ORIGINATING NO.: 05-03-OMB
AGENCY: OFFICE OF MANAGEMENT AND BUDGET
EFFECTIVE DATE: 7-16-04
EXPIRATION DATE: INDEFINITE
SUBJECT: GUIDELINES FOR THE ESTABLISHMENT AND OPERATION OF PETTY
ATTENTION: DIRECTORS OF ADMINISTRATION AND CHIEF FISCAL OFFICERS
FOR INFORMATION CONTACT: LESLIE A. NOTOR
PHONE: (609) 292-5040
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
III. OPERATION OF THE PETTY CASH FUND
- The special payee identification number must be referenced on every
payment voucher submitted for reimbursement of the fund.
- Petty cash funds should be reimbursed as frequently as possible.
- 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.
- 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.
- 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:
- 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.
- A copy of the bank statement used in the above reconciliation.
- 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:
|$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:
- A copy of the check drawn against the petty cash bank account for
the amount of the fund.
- A copy of the cash receipt document to reimburse the State account.
- 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
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
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
Manager, Accounting Bureau, OMB Date