Michigan State University
Controller's Office

Administration Bldg
426 Auditorium Rd, Rm 305
East Lansing, MI 48824
517 355-5020

SECTION 60: Cash Advances: Operational and Event

Last updated: August 2012

I. General

  1. The custodian of a cash advance must repay the entire outstanding balance of the 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 cash advance fund. A new note must be signed by the individual assuming responsibility of the fund whenever a change in custodian occurs.
  3. Cash advances are not charged to the department's account, but are carried as receivables by the Cashier's Office.  The department's account is charged as requests for reimbursement are submitted in EBS.
  4. Refunds can be made only from cash advance funds obtained by departments for that purpose.
  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.
  6. Departments should also consider the MSU Purchasing Card (MasterCard) as an alternative to a Cash Advance. For additional information, please refer to Section 270 of this manual.

II. Types of Cash Advances

  1. OPEN-ENDED (OPERATIONAL) – Funds on hand to make change, provide refunds or to purchase small items not available at University Stores.  Such purchases should only be for items appropriate to charge to a University account.  Funds do not have a specific due date.
  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.

III. Obtaining Money for a Cash Advance Fund

  1. The person who will be responsible for the cash advance fund (custodian) should complete the Request for Cash Advance Form (see exhibit 60–A) and forward it to the unit administrator for approval.
  2. Send or bring the original signed request to Hannah Administration Building, 426 Auditorium Road Rm 110.  A legal note will be prepared and must be signed by the custodian. Valid signed photo identification is required.
  3. If the amount of the cash advance totals more than $25,000, two departmental signatures are required.
  4. The funds may be picked up at the Cashier's Office between the hours of 8:30 a.m. and 4:30 p.m.
  5. 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 $5,000. If the advance is to be issued in check form, prior notification is not required.
  6. 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.
  7. Departmental cash funds are reviewed periodically by Internal Audit.

IV. Use of Cash Advance Funds

  1. The handling of the cash advance 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 cash advance 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 cash advance fund for reimbursement.  No money should be disbursed from the cash advance 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, a written note on how the funds were expended is required.  The note 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 cash advance slip for the amount of money they have received.  The 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 cash advance 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 cash advance fund is no longer required, the funds must be returned to the Cashier's Office. DO NOT deposit the funds into the department’s account.

V. Replenishing Cash Advance Funds

  1. In the new financial system, the reporting of expenses and request for reimbursement related to a continuing, open ended Cash Advance will be accomplished via the Disbursement Voucher (DV).
  2. All custodians of open ended Cash Advances will be a Special Payments (SP) vendor in the new financial system in the format: Cash Advance – Custodian Name. This Cash Advance vendor must be used when processing a reimbursement of Cash Advance funds when the advance is to continue. The Cash Advance vendor will be created by the Accounting Office only – not departments.

    As the intent here is for the custodian to direct the reimbursement immediately back into the department’s cash pool, the Cash Advance custodian will be reimbursed via check, not direct deposit.

  3. In order to account for expenses related to a cash advance, a Reimbursement Worksheet (RW) must be completed. The RW is used to justify the use of University funds advanced and to calculate the total reimbursement. Both the completed Worksheet and images of all receipts must be attached to the DV.
    1. When processing a reimbursement for a continuing cash advance, select payment reason code “R” on the Disbursement Voucher (DV).
    2. The RW and all receipts must be attached to the DV.
    3. Receipts must be scanned following procedures for imaging: http://archives.msu.edu/records/scanning.php?records_scanning.
    4. Custodians must “approve” the DV for reimbursement. If the custodian is the DV initiator, this approval is completed upon submission of the DV. If not, the initiator must ad hoc route the DV to the custodian and the custodian must approve the DV before further routing will continue.
    5. If the RW is incorrect, the DV will be disapproved by Accounting. A new DV must be created with all required attachments and submitted through the required workflow.
    6. The business purpose is documented on the DV and not on the RW.
    7. On the RW, the total of the itemized expenses must match the total amount indicated in the Accounting Line section.

VI. Repaying Cash Advance Funds

  1. In the new financial system, the reporting of expenses and request for reimbursement related to a Cash Advance to be closed will be accomplished via the Distribution of Income and Expense (DI).
  2. In order to account for expenses related to a cash advance, a Reimbursement Worksheet (RW) must be completed. The RW is used to justify the use of University funds advanced and to calculate any reimbursement or refund to MSU. Both the completed Worksheet and images of all receipts must be attached to the DI.
  3. Three outcomes are possible when reconciling cash advances:
    1. The exact amount of the advance has been spent. In this case, the RW and receipts are attached to the DI and submitted through the required workflow as outlined below.
    2. The entirety of the advance was not spent. In this case, the individual returns the unused funds to MSU which are deposited in the Cashier’s Office, Hannah Administration Building, 426 Auditorium Road Rm 110. (DO NOT deposit the unused funds into the department’s account.) The RW and receipts are attached to the DI and submitted through workflow as outlined below.
    3. The individual is owed money because the expenses were greater than the advance. In this case, the RW and receipts are attached to the DI and submitted as outlined below. Once Accounting approves the RW and DI, Accounting will process a reimbursement for the balance due the individual. MSU employees with payroll Direct Deposit will be reimbursed via Direct Deposit only.
  4. The Distribution of Income and Expense (DI) must contain the following information:
    1. The DI must reflect the amount of total expenses incurred and applicable accounting string information.
    2. The Advance Number, Name in which the Advance was issued, and the Name of individual to be reimbursed (if different) must be documented on the DI.
    3. Within the DI, the Accounting Line “From” is used to relieve the Controller’s Office account of the advance expense. The Total from the RW must be recorded with the following account information:
      1. Account Number: AT023282
      2. Object Code: 6173
      3. Amount: Total from RW
    4. Within the DI, the Accounting Lines “To” must match the amount per the Reconciliation Worksheet. Expenses will be charged according to the information on the DI.
    5. The RW and images of all receipts must be attached to the DI.
    6. Receipts must be scanned following MSU procedures for imaging: http://archives.msu.edu/records/scanning.php?records_scanning.
    7. MSU employees must “approve” the DI for reimbursement. If the MSU employee is the DI initiator, this approval is completed upon submission of the DI. If not, the initiator must ad hoc route the DI to the employee and the employee must approve the DI before further routing will continue.
    8. For accounts beginning with “RC” (grant accounts), Contract and Grant Administration must approve the DI. Therefore, the DI initiator must ad hoc route the DI for approval to the group ”CGA Processor Level 1”.
    9. If the RW or the DI is incorrect, the DI will be disapproved by Accounting. A new DI must be created with all required attachments and submitted through the required workflow.

VII. Security

  1. Funds should never be left unlocked or unattended and should be concealed from general view when not in use.
  2. Open-ended cash advance funds must be kept within the department and should not 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.

VIII. Exhibits/Forms