State of Connecticut Accounting Manual - MISCELLANEOUS

MISCELLANEOUS

1.0 GENERAL INFORMATION

This is used for miscellaneous procedures or instructions. It is also recommended that special waivers, exceptions or accounting procedures that apply to your agency be filed in this section.

2.0 IMPREST PETTY CASH FUNDS

2.1 Statutory Reference:

Section 3-112.

2.2 Petty Cash Funds Definition

Petty Cash Funds are not funds as defined by paragraph 2.2 on page 1-5 of SAM. A petty cash fund is a segregation of an advance of money from a fund to be used for the purpose explained in paragraph 2.3 below. In Connecticut all petty cash funds are operated as Imprest Petty Cash Funds, i.e. an amount is advanced from the General Fund (or, if appropriate, from some other fund) to an agency and the agency must at all times account for this advance. Disbursements are made from time to time as needed, a receipt or petty cash voucher being completed in each case. At certain intervals, or when the petty cash is completely expended, a report with substantiating petty cash vouchers is prepared and the petty cash fund is replenished for the amount of disbursements by a check drawn on the appropriate fund bank account. The total advanced should always equal the cash on hand or in bank plus receipts for expenditures plus requests for reimbursements in transit.

2.3 Establishing or Increasing Petty Cash Funds

To establish a new Petty Cash Fund or increase the amount of funds in an existing Petty Cash Fund, the agency should send a request to the Office of the State Comptroller (Attention: Director, Administrative Services Division), in memorandum form, stating the following:
 
(1) The fund from which the advance is requested (General Fund, Special Revenue, Internal Service, etc.).
 
(2) Whether the request is for a new fund or an increase in an existing fund.
 
(3) Amount requested (if an existing fund, state the present amount authorized and the requested new authorization).
 
(4) Justification: be specific, stating the projected uses for the fund, including the anticipated frequency or replenishment.
 
(5) Whether for a temporary or permanent period of time.
 
(6) The request should come from or be approved by the agency head or his/her designee.
 
(7) Written procedures and process charts must be maintained.
 
(8) A written policy on travel and employee advances should also be maintained.

2.4 Use of Petty Cash

(1) Petty Cash Funds have many proper uses; they are intended to facilitate departmental or agency purchases of small, but necessary operating items, not to exceed $50.00, except for emergencies or specific exceptions granted by the State Comptroller, based upon the peculiar needs of an agency (change funds, cash advances or prepayment for travel when required by collective bargaining agreements or as appropriate for non-collective bargaining employees, food purchases for agency business related meetings). To obtain an exemption to exceed the $50.00 threshold per incident submit an email to OSC.PETTYCASH@po.state.ct.us with the dollar amount, the justification, the agency name and the name, address and telephone number of a contact person. Requests are reviewed on a daily basis and a response will be sent.
 
(2) Petty cash should not be used for any items that can be paid in the usual manner.
 
(3) Payments of regular invoices; regular postage needs (except for small postage purchases, postage due, special delivery, and certified or registered mailings) are the type of items that should not be paid by petty cash. Check cashing should be limited to State business with proper documentation.
 
(4) All sundry payments of an allowance nature paid to state employees will be treated as compensation and reported on IRS Form W-2. Therefore, such payments must be processed on payroll Form CO-17XP-PR and are not to be paid from petty cash.
 
(5) Petty cash funds should be used for the splitting of "First" checks received for Workers' Compensation. A determination must be made as to the portion due the employee, if applicable, and/or the State's portion. The funds deposited from the "first" check are restricted funds and are not be used for any other purpose. Workers' compensation procedures require an adjustment check to be issued to the employee within five working days after receipt of the "first" check from the Third Party Administrator.
 
Two checks would then be issued if a check is to be split between the employee and the State. One made payable to the employee for the correct compensation benefit amount due. The second one made payable to the "State Treasurer" for the amount due the agency and deposited as a Refund of Expenditures*. The coding string should be the same coding on the original payment processed through the payroll system.
 
