Change Funds
Section: Fiscal
Index: B-07
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/payment card receipts are 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/payment card receipts for that purpose. Use of cash receipts for petty cash, change-making, or check cashing is prohibited. UH System Administrative Memorandum 03.F.04, Cash Handling
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, in accordance with UH System Administrative Memorandum 01.C.04, Reporting/Investigating Fraudulent Acts. Reports can be made in several ways as noted on the UHV Institutional Compliance Website - Reporting Fraud, Waste and Abuse
Definitions
Cash: For the purpose of this policy cash is defined as U.S. currency; personal, business, bank, and cashier’s checks; money orders; travelers’ checks; gift cards; or foreign drafts (cash does not include foreign currency).
Cash Custodian: A person having a fiduciary responsibility to receive, monitor, and safeguard cash/payment card receipts received or maintained within the area for any purpose. Cash Custodians must adhere to the same standards of accountability as Fund Custodians.
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.
Fund Custodian: A person having a fiduciary responsibility to monitor and safeguard a change fund.
Payment Card: A credit card or debit card accepted as payment for merchandise or services by entering the pertinent payment card information into the payment card processing equipment or portal and obtaining an approval or declination from the payment card processor.
Petty Cash Fund: 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 ensure 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 at least two weeks before the change fund is needed.
- 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 Cashier-Finance Office. The Vice President for Administration and Finance or designee will endorse the check.
- The check may be cashed at the University’s financial institution and the Fund Custodian will pick up the change fund from the Finance Office.
- When the change fund is established, a Cash Handler-Authorization to Handle Cash/Check/Payment Card Receipts Form (form is processed through DocuSign only) must be fully completed by the Fund Custodian prior to picking up the funds from the Finance Office.
Responsibilities of The Fund Custodian
- Providing safe and secure storage of the funds.
- 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 Senior Director of Finance of changes in custodianship, location of fund, or change(s) in the physical security of the fund.
- As long as the change fund is active a Change Fund Monthly Verification Form must be completed and sent to the Finance office.
- Balancing and reporting of any overages or shortages in the fund to the Senior Director of Finance.
- Returning the funds 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 Senior Director of Finance.
- Individual shortages of $100 or more, or cumulative annual shortages/overages of $100 or more, must be reported immediately in writing to the Senior Director of Finance 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 Senior Director of Finance, then followed up by a written report detailing the circumstances of the loss within two working days of the occurrence.
- 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 Senior Director of Finance or designee, or the University of Houston System Internal Auditing Department.
- Fund Custodians are required to complete and submit a Cash Handler-Authorization to Handle Cash/Check/Payment Card Receipts Form (form is processed through DocuSign only) on an annual basis.
- 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 Senior Director of Finance explaining the intention to discontinue the fund is prepared and signed by the department head.
- A Deposit Form - Cash (Available on UHV Intranet) is filled out to reflect the cost center and balance in the change fund.
- 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 Senior Director of Finance 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 (Available on UHV Intranet) will be completed by the responsible Cash Custodian and approved by the department head.
- The form will be submitted to the Cashier-Finance Office. After obtaining the approval of the Senior Director of Finance or designee, the Cashier will prepare the requested short-term change fund using funds from the Finance Department change fund.
- The requesting Cash Custodian will pick up the short-term change fund from the Cashier-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-Finance Office by the Cash 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 Custodian.
Approved By:
Signature Obtained 05/05/2023
Robert K. Glenn, Ph.D.
President
Next review date: May 2028 (5 years)
Origination: Finance Department