Proper Use of Petty Cash Funds

Normally, the fund custodian makes purchases and obtains the original receipts to support the expenditure. In addition, cash may be advanced to employees for the purpose of making a purchase for official university business. This advance must be documented by the use of a memorandum receipt with the date of the advance, a description of what will be purchased, the signature of the person accepting the cash and the date by which the receipt and any unused cash will be returned to the custodian. The receipt for the purchase and all unused cash is returned to the custodian by the due date.

The department must maintain documentation to support the petty cash fund disbursements. The PSC Procedural Statement: Petty Cash & Change Funds makes a confidentiality distinction between study subjects (non-confidential) and health-related/human subjects (confidential). This determines how records are kept and how payments are processed. For discussion purposes, the term subject payment includes both groups.

Subject payments may be made from a petty cash fund if a Study Subject Payment form or other more secure type of payment is not a practicable form of payment. Petty cash funds established for subject payments may be authorized for amounts up to $5,000. Additional guidance on payment procedures that involve privacy protection is available from the Petty Cash & Change Funds and the Study Subject Payments procedural statements. Each sponsored project that requires subject payments shall have one petty cash fund set up exclusively for this purpose. The Principal Investigator (PI) or the PI’s designee shall be the custodian. Custodians for these subject payment petty cash funds must be university employees but may hold less than a 50% appointment. Petty cash funds for subject payments are normally set up in the speedtype to which the subject payment expenses are recorded. Generally this is the Fund 30/31 project itself.

If a PI has multiple projects that require subject payments, it is permissible to set up a petty cash fund in each Fund 30/31 project with the same custodian, provided the total of all petty cash funds for that custodian does not exceed $5,000. Petty cash funds set up in Fund 30/31 projects may not be commingled with other funds or used to pay subjects in other projects.

Petty cash funds set up for subject payments are limited to subject payments and cannot be used to pay for other types of expenses. Upon replenishment, subject payments should be recorded using account code 495102–Study Subjects.

Subject payments may also be made from a general departmental petty cash fund in lieu of setting up a petty cash fund expressly for subject payments if this purpose was identified when the fund was initially established. This option is allowable only for studies that involve occasional or a small number of payments. However, the authorized amount of a general departmental petty cash fund cannot be increased to accommodate the addition of subject payments. If additional funds are needed, a separate dedicated petty cash fund should be established for this purpose.

Subject payments made during travel or extended stays in remote locations may be made using cash supplied from a Travel Advance processed through the PSC Travel Authorization Program. Consult the PSC Procedural Statement: Cash Advances for further information.

Payments to study subjects are considered compensation for time and inconvenience and are taxable to the recipient. When payments to an individual reach $600 or more during a calendar year, the university is required to file an IRS Form 1099-MISC. The department is responsible for collecting and reporting this payment information and submitting a completed CU Vendor Authorization and W-9 form to the PSC for those study subjects who have reached the $600 threshold.

Sponsored projects that involve human research may require that study subject payments take place away from the petty cash fund location, disbursed by someone other than the cash custodian. Such circumstances present cash control challenges that are addressed below. The objective is to establish an effective and secure system that tracks the whereabouts and custody of petty cash funds at all times.

As used here, the term “delegate” refers to project personnel who are authorized to make payments to study subjects using petty cash but who are not the designated petty cash custodian.

• Create a master log for the petty cash custodian to track cash-in and cash-out for each delegate.
  • Delegate signs and dates when funds are advanced to them.
  • Delegate signs and dates when funds are returned to the petty cash fund.
• Create a tracking log for each delegate that includes:
  • Project name, project number, SpeedType, PI name, cash custodian name, delegate name.
  • Amount(s) advanced to the delegate.
  • Name of study subject or coded ID for confidential studies.
  • Participation date and payment date (if different).
  • Amount paid to each subject.
  • Subject signature for payment received or, for confidential studies, the delegate’s initials
  • The template from the CCO website is available for use, modification or ideas.
• The cash advance amount on the delegate’s tracking log should match the amount on the master log.
• The master log total cash advances to delegates plus any undisbursed cash should equal the authorized amount of money in the fund since the last reimbursement.
• Once a week, require delegates to turn in/account for funds. 
• Count the petty cash fund itself once a week (delegates’ logs compared to master log and any undisbursed cash counted) to verify that the fund total is in balance.
• Attach the completed logs to a Payment Authorization form and submit to the PSC at least every 3 months (quarterly) and at the end of the fiscal year for replenishment of the fund.  Refer to the Petty Cash Reconciliation form for more information.

Petty Cash Master Log and Delegate Log Example

• Cash should only be kept in an off-campus location when it is in the best interests of the project and can be kept securely.
• Create and retain with the petty cash fund a memorandum receipt that records the details of the petty cash advanced to the delegate manager (date, amount, purpose and signatures). 
• Off-site fund location must be identified on the Petty Cash/Change Fund Request (PCCF) form.
• Location must be secure and the off-site delegate manager should be the only one who has access to the funds.
• When the audit is due, it is the delegate manager’s responsibility to bring the money to the Boulder campus so that CCO may audit it. In special circumstances, the CCO auditor may make arrangements to audit the fund at the off-site location if feasible.
• All other requirements of a petty cash fund should be followed.

• Assign case/client control numbers to participants in such a way that anonymity is maintained (i.e. personal identifiers should not be used as part of the control number).
• Have the subject sign the payment receipt (or log if used - download sample log).
• Keep the receipt/log securely in the department, separate from the list of control numbers.
• Submit documentation with the Payment Authorization that shows the case/client control numbers, amount paid and date. To maintain anonymity, do not submit signed receipts or names to the PSC.
• The business purpose field on the PA should be completed with information that this is a petty cash fund reimbursement used to pay confidential human subjects with the date (or date range) of the payments.
• See PSC Procedural Statement: Study Subject Payments for more information.