If it is determined that the entire check amount is due the State, a check is to be issued, payable to the "State Treasurer", and deposited as a Refund of Expenditures*. The coding string should be the same coding on the original payment processed through the payroll system.
 
If it is determined that an overpayment has been made by the Third Party Administrator, three checks would then be issued.
 
One made payable to the employee for the correct workers' compensation benefit amount due. The second one made payable to the "State Treasurer" for the amount due the agency and deposited as a Refund of Expenditures*. The coding string should be the same coding on the original payment processed through the payroll system. The third one made payable to the "State Treasurer" in the amount of the overpayment. The following information must be printed on the check: Employee's name; Claim number; Department of employment; Date of injury; Third Party Administrator's check number to which the check is being written against.
 
Forward this check with a covering memorandum to:
Department of Administrative Services
c/o Director of Budget
State Office Building - Room 508
165 Capitol Avenue
Hartford, Connecticut 06106
 
* For recoveries of prior year expenditures against lapsing appropriations, deposit as a Refund of Prior Year Expenditures, revenue account 44410.
 
Please direct questions as follows:
Procedure Interpretation - Administrative Services Division, 702-3440.
Workers' Compensation Issues - DAS/Personnel, Workers' Compensation Unit, 713-5002.

2.5 Agency Records

The following records for all Petty Cash Fund receipts and disbursements must be kept in detail in order to provide complete accountability.
 
(1) A journal or register in which all fund receipts and expenditures are recorded.
 
(a) Form CO-92, Petty Cash Fund Account is available from Vanguard Direct.
 
(b) A journal of specific design may be used to meet the needs peculiar to the agency.
 
(2) Receipts to document all disbursements of funds, i.e. for purchases from vendors, post office mailing or advances for travel or other expenses.
 
(3) When warranted by the size of the fund, a checking account for which prior approval has been obtained from the State Treasurer and the State Comptroller. Complete form CO-929, Bank Account Establishment Request.
 
(4) Reconciled checking account statements.
 
(5) Reconciliations of Fund.
 
(a) Detailed count of cash on hand, plus
 
(b) Cash in bank, plus
 
(c) Advances, plus
 
(d) Receipts for disbursements not yet submitted for reimbursement, plus
 
(e) Outstanding vouchers submitted for reimbursement, but not yet received should equal
 
(f) The authorized Petty Cash Fund.

2.6 Replenishment

To replenish the fund, complete a voucher.
 
The replenishment should be done at least quarterly. The frequency depends on the dollar volume of expenditures in relation to the size of the fund authorized.

2.7 Re-Deposit of Excess Funds

If at any time it is determined that the amount of the Petty Cash Fund is excessive, re-deposit of the excess must be made. Make check payable to "Treasurer, State of Connecticut." The re-deposit, should include the following information:
 
(1) Revenue account "44378".
 
(2) Title of Standard Account "Petty Cash Returned".
 
(3) Fund Number to which deposit is made.
 
(4) Agency Number.
 
Copies of the above documentation must be sent to the Office of the State Comptroller, Administrative Services Division to ensure that the transaction has been processed correctly for reducing an authorized petty cash balance.

2.8 Payments to Outside Contractors

Generally, payments to non-state employees (outside contractors) for honoraria, fees for sports and other special events, and like items must be processed as a voucher in the usual manner. However, where circumstances necessitate payment from the agency's Petty Cash Fund, the responsibility for IRS Form 1099 reporting still exists. To ensure compliance, the following procedures will apply to all such payments from Petty Cash to outside contractors.
 
(1) All reportable payments from the agency's petty cash account must be summarized annually and forwarded to the Comptroller's Accounts Payable Division, Special Processing Section. Please include the payee name, FEIN/SSN, complete mailing address and amount paid to each vendor during the calendar year. This information must be reported between January 1 through January 10 in order for the Comptroller to comply with IRS reporting requirements. It is each state agency's responsibility to comply with this requirement. Failure to properly report this information can subject the State to IRS penalties and fines.
 
