University Administrative Policies


UNM_Policy_Office-L communicates important policy announcements (such as policy approvals, revisions, or campus review-and-comment periods).

UNM Policy Office

MSC05 3357
1 University of New Mexico
Albuquerque, NM 87131

Physical Location:
Scholes Hall
114 A and B

Phone: (505) 277-2069

Administrative Policies and Procedures Manual - Policy 7210: Petty Cash Fund

Date Originally Issued: 11-01-1991
Revised: 12-06-1993, 07-01-2004, 01-01-2012, 12-01-2016

Authorized by RPM 3.1 ("Responsibilities of the President")
Process Owner: University Controller and HSC Senior Executive Officer for Finance and Administration

1. General

This policy applies to the establishment and operation of a Petty Cash Fund. Financial Services may authorize the creation of a Petty Cash Fund for departments that make frequent small dollar purchases and for whom other alternatives are not a viable option. Petty Cash is the least desirable method, from an accounting and risk standpoint, by which to conduct transactions, and other options, such as a University Purchasing Card (PCard) should be used whenever possible.  Violation of this policy will result in the closing of a department's Petty Cash Fund.

A Petty Cash Fund may be used to advance cash to an employee for the purpose of making an authorized purchase for the department, or to reimburse the individual, directly from the Petty Cash Fund, for a pre-approved expenditure made with personal funds.   The employee’s supervisor must approve all Petty Cash purchases in advance.  A Petty Cash Fund must never be used for personal advances, loans, IOUs, or cashing checks. Items not authorized for payment with Petty Cash include salary payments, payments for services, travel costs, food for entertainment purposes, including staff meetings, and any expenditures that are unallowable per policy. Contact Financial Services for appropriate procurement procedures. Refer to UAP 4000 ("Allowable and Unallowable Expenditures") for a description of unallowable expenditures.

A Petty Cash Fund may be used for departmental purchases of $100 or less per day/per vendor without having to go through the normal procurement procedures. Incremental purchasing, splitting one large purchase into several smaller purchases in order to circumvent the dollar limit, is unallowable. If a department does not have a Petty Cash Fund, authorized and allowable purchases made from personal funds can only be reimbursed via Chrome River Expense.

As an alternative to creating an actual Petty Cash Fund in the Banner system, departments sponsoring research studies in which participant fees will be paid may utilize a Petty Cash advance in situations that require confidentiality.  Refer to the Unrestricted Accounting–Main website for guidance on this process.

2. Establishment

To establish (or increase) a Petty Cash Fund, submit a  Justification Memo and Petty Cash Reimbursement form to the appropriate Financial Services accounting office for consideration. Both of these forms are available on the Unrestricted Accounting-Main Campus website.  The memo should include information regarding what types of purchases or payments will be made, the “normal” amount of such payments, the types of individuals that will be making the purchases (faculty, staff, students, or other), and why the P-Card cannot be used.  Also include the name of the Fund Custodian, the location of the fund, and the total amount being requested for the fund. The amount of a Petty Cash Fund should be limited to the minimum amount required for efficient operations. This limits risk and loss of interest income. A fund may be decreased or eliminated by making a deposit to the Petty Cash Fund index number. If a fund is not used for a large portion of a year, the fund should be deposited until it is needed again and a copy of the Money List should be sent to the Financial Services accounting office. The appropriate Financial Services accounting office must be notified in writing if a fund is to be permanently closed.

3. Safekeeping of Fund

A department that has a Petty Cash Fund is responsible for the safekeeping of the Petty Cash and for the safety of employees who handle the money. All individuals handling University cash should be aware of the requirements of UAP 7200 ("Cash Management"), specifically the requirement to attend the cash management training course. Access to the Petty Cash Fund must be restricted to the Fund Custodian, as described in Section 4. herein. Responsibility for the fund must be specifically included in the employee's job duties and acknowledged by the employee as a job duty. Security measures should be observed for Petty Cash Funds (for example, place cash boxes in a safe or locked file cabinet and memorize safe combinations instead of writing them down). University Campus Police Department will provide an escort for any fund reimbursement upon request. Campus Police Department can also inspect and recommend security measures for departments that handle cash.

4. Fund Custodian

The Fund Custodian is responsible for ensuring that the total amount of the fund is accounted for at all times and should reconcile the Petty Cash Fund once a week. The UNM Petty Cash Fund Reconciliation form should be used for this purpose and be available for review by Financial Services or auditors upon request. The Reconciliation form must be signed by the Fund Custodian and maintained for two (2) years.

4.1. The Petty Cash Fund must be reconciled whenever the Fund Custodian changes. The outgoing Custodian reconciles the fund, listing its contents. Both the outgoing and incoming Fund Custodians sign the UNM Petty Cash Fund Reconciliation form. Forward a copy of the reconciliation form to the appropriate Financial Services accounting office and indicate that the Fund Custodian has changed; Financial Services must be notified that the Fund Custodian of record has relinquished all duties and that a new Fund Custodian is in place.

5. Disbursements

5.1. To reimburse an employee from a departmental Petty Cash Fund for a pre-authorized purchase, the employee should prepare a Petty Cash Receipt form.

5.2. A Petty Cash Advance form should be used when the department advances cash to an employee to make authorized purchases. The Fund Custodian, the employee receiving the Petty Cash, and the employee’s supervisor must sign the form. The form will be canceled when the employee provides a receipt for the authorized purchase(s) and returns any applicable change. The receipt must be returned to the Fund Custodian no later than the next working day after receiving the advance.

6. Replenishing the Petty Cash Fund

Fund Custodians should replenish the Petty Cash Fund monthly or when total accumulated receipts exceed $200, whichever occurs first.  If Petty Cash usage typically does not exceed $50 monthly, the department should consider closing the fund and making these purchases via another method (PCard or reimbursement via Chrome River).To replenish the Petty Cash Fund, the Fund Custodian prepares a Petty Cash Reimbursement form, in accordance with Financial Services’ procedures, and attaches the requested documentation.

7.  Related Links

Forms can be found on the Unrestricted Accounting website page.