Petty Cash Policy | Columbia University Administrative Policy Library

Policy Statement

The purpose of a petty cash fund is to allow for the reimbursement of minor business expenses in an efficient and cost effective manner. The use of petty cash funds should be limited to reimbursement of faculty, staff, and visitors for small expenses, not to exceed $80 (taxi fares, postage, emergency office supplies, human subject payments, etc).

The University maintains a number of petty cash funds. The oversight of these funds is the responsibility of the Controller's Office, which authorizes their establishment or modification. Each approved petty cash fund will have a Custodian, who is responsible for reconciling the fund on a regular basis (at least monthly), maintaining required records regarding disbursements that have been made from the fund, and replenishing the fund within the approved level for the fund.

Pettycash funds should not be commingled with any other fund. Minor approved business expenses (refer to Columbia University's Travel and Business Expense Policy) may be reimbursed from the fund using a Petty Cash Voucher. No expenses that are reportable to the IRS or subject to income tax withholding may be reimbursed through petty cash.

Reasons for the Policy

The policy promotes the use of petty cash for appropriate business transactions, while assuring the observance of internal controls over petty cash funds in order to minimize the University's risk of financial loss.

Scope

This policy provides guidance for the authorization, establishment, and maintenance of petty cash funds, including appropriate uses and security standards. Each individual, school, and department who uses petty cash should review and understand this policy.

Policy

Petty cash is a vehicle for payment/reimbursement of small dollar items, but is frequently not the most cost effective way to purchase these goods and services. Business managers are encouraged to consider the total cost of transactions when using petty cash.

Each department at Columbia University may establish a Petty Cash Fund of up to $500 to pay for miscellaneous expenses. Petty cash should be used for small, "last minute" business expenses (refer to Columbia University's Travel and Business Expense Policy) where it is impractical to be billed or to have a check issued beforehand.

Please note that petty cash can NOT be used to reimburse purchases made on credit cards or debit cards.

Petty cash funds may only be established and used for the following authorized purposes:

For qualifying payments to human subjects engaged in research activities
Necessary and reasonable small business transactions, not to exceed $80
Emergency purchases of office supplies costing $80 or less
Necessary and reasonable food (such as sandwiches and beverages) brought into the office for business meetings, costing $80 or less. Expenses for food exceeding $25 must be accompanied by original receipts.
Local transportation, parking, and tolls (all airfare, train tickets, and car rentals are to be submitted through travel and expense reports)

Security

It will be the custodians' responsibility to provide adequate precautions for the safekeeping of the funds under their control. All petty cash funds must be stored in a secured device such as a safe or cash box in a locked cabinet. Only the Petty Cash Fund custodian and the department head should have keys to the box and cabinet. Funds should never be left unattended and unsecured.

Roles and Responsibilities

Office of the Treasurer — Responsible for the creation and ownership of the Petty Cash Policy.
Office of the Controller (General Accounting and Financial Reporting Department) — Responsible for the establishment, oversight, and administration of petty cash funds.
Accounts Payable — Responsible for providing appropriate replenishment of all University petty cash funds. Accounts Payable will review disbursements from such funds to ensure compliance with University policy.
Petty Cash Fund Custodians
- Performing regular (at least monthly) reconciliations of the fund and maintaining adequate control over the funds
- Providing adequate precautions for the safekeeping of the funds under their control
- Requesting appropriate replenishment of the fund
- Closing the fund immediately if the purpose for which it was established ends or changes significantly
- Provide updated custodian information to the Controller's Office

Definitions

Custodian — A designated full-time salaried officer or staff employee who is responsible for the safekeeping and reconciliation of a petty cash fund, as well as, adherence to University policy for all reimbursements and payments made from the fund.

DAF — A Department's authorized signature designee whose name is on file through a completed Departmental Authorization Form and authorize expenditures to ensure they are accurate and in compliance with University and other regulations.

Human Subjects — Voluntary participants in research studies.

Reimbursable Expense — An approved University business expense that is not subject to reporting or withholding as income. Refer to Columbia University's Travel and Expense Policy for detailed guidance.

Petty Cash Reimbursable Expense — Necessary and reasonable small business transactions, not to exceed $80, including emergency purchases of office supplies costing $80 or less, local carfare, parking and tolls, and qualifying payments to human subjects engaged in research activities.