See Section 8.0 Federal Income Tax Reporting, Form 1099 of the Expenditure Section of this manual for further details.
 
(2) Optional: You may wish to type in an acknowledgment of receipt of payment on a Form CO-17 and obtain the payee's signature at the time of payment.

2.9 Payroll Transactions

The agency's Petty Cash Fund is not be used to process payroll transactions. Contact the Comptroller's Payroll Division for the proper payroll transaction procedure.

2.10 Funds for Travel Expenses and Workshops/Conferences

When authorized cash advances for travel expenses are made to employees for whom such provision has been made in a collective bargaining agreement, or otherwise, such advance should be made from the Petty Cash Fund. To account for the cash advances, the Petty Cash Fund custodian must obtain a statement, signed by the recipient, acknowledging:
 
(1) The amount of the cash advanced.
 
(2) That within 5 working days after return, the employee will submit a completed Form CO-17XP-PR, Employee Reimbursement Voucher with the required documentation, to the agency business office.
 
(3) It is suggested that conference fees be prepaid on a state purchasing card, if available. Where time constraints exist, payment can be prepaid through petty cash.

2.11 Internal Reporting

All Petty Cash Fund custodians must submit to the agency's Chief Fiscal Officer or Business Manager a monthly status report on the activities of the Fund. The report should include:
 
(1) Cash on hand
 
(2) Advances
 
(a) Date advanced.
 
(b) To whom.
 
(c) Reason.
 
(3) Outstanding vouchers
 
(a) Not yet submitted for reimbursement.
 
(b) Submitted for reimbursement.
 
(4) Total amount authorized

2.12 Year End Closing

All expenditures should be recorded in the fiscal year in which they occur. A yearly replenishment must be made and submitted in accordance with the Fiscal Year End Instructions issued by the Office of the State Comptroller.

2.13 Internal Control

Procedures for internal control may vary according to the size of the fund, the size of the agency and varying agency needs. The following general rules are to be applied to all Petty Cash Funds.

(1) The Petty Cash Fund custodian should have no other cash handling responsibilities.
 
(2) Petty Cash monies should be kept separate from all other monies received by an agency, except as authorized in writing by the Comptroller's Administrative Services Division.
 
(3) The authorized fund should be kept to the lowest amount possible, but yet sufficient to adequately meet the needs of the agency. Wherever possible, a state purchasing card should be used instead of petty cash.
 
(4) Expenditures should be kept within the restrictions set in paragraph 2.3.
 
(5) Every transaction must be tangibly documented with forms such as, but not limited to: vendor's invoice, cash register tape, petty cash receipt or post office receipt. Each such document must be itemized and detailed, to the extent possible, showing quantity, description, prices and total. When completing the receipt form, use typewriter or ink (not pencil). Alterations or additions are unacceptable. Section 3-117a of the Connecticut General Statutes requires original documentation for expenditures $25 and greater.
 
(6) Every item listed on the Form CO-17 RPC, Request to Replenish Petty Cash Fund must have an original supporting document attached to the Form CO-17 RPC when required.
 
(7) A periodic detailed examination of the Petty Cash Fund should be made by the Chief Fiscal Officer or comparable official to verify the following:
 
(a) That established procedures are being followed.
 
(b) Perform a cash count in the presence of the custodian, to verify that the cash on hand, cash in bank, advances and unreplenished vouchers are in balance with the total amount authorized.
 
(c) In addition to the cash, verify all other items included in the balance such as checks, vouchers, etc.
 
(d) All checks included in the balance should be cashed or deposited promptly.
 
(e) Verify that checking account bank statements are being reconciled monthly by a person other than the custodian and/or one who has the authority to sign checks.
 
1 Examine, at random, checking account reconciliations for:
 
a Proper procedures.
 
b Math verification.
 
c Receipts compared with deposits.
 
d Timely deposits.
 
