SECTION: FISCAL INDEX: B-7

SUBJECT: CHANGE FUNDS

POLICY

In general, 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 or division administrator to handle cash for that purpose. Should cash be received by a university employee or unit, it is to be deposited in the Finance Office promptly in accordance with the policy outlined herein. Retention of cash received from outside sources for use as change, or check cashing purposes, is prohibited.

Departmental petty cash funds will not be authorized. Individual reimbursements within specified limits should be processed via purchase voucher through Accounts Payable.

Should a department demonstrate a need for a change fund, the fund is to be established and managed for the specific purpose authorized and in accordance with the provisions of the Change Funds Policy. Mixing of types of funds or using a change fund as a petty cash fund is strictly prohibited. All departmental change funds require the approval of the divisional administrator and the Vice President for Administration and Finance.

DEFINITION

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).

PROCEDURES

DEPARTMENTAL CHANGE FUNDS

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

Division administrators are responsible for ensuring that change funds in their areas are managed in accordance with this policy/procedure and that internal guidelines are in place to ensure adequate control of funds.

ESTABLISHMENT OF DEPARTMENTAL CHANGE FUND

• Division administrators are delegated the authority and responsibility by the Vice President for Administration and Finance to designate a specific fund custodian.
• The division administrator will send 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 State of Texas Purchase Voucher shall be prepared describing the type of fund requested, indicating a local general ledger account to be charged, and approved by the divisional administrator.
• The purchase voucher will be forwarded to Accounts Payable for processing. 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, a Acknowledgement of Receipt of Funds and Cash Handling Procedures form (Attachment A) must be signed by the Fund Custodian.

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.
• 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.
• The department should make prior arrangements for a temporary custodian during any absences.

OVERAGES AND SHORTAGES

• Change funds must be balanced by the department supervisor 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.
• Rare shortages or overages of less than $10 may be charged against a departmental account using the cash over/short subcode.
• Individual shortages of $100 or more must be reported immediately in writing to the Comptroller.
• The fund custodian shall maintain a log of all overages/shortages, indicating the date and the amount. When annual cumulative overages/shortages exceed $100 total, the UHS Internal Audit Department must be contacted immediately.
• Losses involving theft or burglary, regardless of the dollar amount, must be reported immediately to the Comptroller--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 AND AUDIT OF DEPARTMENTAL CHANGE FUNDS

• Each departmental change fund is subject to unannounced reviews and/or audits by the responsible division administrator, by the Office of the Vice President for Administration and Finance, and by the University of Houston System Internal Audit Department.

CLOSING A DEPARTMENTAL 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 division administrator.
• A general cash receipt is filled out to reflect the balance in the change fund.
• The memorandum, general cash receipt, and remaining cash are returned to the Finance Department who will credit the account with the balance.

Approved by:

Signature obtained            1/2/06 
Tim Hudson, Ph.D.           Date 

Next review date:  December 2007
Origination: Finance Department