When to Use Other Procedures

Travel & Business Expense Reports to request reimbursement for:
- All individual expenses, including the emergency purchase of supplies and minor equipment costing over $80
- Registration fees
- Business meals outside of the office
- Out-of-town travel expense
- ALL credit card/debit card purchases
Travel & Business Expense Reports can only be used by faculty, staff, and students of the University. Refer to Columbia University's Travel and Expense policy for detailed information.
Purchase Requisitions or EZ Purchase Orders to request the Purchasing Office to order:
- Materials
- Parts
- Supplies
- Equipment
- Services
Travel Advance Request Forms to request an advance of up to $300 to cover out-of-pocket expenses that cannot reasonably be charged to a corporate charge card. Obtain approval of your request, enter into AP/CAR and submit the completed form to Accounts Payable within a reasonable period of time before an official business trip (see University's Travel and Expense policy).

Petty Cash Procedures — Non-Human Subjects

Establishing Petty Cash Funds

Any department that wishes to establish a petty cash fund must demonstrate a true business need. To establish a Petty Cash Fund, send a check request with a letter of explanation approved by a DAF signer to the Office of the Controller, General Accounting and Financial Reporting Department.

On the check request, print or type the name of the custodian in the "Payee" section. In the "Description of Service" section, print or type the words "to establish a petty cash fund." Also provide a Financial Account System ("FAS") account number and all other appropriate information (i.e. the department's address, the custodian's social security number, etc).

The letter of explanation should include:

The reason for the fund
The dollar amount of the fund
The name and title of the individual who will act as the fund custodian
A description of how and where the funds will be secured
Approval by the Department Head

For all Petty Cash Funds, a Petty Cash Fund number will be assigned by the Office of the Controller, General Accounting and Financial Reporting Department to be used to increase, close, and reimburse the Petty Cash Fund.

Increasing Petty Cash Funds

Special circumstances requiring Petty Cash Funds greater than $500 requires the prior approval of the Deputy Controller for General Accounting and Financial Reporting. After receiving a letter of approval, send a check request to Accounts Payable. Under "Description of Services" print or type the statement, "To increase Petty Cash Fund from $____ to $____. Include your Petty Cash Fund number and attach the approval letter from the Deputy Controller. Enter the information electronically via AP/CAR before submitting the check request and documentation to Accounts Payable.

Closing a Petty Cash Fund

The custodian of a Petty Cash Fund must close the fund immediately if the purpose for which the fund was established ends or changes significantly. Upon completion of the custodian's employment by the University, the fund must either be closed or a new custodian appointed (refer to "Changing Custodians below). There will be periodic reviews of account activity and all inactive accounts will be investigated and closed.

To close an existing Petty Cash Fund, deposit any remaining cash in the Fund via a "Cash Receipt Voucher" and send a memo along with a validated cash receipt voucher and any petty cash receipts to General Accounting.

Petty Cash Funds need not be closed and reopened each fiscal year. They remain active for the life of a department's FAS account or until they are requested to be closed.

Changing the Custodian

To change the custodian of a Petty Cash Fund, the current custodian must:

Reconcile the Petty Cash Fund
The new custodian and the department head must sign the reconciliation form
Transfer the fund to its new custodian
Send a memo signed by the department head to Georgia Pike, Chief Accountant, 1700 Broadway, 10 th Floor.

Requesting Reimbursement from the Petty Cash Fund

University faculty, staff, and students may request reimbursement for a business-related expense, not to exceed $80, from the custodian. For each expense, an individual must submit a completed Petty Cash Voucher/Log accompanied by original receipts.

The Petty Cash Voucher/Log — provide:
- Date of purchase
- Printed or typed name of the person reimbursed
- Description of the item purchased, including a valid business reason
- For business meals inside the office, document the business purpose of the meeting and list those in attendance if 10 or less people or the # of attendees if group is larger than 10
- For transportation, include origin, destination, and business purpose
- Dollar amount (not to exceed $80)
- Original receipt
- Signature of the person who received payment
- Signature of the custodian who approved the reimbursement

Under no circumstance may an individual, including the custodian, approve his or her own Petty Cash voucher/log or that of a person to whom he or she reports. It is the responsibility of the custodian to ensure that each voucher is complete, accurate, and accompanied by original documentation. Petty Cash Vouchers/Logs, as well as Check Request forms, are available in the Office of the Controller, 1700 Broadway, 11 th Floor.

Replenishing a Petty Cash Fund

When the fund is low, the custodian should enter the information electronically via AP/CAR and complete a Check Request to replenish the Petty Cash Fund. The Check Request is to be approved by the DAF and forwarded to Accounts Payable along with the proper documentation (see below). Under no circumstance may an individual approve his or her own Petty Cash reimbursements or that of a person to whom he or she reports.