2 Periodically, obtain the checking account statement direct from the bank and perform a verification of all checks included:
 
a For proper endorsements.
 
b That those written during a prior statement period were listed as outstanding.
 
c Question items that have been outstanding for more than one month.

2.14 Petty Cash Loss

In the event a significant unexplainable shortage is discovered in the Petty Cash Fund, the following steps must be taken:
 
(1) Reporting
 
(a) The Petty Cash Fund Custodian must report all losses to the agency head immediately. If a loss results from an apparent criminal act or under mysterious circumstances, the agency must:
 
1 Immediately notify the local police department or if applicable, local security division, i.e. campus police, capital police, etc.
 
2 Within forty-eight hours of discovery complete and submit Form CO-853 Report of Loss or Damage to Real and Personal Property to:
 
Office of the State Comptroller
Administrative Services Division
55 Elm Street
Hartford, CT 06106
 
Auditors of Public Accounts
State Capitol
Hartford, CT 06106
 
(b) The report should include in the "Brief Description of Property" the fund from which the petty cash fund was created.
 
(c) Questions regarding the reporting of losses should be directed to the Office of the State Comptroller, Administrative Services Division, Telephone 702-3440.
 
(2) Replenishment for Petty Cash Loss: A separate voucher must be submitted promptly by the agency to replenish the Petty Cash Fund for the amount of the loss. A copy of the loss report - Form CO-853 must be attached to the voucher, to substantiate the claim for replenishment. The loss must be charged to the custodial agency's appropriation, using Expense Account 54762 - Petty Cash Losses.
 
(3) Recovery of Loss
 
(a) Monies recovered directly by the agency are to be recorded in the Accounts Receivable module within Core-CT using account code 54762 - Petty Cash Losses crediting the custodial agency's appropriation for current year recoveries and account code 44410 for Prior Year recoveries.
 
(b) Petty Cash Fund losses recovered under fidelity bond coverage will be treated by the Comptroller in the same manner as recoveries of other types of losses. For procedures to obtain the use of funds realized from an insurance settlement, see the Property Control Manual.

2.15 Check Cancellation - Petty Cash Fund

On occasion, Petty Cash Fund disbursement checks are returned or lost, so they must be cancelled and the accounting records adjusted. The status of replenishment of the particular expenditure will dictate the portion of the cancellation procedure to be followed.
 
(1) If prior to submitting the expenditure to the Comptroller for reimbursement, the check is returned:
 
(a) Void the check and attach it to the stub in the checkbook.
 
(b) In the Form CO-92, Petty Cash Fund Account, reverse the original disbursement entry and increase the balance in the bank account column. Explain the entry in the description column making reference to the cancelled item.
 
(2) When the expenditure has been submitted to the Comptroller for reimbursement and the replenishment is in transit or has already been received by the agency.
 
(a) If the check is returned, void the check and attach it to the stub in the checkbook; or if the check is outstanding for an extended period of time and it is certain that it cannot be cashed, issue a stop-payment notice to the bank. On the Form CO-92, Petty Cash Fund Account, reverse the original disbursement entry and increase the balance in the description column making reference to the cancelled item. When the replenishment is received, you will have excess cash. Therefore:
 
(b) Issue a check, in the amount of the cancelled check, payable to the State Treasurer and deposit it within the Accounts Receivable Module of Core-CT and the appropriate revenue account for budgeted or non-budgeted accounts, internal service or enterprise fund account number. Explain the entry in the description column making reference to the cancellation.

2.16 Annual Report

A Petty Cash Fund Report is required for each petty cash advance, regardless of fund, authorized by the State Comptroller. A statewide memorandum is issued each fiscal year with the Petty Cash Fund Report and the detailed instructions. The report will be as of April 30 and due in the Office of the State Comptroller, Administrative Services Division no later than May 31 of each year. Certification by the Chief Administrative Officer, Chief Fiscal Officer or comparable official is required. If there are any questions on the preparation of this report contact the Administrative Services Division at (860) 702-3440.

Back to Miscellaneous Index
Back to Comptroller's Home Page