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Department of the Treasury
Guidelines for the Establishment and Operation of Petty Cash Funds

ORIGINATING NO.: 05-03-OMB

AGENCY: OFFICE OF MANAGEMENT AND BUDGET

EFFECTIVE DATE: 7-16-04

EXPIRATION DATE: INDEFINITE

SUPERSEDES: 96-08-OMB

SUBJECT: GUIDELINES FOR THE ESTABLISHMENT AND OPERATION OF PETTY CASH FUNDS

ATTENTION: DIRECTORS OF ADMINISTRATION AND CHIEF FISCAL OFFICERS

FOR INFORMATION CONTACT: LESLIE A. NOTOR

PHONE: (609) 292-5040

I. PURPOSE

This Circular Letter revises and clarifies certain aspects of the operation of a petty cash fund.

Petty cash funds are established to provide the administrator of a spending agency with a method of payment to be used for goods and services that require immediate purchase. Additionally, petty cash funds are established to provide change funds for those agencies that receive cash payments from the public.

A petty cash expenditure shall not violate any state statute, the Appropriations Act, or any existing circular letter.

II. ESTABLISHMENT OF PETTY CASH FUND

A request to establish a petty cash fund is made by an agency's Assistant Commissioner or Director of Finance or Administration, using the request form attached. Indicate that the request is for a new fund by placing a check on the appropriate line at the top of the form. The agency must detail the nature of activity and provide justification for the fund and fund amount. Indicate specifically why the use of a payment voucher or off-line system is not appropriate. The form must be properly completed, signed, and dated.

If authorized, the fund will be assigned a payee identification number and the Office of Management and Budget (OMB) will prepare a check to establish the fund. The check along with a copy of the approved request form will be sent to the agency.

If a checking account is needed, it is the requesting agency's responsibility to request the opening of a bank account by OMB's Cash Management Unit, in accordance with Treasury Circular Letter 00-12-OMB, Banking Services. A copy of the approved petty cash fund request form must accompany this request.

III. OPERATION OF THE PETTY CASH FUND

  1. The special payee identification number must be referenced on every payment voucher submitted for reimbursement of the fund.

  2. Petty cash funds should be reimbursed as frequently as possible.

  3. Petty cash change funds will not be reimbursed. The checks that initially finance these funds will be the only payments made to the funds unless a subsequent request for an increase in the fund is approved (See IV. C. below).

  4. A petty cash expenditure is an expenditure not exceeding $150 for the purpose of paying a current expense requiring a prompt cash outlay. Such an expense shall not be part of a larger amount payable which exceeds $150 and which is made payable to the same vendor for the same purpose.

  5. Emergencies: When an emergency requires an immediate payment for goods or services of more than $150, a memorandum documenting such emergency must be prepared and signed by the Agency Approval Officer and made part of the petty cash file.

IV. ANNUAL REAUTHORIZATION

Petty cash funds must be reauthorized annually. OMB will send reauthorization packages to the agencies in April for the following fiscal year. The reauthorization package must be submitted to OMB no later than June 30. If the documents are not received in a timely manner, future reimbursements may be delayed. The following items are to be submitted with the reauthorization package:

  1. A fund reconciliation for each petty cash fund, certified by both the preparer and the agency's approval officer. This fund reconciliation must reconcile the most recent bank statement and cash on hand, as applicable, to the authorized amount of the fund. A blank reconciliation form is provided in the reauthorization package.

  2. A copy of the bank statement used in the above reconciliation.

  3. A request for reauthorization for the new fiscal year, using the form attached. All information required on the form must be furnished. At this time, the amount of the fund should remain the same. A request for an increase or decrease to a petty cash fund should be submitted separately by memorandum to the Manager of Accounting Bureau, OMB by an agency's Assistant Commissioner or Director of Finance or Administration.

V. AUDIT REQUIREMENTS

It is the responsibility of the administering agency to ensure that periodic audits of each petty cash fund are performed. Audit reports are required in accordance with the following schedule:

ANNUAL DISBURSEMENTS AUDIT FREQUENCY
$50,000 or more every two years
$25,000 to less than $50,000 every three years
Less than $25,000 and/or change fund every four years

To determine the next period to be audited, the fund disbursements during the last period audited should be measured. For example, if the fund was audited for the year ended June 30, 2002, and disbursements for that year were $24,000, the next period to be audited would be the year ended June 30, 2006. If disbursements in 2002 were $26,000, the next period to be audited would be the year ended June 30, 2005.

OMB may require more frequent audits than indicated by the above schedule. Additionally, an agency may request OMB to audit the fund less frequently than indicated by the above schedule. OMB will determine if the agency request contains sufficient justification for approval.

The audit report is to be submitted to OMB no later than 180 days after the audit period. The audit report will identify the auditing standards used in performing the audit and give positive assurances that the fund was operated in compliance with this Circular Letter or, if applicable, report the instances on non-compliance.

VI. CLOSE-OUT OF FUND

After final reimbursement is made to the petty cash fund to return it to the authorized amount, the following items must be submitted to OMB:

  1. A copy of the check drawn against the petty cash bank account for the amount of the fund.

  2. A copy of the cash receipt document to reimburse the State account.

  3. A final fund reconciliation and audit. If there is a checking account associated with the account, the agency should close the account in accordance with Treasury Circular Letter 00-12-OMB.


Charlene M. Holzbaur
Director

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PETTY CASH FUND REQUEST/REAUTHORIZATION FORM


New Fund ________ Existing Fund _________

Payee Identification # _________________________________________

Name of Fund _________________________________________

Name of Requesting Agency _________________________________________

Name of Custodian _________________________________________

Address of Custodian _________________________________________

Amount of Fund ___________________ Fiscal Year _____________

Justification for Fund and Fund Amount

_________________________________________________________________________________

_________________________________________________________________________________

_________________________________________________________________________________

_________________________________________________________________________________

Requested By:


Signature of Agency Approval Officer Date


Name of Agency Approval Officer (Please Print)


Title of Agency Approval Officer (Please Print)


Address of Agency Approval Officer

_________________________________________________________________________________

FOR OMB USE ONLY

Approved Denied


______________________________________ ____________
Manager, Accounting Bureau, OMB Date

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