This approval certifies:

Funding available
Compliance with funding agency regulations
Compliance with University reimbursement and business expense policy
Propriety of travel expenses
Completeness of documentation and accuracy of accounting
"Unallowables" have been segregated in accordance with University policy

Check Request:

Print or type the custodian's name in the "Payee" section.
Print or type "to replenish the petty cash fund" and the Petty Cash Fund number provided by Office of the Controller, General Accounting in the "Description of Services" section
Provide all other appropriate information, including the department's address, total expenses, and account number and subcode.
Obtain the approval of the DAF

The custodian should total the individual categories of expenses and assign each amount to an account number and subcode, and document accordingly on the Check Request (i.e. add all postage expenses together and assign the total an account number with a "2710" subcode). Segregate "unallowable" costs according to University Policy and use subcode "8500" or a specific subcode in the "8000" series (refer to the Travel and Business Expense Policy). Do not use subcode "4830, Petty Cash".

Documentation:

Arrange vouchers and original receipts in chronological order (exclude any confidential subject information if applicable)
Enclose documentation in a large envelope
Print or type the date, amount, the custodian's name, the department name, and the check request number on the envelope
Staple the envelope to the check request
Custodian must keep copies of original documentation for their own departmental files

It is no longer necessary to tape documentation, such as original vouchers and receipts, to letter-sized sheets of paper.

Reconciliation

The custodian must reconcile the Petty Cash Fund on a regular basis, weekly if the Fund is active, but no less frequently than monthly. Reconciliation ensures that the sum of the outstanding reimbursements, cash, and vouchers is equal to the original amount of the Fund. For those departments with multiple Petty Cash Funds, an overall department reconciliation should be performed quarterly.

If there is a small overage or shortage (under $5), the custodian should make the adjustment when entering the transaction electronically through AP/CAR. The entry on the Check Request form should contain the description, "Petty Cash Vouchers less overage (or plus shortage) of $x.xx". If the shortage is significant, the department head must be notified (see Security section). All overages/shortages should be recorded in subcode 8500.

The Office of the Controller, General Accounting Department requests an annual certification of Petty Cash account balances. Internal Audit periodically performs spot check counts. An appropriate departmental representative should also perform spots checks of Fund balances.

Security

Funds should never be left unattended and unsecured. In the event funds are lost or stolen, the custodian or department head must contact the University's Security Office to obtain a Security Report and notify the Office of the Controller, General Accounting of the loss. Any funds missing from petty cash will be charged to the responsible department and the custodian may be subject to disciplinary action for any violations of this policy contributing to the loss of funds. Send an approved check request to replenish the fund, with a copy of the Security Report, to Accounts Payable.

Petty Cash Procedures Human Subjects

This policy applies to all human research studies that will provide payments to participants or subjects for either: a) expenses that will incur as a result of participation (i.e., travel related costs) or b) payments to compensate subjects for their willingness to participate in the research study.

All plans to compensate participants/subjects in research studies must receive prior approval from the Institutional Review Board (IRB).

Background

Human research relies on volunteers to participate in studies. It is not uncommon for a researcher to reimburse subjects for travel or other expenses that they may incur as a result of participation in a study. Some studies may also offer compensation as a means to attract volunteers.

The IRB reviews all proposed plans for reimbursement or compensation provided to subjects to ensure that such payments are not coercive or provide the potential for undue influence. Another consideration of the IRB, particularly for research involving the collection of sensitive data, is that the confidentiality of the subject(s) is protected.

Columbia University has developed this policy to provide a standard process to handle compensation of research subjects through Petty Cash and to protect the confidentiality of subjects, to the extent allowable by law, during the reimbursement process.

Establishing Petty Cash Funds

On the check request, print or type the name of the custodian in the "Payee" section. In the "Description of Service" section, print or type the words "to establish a petty cash fund." Also provide a Financial Account System ("FAS") account number and all other appropriate information (i.e., the department's address, the custodian's social security number, etc).

The letter of explanation should include:

The reason for the fund
The dollar amount of the fund (base amount — see guidelines below)
The name and title of the individual who will act as the fund custodian
A description of how and where the funds will be secured
Approval by the Department Head

For each funded grant project, a unique Petty Cash Fund is established to support the anticipated human subject reimbursement activities. (For ease of management for multiple-year grants, the initial fund can be opened against a non-grant account such as ledger 4 account — if funds allow). The fund initiator is required to justify the base amount of the fund, regardless of funding source, as determined by the following:

Projected subject volume per week/month
Projected reimbursement amount per subject
Projected time lag for fund reimbursement

The fund custodian will cash the fund establishment check at either Chase Harkness or Chase 165 th Street.

Increasing Petty Cash Funds

Closing a Petty Cash Fund

Petty Cash Funds need not be closed and reopened each fiscal year. They remain active for the life of a department's FAS account or until they are requested to be closed.

