Fayetteville Policies and Procedures 312.2
An imprest fund is a specific amount of money assigned to a university employee (custodian/agent) for specific authorized purposes (i.e. petty cash or change funds). Funds can be assigned only to an employee of the University of Arkansas. Petty cash and change funds are to be used for the purposes outlined below and are not to be used interchangeably. This type of misuse may result in fund closure.
Petty Cash Funds
Petty cash funds are revolving, fixed amount, imprest accounts that are used to make miscellaneous, small, or emergency purchases.
Departments that make frequent, low-cost purchases may request a petty cash fund from the Financial Affairs Compliance Office. Before requesting the establishment of a petty cash fund, the department should ascertain that the goods and services to be purchased could not be obtained from:
- An on-campus vendor, such as the University Bookstore
- An off-campus vendor, using standard purchasing procedures including the use of a departmental Procurement Card
Petty cash vouchers, receipts, cash on hand, and bank balances must at all times equal the total amount authorized for the petty cash fund. A petty cash voucher is issued at the time money is advanced to a third party to make purchases on the university’s behalf. It should include the amount and purpose of the proposed expenditure and be signed and dated by the recipient. Vouchers cannot be used as a substitute for a sales receipt.
A change fund may be established for a department that has been authorized to receive cash for sales, services, or fees. No expenditures are to be made from the change fund. The fund should be kept completely separate from any other change or petty cash funds.
Establishing an Imprest Fund
To establish a new imprest fund, submit a completed Request for Imprest Fund form to the Financial Affairs Compliance Office that includes the following information:
- Justification for intended use of the fund
- Justification for the amount of money requested
- Dean or department head approval
All requests approved by the Financial Affairs Compliance Office will be then forwarded to the Chief Fiscal Officer of the State for approval. Sufficient time must be allowed for this authorization process to be completed. The Financial Affairs Compliance Office will notify the department of the approval/disapproval of the request and the issuance of a check to the fund custodian will be initiated if the request has been approved.
Bank Account Authorization
The Director of Cash Management must authorize all bank accounts. A copy of the completed signature card must be on file in the Cash Management Office. All bank accounts (1) must have at least two signatures, one of which must be the director of cash management’s, and (2) must have a month end closing and statement date.
Managing Imprest Funds
Each imprest fund is assigned to the custody of a single individual that is the university’s agent and custodian for the fund. A department head or equivalent administrator must authorize the Request for Imprest Fund form and designate the custodian. The custodian is personally responsible for maintaining and reconciling the fund.
The fund custodian must submit a signed reconciliation report to the Financial Affairs Compliance Office within fifteen (15) days after the end of each month. If the fund is maintained in a bank account, the account must have a month-end cutoff and a copy of the bank statement and bank reconciliation must be submitted with the fund reconciliation. The reconciliation must include a listing of all outstanding checks, showing check number, issue date, payee and amount.
Any interest earned on the bank account must be specifically identified on the reconciliation. All interest earnings must be remitted to the University Cashiers at least annually by June 20 of each year.
Financial Affairs Compliance will monitor the listed outstanding checks; if any checks are determined to be subject to the State Unclaimed Property law, Financial Affairs Compliance will advise the fund custodian of the proper method of disposal.
The reconciliation must include the following statement over the signature of the fund custodian:
"As fund custodian, I recognize that I am personally responsible for the full amount of the fund entrusted to me and certify this amount is currently represented by either bank funds, cash on hand, receipts for reimbursement, or signed vouchers.”
If the fund reconciliation is not submitted within forty-five (45) days, the Financial Affairs Compliance Office may withdraw authorization for the fund. No further reimbursements will be forwarded to the custodian, and any undocumented or non-reimbursable amounts will be invoiced to the fund custodian. If necessary, payroll deduction from the fund custodian will be used to reimburse the university.
Imprest Fund Controls
In order to properly control the university’s imprest system, the following restrictions and regulations have been established and maintained:
- Each petty cash transaction must be documented with a receipt, invoice, or similar item.
- All funds and transaction documents must be held in a secure location, e.g., safe, vault, or locked desk drawer.
- Petty cash funds greater than $500 should be held in a bank account authorized by the university. Smaller funds may use a bank account at the discretion of the custodian.
- Commingling of imprest funds and associated documents with other funds is not permitted.
- One person is responsible for the fund at all times.
- Post-dated checks and notes payable (IOUs) are not accepted.
- Imprest funds (change, petty cash bank accounts, and petty cash nonbank accounts) must be reconciled monthly.
