Cash Funds

Policy Approval Authority President
Responsible Division Division of Administration and Finance
Responsible University Office Controllers
Responsible Officer(s) Controller
Contact Person Jason Askin
Primary Audience Faculty
Staff
Status Active
Proposed Adoption Date 02-11-2020
Effective Adoption Date 03-17-2020
Last Review Date 03-30-2021
Policy Category/Categories Finance / Risk Management
Sponsored Funding/Grants and Contracts

There are three types of cash funds:

  1. Petty cash - This is cash that is used by department heads or individuals for the cash purchase of small items or services.

  2. Working fund - This is cash used in a cashiering function during the normal routine of conducting University business. These funds are used only in making change and handling cash operations that are involved with the receipting of money.

  3. Research advance – A cash advance for funded research activities that require payment for goods or services for which it is impossible or impractical to use the University procurement or reimbursement processes.

 

Policy:

Petty Cash Advances

The University will, upon written justification, advance a full-time University employee a petty cash fund on an limpest basis.  These funds are to be used for the cash purchase of small items or services for the University.  The individual who receives the petty cash fund is considered the fund custodian and is held entirely responsible for the total funds advanced.

The Department Head is responsible for creating an internal policy for timely review and sign-off and ensuring collection of the fund upon the fund custodian’s separation from the department.  Funds that cannot be collected from the fund custodian upon separation from the University will be charged to the department’s default cost center.  The fund must be returned when it is no longer needed or upon the request of the Controller.  The Controller’s Office will annually verify and evaluate the amount, use of and need for each petty cash advance.

The following restrictions and policies pertain to all petty cash advances:

  1. The petty cash advance should be replenished on a timely basis via a check request form. Current valid receipts must accompany the check request and should clearly indicate the business purpose of the purchases.  All funds must also be replenished at June 30th to ensure expenses are recorded in the correct fiscal year.

  2. Funds 02, 04 and 44 are not allowed as a default cost center.

  3. Each individual petty cash expenditure should be under $100.00.

  4. Sales and use taxes are not reimbursable. Please always use the IL Tax Exemption Form when making purchases on behalf of the University.

  5. The petty cash advance is to be used for University business only. Personal loans, hold checks, gift cards, etc. are not permitted.  Misuse or abuse of the advance will result in an immediate recall of the total amount advanced.

  6. The petty cash advances are not to be used for travel or meal expenses. These expenses are reimbursable on a travel voucher (see 4-31 Travel).  However, parking and toll expenses may be reimbursed through petty cash (providing no other travel expenses are incurred).

  7. All petty cash advances are subject to audit, at any time. All funds must be kept on-site at NIU, locked up in a safe place, and should never be commingled with personal funds.  The fund custodian is responsible for the accounting and safekeeping of the fund.  Any shortages of the fund are the responsibility of this individual.

  8. The petty cash fund is to be immediately closed should the fund custodian terminate employment or be reassigned.

Working Fund Advances

The University will, upon written justification, advance a full-time University employee a working cash fund.  These funds are to be used in a cashiering function during the normal routine of conducting University business.  These funds are used only in making change and handling cash operations that are involved with the receipting of money.   The individual who receives the working cash fund is held entirely responsible for the total funds advanced.

The Department Head is responsible for creating an internal policy for periodic review and sign-off and ensuring collection of the fund upon the fund custodian’s separation from the department.  Funds that cannot be collected from the fund custodian upon separation from the University will be charged to the department’s default cost center.  The fund must be returned when it is no longer needed or upon the request of the Controller.  The Controller’s Office will annually verify and evaluate the amount, use of and need for each working fund cash advance.

The following restrictions and policies pertain to all working fund advances:

  1. Working funds are used for making change and should not be used for making purchases. These funds should be kept intact and will not be reimbursed.

  2. Funds 02, 04 and 44 are not allowed as a default cost center.

  3. The working fund is to be used for University business only. Personal loans and hold checks are not permitted.  Misuse or abuse of the advance will result in an immediate recall of the total amount advanced.

  4. All working fund advances are subject to audit, at any time. All funds must be kept on-site at NIU, locked up in a safe place, and should never be commingled with personal funds.  The individual receiving the advance is responsible for the accounting and safekeeping of the fund.  Any shortages of the fund are the responsibility of this individual.

  5. The working fund is to be immediately closed should the fund custodian terminate employment or be reassigned.

 

Research Advances

The University will, upon written justification, advance funds to faculty or research staff prior to initiation of research activities to facilitate expenditures that are impossible or impractical to make through normal University procurement or reimbursement processes. Research advances are only made to Principal Investigators and are generally used for University business travel outside the United States or for research participant payments. Research cash advances cannot be used to circumvent University procurement or reimbursement processes or as a matter of convenience. All expenses must be allowable per University and sponsor policy.  Any research advances used for unallowable expenses must be repaid to the University.         