Changing the Custodian

To change the custodian of a Petty Cash Fund, the current custodian must:

Reconcile the Petty Cash Fund
The new custodian and the department head must sign the reconciliation form
Transfer the fund to its new custodian
Send a memo signed by the department head to Georgia Pike, Chief Accountant, 1700 Broadway, 10 th Floor.

Requesting Reimbursement from the Petty Cash Fund

For human subject reimbursement, the study coordinator should distribute the cash to the subject and prepare a receipt for the subject to sign. All receipts for human subjects need to be HIPAA compliant. A new three ply receipt with the following fields is currently available to help comply with HIPAA:

Requisition #
Date
Protocol name or #
Check box for "subject reimbursement" or "subject compensation"
Amount paid
Name and signature of study coordinator
Name of study subject (*)
Signature of study subject (*)

(*) Under HIPAA guideline, these items are considered confidential subject information and will not be included on the third copy of the receipt, which is submitted to Accounts Payable. Copy 1 is to be given as a receipt to the subject, copy 2 must be kept at the research site as part of the permanent confidential records, and copy 3 will be temporarily retained by the study coordinator until they need to replenish the petty cash fund. At that time, all copy 3 forms will be submitted to Accounts Payable.

According to IRS regulations, annual compensation (subject incentives) to study subjects of $600 or greater is considered taxable compensation and reportable to the IRS. Plans for protecting patient confidentiality in these case will be reviewed by the IRB as part of the protocol/informed consent approval process.

If a series of subject payments result in total compensation greater than $600, the departmental administrator will:

Prepare a W-9 Form providing the subject's name, address, and social security number and submit it to the Controller's Office. A memorandum must accompany the W-9 Form providing the amount of compensation to the subject. The memo and W-9 Form must be mailed to: 1700 Broadway, 11 th Floor, Attn: AP Supervisor — 1099 Reporting.
An IRS 1099 Form will be issued to the recipient.

If a given payment is greater than $600, the departmental administrator will:

Enter a check request through AP/CAR providing the amount of the check, as well as, the name, address, and social security number of the subject.
Prepare a W-9 Form providing the subject's name, address, and social security number and submit it to the Controller's Office. A memorandum must accompany the W-9 Form providing the amount of compensation to the subject. The memo and W-9 Form must be mailed to: 1700 Broadway, 11 th Floor, Attn: AP Supervisor — 1099 Reporting.
An IRS 1099 Form will be issued to the recipient.

The informed consent document, reinforced by the informed consent process, must clearly iterate the responsibility of the institution to report to the IRS as a taxable income all payments to an individual subject aggregating $600 or more in a calendar year. The IRB must review and approve the informed consent document prior to implementation.

Replenishing a Petty Cash Fund

This approval certifies:

Funding available
Compliance with funding agency regulations
Compliance with University reimbursement and business expense policy
Propriety of travel expenses
Completeness of documentation and accuracy of accounting
"Unallowables" have been segregated in accordance with University policy

Check Request:

Print or type the custodian's name in the "Payee" section.
Print or type "to replenish the petty cash fund" and the Petty Cash Fund number provided by Office of the Controller, General Accounting in the "Description of Services" section.
Provide all other appropriate information, including the department's address, total expenses, and account number and subcode.
Obtain the approval of the DAF.

Documentation:

Arrange vouchers/logs and original receipts in chronological order (exclude any confidential subject information if applicable) (NOTE: Custodians may use either the 3-Ply form or a substitute method of receipts that include participant ID # and amount)
Enclose documentation in a large envelope
Print or type the date, amount, the custodian's name, the department name, and the check request number on the envelope
Staple the envelope to the check request

It is no longer necessary to tape documentation, such as original vouchers and receipts, to letter-sized sheets of paper.

Reconciliation

The custodian must reconcile the Petty Cash Fund on a regular basis, weekly if the Fund is active. Reconciliation ensures that the sum of the outstanding reimbursements, cash, and vouchers is equal to the original amount of the Fund. For those departments with multiple Petty Cash Funds, an overall department reconciliation should be performed quarterly.

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Policy Statement

Reasons for the Policy

Scope

Policy

Security

Roles and Responsibilities

Definitions

When to Use Other Procedures

Petty Cash Procedures — Non-Human Subjects

Establishing Petty Cash Funds

Increasing Petty Cash Funds

Closing a Petty Cash Fund

Changing the Custodian

Requesting Reimbursement from the Petty Cash Fund

Replenishing a Petty Cash Fund

Documentation:

Reconciliation

Security

Petty Cash Procedures Human Subjects

Background

Establishing Petty Cash Funds

Increasing Petty Cash Funds

Closing a Petty Cash Fund

Changing the Custodian

Requesting Reimbursement from the Petty Cash Fund

Replenishing a Petty Cash Fund

Check Request:

Documentation:

Reconciliation

Security

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