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University of Houston - Victoria

Office of the Vice President for
Administration and Finance

SECTION: FISCAL INDEX: B-7

SUBJECT: CHANGE FUNDS

POLICY

A department may be authorized to establish a change fund only after demonstrating a need in support of sales or services operations, developing and providing detailed cash handling procedures to the Vice President for Administration and Finance, and obtaining written authorizations from the department head and Vice President for Administration and Finance. Change funds must be reauthorized annually.

Cash is not to be accepted by or issued to any university employee for any purpose unless that employee has been authorized by the department head to handle cash for that purpose. Use of cash receipts for petty cash, change-making, or check cashing is prohibited.

Department petty cash funds are prohibited. Individual reimbursements within specified limits should be processed via voucher through Accounts Payable.

All employees are obligated to report any suspected irregularity in the handling of cash, including change funds. Reports can be made in several ways as noted on the UHV Institutional Compliance website. (References)

DEFINITIONS

Change Fund : A fund established for the purpose of supporting a sales or service operation. The change fund is used to make change for direct purchases of goods or services or to support indirect services (such as copy machines and providing change for vending machines).

Fund Custodian: A person having a fiduciary responsibility to monitor and safeguard a change fund.

Cash Custodian: A person having a fiduciary responsibility to receive, monitor, and safeguard cash received or maintained within the area for any purpose. Cash custodians must adhere to the same standards of accountability as fund custodians.

Petty Cash Fund: A petty cash fund is a fund established with a designated amount from which payments and reimbursements for small dollar expenses may be made. Petty cash funds are prohibited at UHV.

PROCEDURES

DEPARTMENT CHANGE FUNDS

Change funds are authorized only for approved university operations whose specialized sales or service operations warrant such funds. The department fund custodian is responsible for the monitoring and safeguarding of change funds in compliance with university guidelines. This university does not operate petty cash funds.

Department heads are responsible for ensuring that change funds in their areas are managed and safeguarded in accordance with this policy and that department cash handling procedures are in place to ensure adequate control of funds and separation of duties.

ESTABLISHMENT OF DEPARTMENT CHANGE FUND

  • Department heads are delegated the authority and responsibility by the Vice President for Administration and Finance to designate a specific fund custodian.
  • Separation of duties within departments must be defined before the department is authorized to establish a change fund. To insure separation of duties, the same employee must not have both cash handling and monthly reconciliation responsibilities.
  • The department head will develop detailed cash handling procedures for the change fund.
  • The department head will send the procedures along with a memo to the Office of Administration and Finance requesting a change fund, describing the purpose and use of the fund and designating a fund custodian.
  • The Vice President for Administration and Finance will review and approve or disapprove the request based upon the individual facts and circumstances.
  • If the request is approved, a voucher shall be prepared describing the type of fund requested and indicating a local general ledger account to be charged. The voucher must be approved by the department head.
  • A check will be issued to the University of Houston-Victoria and returned to the Finance Department. The Vice President for Administration and Finance will endorse the check and forward to the fund custodian.
  • The check may be cashed at any financial institution, but not from another departmental change fund.
  • When the change fund is established, an Acknowledgement of Receipt of Funds and Cash Handling Procedures form must be signed by the Fund Custodian. (References)

RESPONSIBILITIES OF THE FUND CUSTODIAN

  • Providing safe and secure storage of the fund.
  • Ensuring that each transaction is for the purpose for which the fund was authorized and that the change fund is not used as a petty cash fund.
  • Notifying the Comptroller of changes in custodianship, location of fund, or change(s) in the physical security of the fund.
  • Balancing and reporting of any overages or shortages in the fund to the Comptroller.
  • Returning the fund to the Finance Office when the need for maintaining the fund is no longer required.
  • The department must make prior arrangements for a temporary custodian during any absences.

OVERAGES AND SHORTAGES

  • Change funds must be balanced by the department head or designee.
  • It is the responsibility of the fund custodian to ensure that the sum of cash on hand is equal to the amount issued at all times.
  • Individual shortages or overages of less than $10 may be charged against a department cost center using the cash over/short account.
  • Individual shortages or overages of $10 or more, or cumulative annual shortages/overages of $40 or more, must be reported immediately to the Comptroller.
  • Individual shortages of $100 or more, or cumulative annual shortages/overages of $100 or more, must be reported immediately in writing to the Comptroller and the University of Houston System Internal Auditing Department.
  • Losses involving theft or burglary, regardless of the dollar amount, must be reported immediately to the Comptroller and followed within two working days of the occurrence by a written report detailing the circumstances of the loss.
  • If either the UHS Internal Auditing Department or the Vice President for Administration and Finance confirms that the loss is due to theft and not error, the Victoria Police Department will be notified.

REVIEW, AUDIT AND REAUTHORIZATION OF DEPARTMENT CHANGE FUNDS

  • Each department change fund is subject to unannounced reviews and/or audits by the responsible division administrator, the Office of the Vice President for Administration and Finance, the Comptroller or designee, or the University of Houston System Internal Auditing Department.
  • Fund custodians are required to complete and submit an Acknowledgement of Receipt of Funds and Cash Handling Procedures form on an annual basis. (References)
  • Change funds must be approved and reauthorized annually.

CLOSING A DEPARTMENT CHANGE FUND

When a department determines that a change fund is no longer required, the following process should be followed to close the fund.

  • A memorandum to the Comptroller explaining the intention to discontinue the fund is prepared and signed by the department head.
  • A Deposit Form - Cash is filled out to reflect the cost center and balance in the change fund. (References)
  • The memorandum, Deposit Form - Cash, and remaining cash are returned to the cashier in the Finance Office who will prepare the journal entry to credit the account with the balance.

SHORT-TERM CHANGE FUNDS

Under certain circumstances, a change fund for a short-term operation may be required. A short-term change fund may be requested by a department cash or fund custodian, approved by the department head, and approved by the Comptroller under the following terms:

  • The request involves an amount of $150 or less for a period of three working days or less.
  • A Short-Term Change Fund Request form will be completed by the responsible cash or fund custodian and approved by the department head.
  • The form will be submitted to the Cashier in the Finance Office. After obtaining the approval of the Comptroller or designee, the Cashier will prepare the requested short-term change fund using funds from the Finance Department change fund.
  • The requesting cash or fund custodian will pick up the short-term change fund from the Finance office and sign the Short-Term Change Fund Request form acknowledging its receipt.
  • The short-term change fund will be returned to the Cashier in the Finance Department by the cash or fund custodian within the three working days. The Cashier will return the funds to the Finance Department change fund, sign the Short-Term Change Fund Request form acknowledging receipt of the returned funds, and provide a copy to the cash or fund custodian.

REFERENCES

1) UH System Administrative Memoranda 03.F.04

2) UHV Institutional Compliance Website - Reporting Fraud or Other Irregularities

3) Acknowledgement of Receipt of Funds and Cash Handling Procedures Form

4) Deposit Form - Cash

5) Short-Term Change Fund Request Form

 

Approved by:

Signature Obtained
Philip Castille, Ph.D.
President

08/29/13
Date


Next review date: December 2016
Origination: Finance Department

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