- No checks may be cashed from imprest funds.
- No payroll, payroll advance, or related transactions may be made from an imprest fund.
- Travel expenses — i.e. toll fees, gasoline or vehicle costs, tips, etc. — may never be paid from imprest funds.
- Disbursements made for business meals, entertainment, or gifts may never be paid from imprest funds.
- Imprest funds are subject to unannounced review by Financial Affairs Compliance, Internal Audit and Legislative Audit personnel.
Refer to Fayetteville Policy and Procedures 306.0 for guidance on cash handling.
Expenditures from a Petty Cash Fund
Petty cash may only be used to purchase items requiring immediate payment and are limited to miscellaneous, small, or emergency purchases. The fund may not be used to avoid any university or state purchasing restrictions. See the Business Services website for further information on regulations and restrictions.
Fund shortages are the responsibility of the fund custodian. All cash discrepancies should be immediately reported to and investigated by the custodian’s immediate supervisor. Shortages should be reported in accordance with Fayetteville Policy and Procedure 306.0. If it is determined the shortage resulted from negligence on the part of the custodian, they will be held personally responsible and will be expected to reimburse the university.
Replenishing a Petty Cash Fund
To replenish a petty cash fund a Schedule of Petty Cash Disbursements must be prepared and signed by the fund custodian. Attach receipts, sales slips, etc., to support each item on the schedule. In the case of recurring items such as postage due, a summary sheet may be used as documentation with the total placed on the Schedule. The department requesting the fund is responsible for all bank service fees. Bank fees should be reimbursed to the fund in the same manner as other expenditures.
Reimbursements made to a fund custodian for petty cash expenditures are based on a check request initiated through the UPAY command in the UPS system, and must be supported by purchase receipts. A University of Arkansas employee who is neither the fund custodian nor reports to the fund custodian must approve UPAY reimbursement requests and must be authorized to approve expenditures on company cost centers. Complete the reimbursement by submitting a signed Schedule of Petty Cash Disbursements to the Accounts Payable Office. The schedule must include the following information:
- Each transaction listed separately
- Dated signature of the fund custodian
- Receipts, invoices and other supporting papers that properly document each expenditure
- The company and cost center to be charged for the reimbursement
Each fund custodian should submit a reimbursement request at least monthly.
The Purchasing Office must receive the schedule and documentation before a reimbursement will be approved.
Change of Custodian
Any change in the custodianship of the fund must be immediately reported to the Financial Affairs Compliance Office. Complete the Imprest Fund Change of Custodian form at the department level and send it to the Financial Affairs Compliance Office. The purpose of this form is to document the department head has confirmed:
- The change of custodian
- The total of the cash and receipts equal the specified amount of the fund
- The new custodian is aware of his or her specific responsibilities related to custody of the fund
- The bank account signatures (if a bank account is used) have been changed to reflect the new custodian
It is important to perform a count of the fund in the presence of the old and new custodians at the time of transfer. If it is impossible for the old and new custodians to be present at the same time, the count should be performed in the presence of another responsible employee of the department who will assume custody of the fund until the new custodian arrives. The count must be documented (Custodian Transfer Count Certification form) with a statement signed by the custodians (including the temporary custodian, if used). This statement must be sent to the Financial Affairs Compliance Office with the next monthly reconciliation.
Change of an Imprest Fund Balance
Fund custodians are required to maintain their fund at the minimum balance necessary to accomplish their needs. Excess funds held in imprest accounts cost the university by reducing investment income.
The balance of the fund may be reduced by depositing a portion of the fund balance into the appropriate cost center and notifying the Financial Affairs Compliance Office in writing using the Request for Imprest Fund form.
A proposed increase in the fund balance must follow the same steps as requesting a new fund, i.e., submitting a Request for Imprest Fund with justification to the Financial Affairs Compliance Office.
Close-out of an Imprest Fund
When an imprest fund is to be discontinued:
- Process all outstanding receipts for reimbursement
- Deposit the total fund balance to the appropriate cost center through the University Cashiers
- Notify the Financial Affairs Compliance Office in writing using the Request for Imprest Fund form
Recall of an Imprest Fund
The Financial Affairs Compliance Office monitors the usage of each fund. If it is determined that a fund’s balance is substantially in excess of the department’s needs based on historic usage, the fund custodian and the department head will be asked to either reduce the fund balance or further justify its continuance at the current level. The Financial Affairs Compliance Office may recall an imprest fund if any violation of this policy occurs.