Procedures:

Opening a Petty Cash/Working Fund

A Request for Petty Cash Advance or Request for Working Fund form should be completed by the individual responsible for the fund.  A default cost center must be provided to be used as a place-holder for the cash amount.  Funds 02, 04 and 44 are not allowed as a default cost center.  Approval by the Cost Center Manager and/or Department Head is required.  The form should then be forwarded to the Controller for final approval.  If approved, a check will be drawn from the University’s working cash fund, payable to the individual requesting the advance.

Closing the Fund

  • Closing the Petty Cash fund consists of two steps:
  1. Deposit cash on hand with the University Bursar using the Department’s default cost center and account 110105. Include the description “TO CLOSE PETTY CASH” on the deposit form.  A deposit receipt will be given to the employee and a copy sent to Accounting.

  2. Submit receipts for funds used and a copy of the receipt for funds deposited along with a check request form to Accounts Payable using the chart field combination of the department being charged and account 672005 (Petty Cash Expense). State on the form that the request is “TO CLOSE PETTY CASH”.  Accounting will record the expense for funds used and close the fund instead of issuing reimbursement.
  • Decreasing or Closing the Working Fund consists of one step:
  1. Deposit the amount you are decreasing (total amount if closing) with University Bursar using the Department’s default cost center and account number 110105. Include the description “TO DECREASE/CLOSE WORKING FUND” on the deposit form.  A deposit receipt will be given to the employee and a copy sent to Accounting


Research Cash Advances

Principal Investigators (PI) are allowed to request research cash advances for themselves, research and creative staff, and students. These advances are expected to accommodate research activities for which processing on campus payments are impossible or impracticable. These activities are generally limited to research travel and payments to human subject research participants. The PI is accountable for all advanced funds.

To request an advance, the PI must complete a Request for Research Cash Advance form (RCA). Upon final approval(s), the request will be submitted to Accounts Payable for processing.   

General requirements:

  • Principal Investigators are responsible for safeguarding the funds and obtaining appropriate receipts and documentation to support the cash advance and ensuring malleability under NIU policy and federal, state, local or other grantor guidelines, as applicable.
  • A default cost center must be provided as a place-holder for the cash amount requested. Funds 02, 04 and 44 are not allowed as a default cost center.
  • The Cost Center Manager and/or Department Head responsible for the default cost center must approve the cash advance.
  • The cost center will be used to cover any charges that are deemed unallowable and/or lack proper support documentation.
  • Any unused funds must be returned to the University or the default cost center will be charged.
  • Institutional Review Board (IRB) approval is required before any research cash advance can be issued for human subject payments.
  • Research cash advances may be requested on federal (including flow through) or private grants to facilitate the sponsored project. Expenses must meet Federal Uniform Guidance and grantor rules and requirements.
  • Cash advances on State of Illinois funded grants are not permitted.

Approvals:

  1. Principal Investigator (University and grant funded research)
  2. Default Cost Center Manager and/or Department Head (University and grant funded research)
  3. Sponsored Programs Administration (if grant funded research) OR Controller (if university funded research)
  4. Accounts Payable (University and grant funded research)

A minimum of fifteen (15) business days is needed to process the research advance. Principal Investigators should plan accordingly.


Reconciling the Research Cash Advance

At minimum, cash advances will be reconciled within 30 days of the cash advance end date noted on the approved Research Cash Advance (RCA) form. Sponsored Programs Administration may require more frequent reconciliation.  

The Principal Investigator must provide receipts and/or other documentation supporting expenditures made with the advanced funds.

University Funded Research - Accounts Payable will review the expenditures for non-grant funded cash advances to ensure malleability with NIU policies and procedures and will clear the research cash advance funds and record the expenses.

Grant Funded Research - Sponsored Programs Administration will review the expenditures for grant-funded cash advances to ensure malleability with sponsor rules and requirements.   Expenditures made from research cash advances are not considered the sponsor’s responsibility until the reconciliation is complete and the reconciling transaction is recorded.

Upon reconciliation, the expenses will be transferred to the university cost center or grant account funding the activity.

Reconciliation not submitted within 30 days of the project period end date may escalate to the Vice President for Research and Innovation Partnerships. Controller’s Office will track and escalate advances made for University Funded Research. Sponsored Programs Administration will track and escalate advances made for Grant Funded Research.

PIs in past due status may not be eligible for another research cash advance until all outstanding research cash advances are reconciled.  

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