RED ink.
    2. RESEARCH PARTICIPANTS – Cash payments made to individuals for their participation as human subjects for a research project.  For reimbursement purposes, prepare a list of names, addresses and amount received.  Process original receipts on a reimbursement voucher made payable to: MSU FOR THE ACCOUNT OF (NAME OF CUSTODIAN).   Make sure advance number is clearly stated on the front of the voucher and has been circled in RED ink.
  2. Issued by the CASHIER'S OFFICE:
    1. OPEN-ENDED (OPERATIONAL) – Funds on hand to make change, provide refunds or to purchase small items not available at General Stores.  Such purchases should only be for items appropriate to charge to a University account.  Funds do not have a specific due date. Process original receipts on a reimbursement voucher made payable to: (NAME OF CUSTODIAN).
    2. EVENT – Funds needed to facilitate a specific event, such as cash payments to performers or workers as required by contract or change funds for hosting a fundraiser or conference. Process original receipts on a reimbursement voucher made payable to: MSU FOR THE ACCOUNT OF (NAME OF CUSTODIAN).   Make sure advance number is clearly stated on the front of the voucher and has been circled in RED ink.
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III. Obtaining Money for a Petty Cash Fund

  1. Departmental Funds
    1. The person who will be responsible for the petty cash fund (custodian) should complete the Request for Petty Cash Advance Form (see exhibit 60-A) and forward it to the unit administrator for approval.
    2. For advance requests through the Voucher Processing Office, bring the original signed form to room 360 Administration Building for immediate processing. A legal note will be prepared and must be signed by the custodian.  Valid signed photo identification is required.
    3. For advance requests through the Cashier's Office, send or bring the original signed request to 110 Administration Building.  A legal note will be prepared by and must be signed by the custodian. Valid signed photo identification is required.
    4. Subsequent requests for funds under the same project name will require a new Request for Petty Cash Advance Form with original signatures.  Use the “Project Number” section of the form to track requests for additional funds.
    5. The funds may then be picked up at the Cashier's Office between the hours of 8:15 a.m. and 4:45 p.m.
    6. The Cashier’s Office should be notified at least two days prior to the desired pick-up date if the custodian is requesting cash in specific denominations or advances greater than $10,000. If the advance is to be issued in check form, prior notification is not required.
    7. Change of due date will require Unit Administrator or Designate signature authorization.  Requests for extension should be forwarded to the issuing office prior to advance due date.
    8. Departmental cash funds are reviewed periodically by Internal Audit.
  2. Agency or Registered Student Organization Funds

    Prepare a direct payment voucher payable to the individual to be in charge of the fund and submit to the Accounting Department. This voucher must be approved by an authorized person whose signature is on file with the Accounting Department where a check will be issued.  The money for the fund will be charged against the organization or agency's account.
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IV. Use of Petty Cash Funds

  1. The handling of the petty cash fund is the responsibility of the individual authorized by the department chairperson or administrative head.  No loans of any type or travel advances are to be made from the petty cash fund.  UNDER NO CIRCUMSTANCES SHOULD THIS FUND BE USED TO CASH CHECKS OR FOR PERSONAL REASONS.  See Section 15 of this manual for more information.
  2. If a person makes an authorized purchase of an item with their own money, that person must obtain a receipt or invoice, sign it, and present it to the person in charge of the petty cash fund for reimbursement.  No money should be disbursed from the petty cash fund to reimburse a person unless a paid receipt or invoice is presented.  However, if such documents are not issued for the type of expense incurred (e.g., parking meters, phone calls made on a pay phone), a written note on how the funds were expended is required.  The note and the voucher must be signed by the person who made the expenditure.
  3. For persons who must have advance cash to make authorized purchases, it is necessary that they sign a petty cash advance slip for the amount of money they have received.  The petty cash advance slip is to be destroyed when any unspent money and a paid receipt for the purchase are returned to the fund.
  4. No purchase of an item costing more than $100 should be made from a petty cash fund.  Items costing more than $100 should be acquired through other means (e.g., purchase requisition or MSU Purchasing Card).
  5. When use of a petty cash fund is no longer required, the funds must be returned to the Cashier's Office.
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V. Replenishing Petty Cash Funds

  1. The person authorized to handle the petty cash fund is responsible for keeping it in balance, thus, THE PAID RECEIPTS OR INVOICES PLUS THE CASH SHOULD ALWAYS EQUAL THE FUND BALANCE.
  2. To replenish the petty cash fund, a reimbursement voucher (see exhibit 60-B), should be typewritten for the amount of the paid receipts or invoices in the petty cash box and made payable to (NAME OF CUSTODIAN).  Each purchase must be listed on the voucher, showing the date of purchase, vendor's name, and amount paid.  The paid receipts should be attached to the voucher and sent to Voucher Processing, 360 Administration Building.  The custodian of the petty cash fund should sign the voucher.  It is not appropriate for the custodian of the fund to authorize their own reimbursement.  Therefore, the unit administrator or an authorized signer on the account(s) being charged who is administratively senior to the payee should also sign approving the reimbursement.
  3. Any overages or shortages should be shown on the reimbursement voucher.  An overage should be deducted from the total amount to be reimbursed.  A shortage should be added to the total amount to be reimbursed.  The reimbursement voucher should indicate the reason for the overage or shortage.
  4. Allow 5-8 business days from the time the reimbursement voucher reaches Voucher Processing for the reimbursement check to be written and returned.  Requests for reimbursement of the fund should be made before all of the cash has been spent.
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VI. Repaying Petty Cash Funds

  1. To repay the petty cash fund, a reimbursement voucher (see exhibit 60-B), should be typewritten for the amount of the paid receipts or invoices in the petty cash box.  The reimbursement voucher should be made payable to: MSU FOR THE ACCOUNT OF (NAME OF CUSTODIAN).  Make sure advance number is clearly stated on the front of the voucher and has been circled in RED ink.  Each purchase must be listed on the voucher, showing the date of purchase, vendor's name, and amount paid. The paid receipts should be attached to the voucher and sent to Voucher Processing 360 Administration Building. The custodian of the petty cash fund should sign the voucher. It is not appropriate for the custodian of the fund to authorize his or her own reimbursement. Therefore, the unit administrator or an authorized signer on the account(s) being charged who is administratively senior to the payee should also sign approving the reimbursement.
  2. Any overages or shortages should be shown on the reimbursement voucher. An overage should be deducted from the total amount to be reimbursed. A shortage should be added to the total amount to be reimbursed. The reimbursement voucher should indicate the reason for the overage or shortage.
  3. Any remaining cash on hand should be returned to the Cashier's Office, Monday-Friday, 8:15A.M. - 4:45P.M.  The cash will be processed as a repayment and you will be issued a receipt.
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VII. Security

  1. Funds should never be left unlocked or unattended and should be concealed from general view when not in use.  Unreimbursed petty cash vouchers, with attached receipts, should not be kept in the cash box.
  2. Petty cash funds must be kept within the department.  Under no circumstances are such funds to be deposited in a commercial depository account off campus.  Contact the Manager of the Cashier's Office for exceptions to this policy.  If permission is granted to maintain the advanced funds in a commercial account off campus, any interest earned is the property of Michigan State University.
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VIII. Exhibits/Forms

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