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New York State Accounting System User Procedures Manual

Volume Name
CONTROLS AND SPECIAL PROCEDURES
Volume
XI
Date
10/25/04
Section Name
Petty Cash Advance
Section
4.0300

      It is in the State’s best interest to use cost effective payment methods and to avoid the expenses associated with the State’s traditional voucher payment system. State agency managers are required to develop and implement small dollar payment procedures using one of the following preferred payment methods for small dollar purchases:

  • Purchasing cards
  • Travel cards
  • Petty cash or travel advance accounts for items that cannot be paid with a credit card

      This section describes established criteria and guidelines concerning the use of a petty cash advance, the documentation requirements for petty cash disbursements and reimbursement of the petty cash advance.     

  

STATUTORY AUTHORITY

          Section 115 of the State Finance Law authorizes the establishment of cash advance accounts. The monies are to be used in accordance with rules prescribed by the Comptroller which include, but are not limited to:

  • Developing and implementing a complete system of internal controls governing advance accounts;
  • Proper documentation for all advance account disbursements;
  • Monthly reconciliation of advance account receipts and disbursements to bank statements (See Section 4.0120 of this Manual);
  • A prohibition against commingling advance funds with any other monies in the custody of the agency or facility; and
  • Semi-annual review of the use of advance funds to determine the appropriate funding levels.

GUIDELINES

          A petty cash advance account can be used for the following purposes:

1. Provide change when a department or agency collects fees, makes charges for services or provides change for clients' and inmates' cash accounts.

2. Provide cash to outgoing inmates and clients.

3. Provide cash for subpoena fees.

4. Purchase materials, supplies or services where the amount of a single purchase does not exceed $250. Separate invoices under $250 from one vendor may be combined with one petty cash check being issued in an amount over $250.  Purchases related to 'P' contracts are allowed.

5. Pay invoices where the check issued exceeds $250 if the merchandise received is less than $250 but the amount of freight charged makes the total payment over $250.

6. Pay for small claims described in Section 6.0500 of this manual up to a maximum of $75 for non-tort claims pursuant to Section 8 (12), (12e) and (12f), and up to maximum of $250 for tort claims pursuant to Section 8 (12a) of the State Finance Law.

7. Provide salary advances to new employees in an amount not to exceed the full amount of their net salary due. Advances may not be used for individuals hired under contract, temporary service or for lost payroll checks. All advances should be repaid within 14 days or upon receipt of the first salary check. (See Section 4.0310 of this manual for specific details.)

8. Make partial payments against purchase orders as long as they do not exceed $250.

9. Pay for out of pocket purchases of necessary supplies, materials or services (documentation required).

10. Pay for food, refreshments - Requires a reason for expense; names and titles of participants; reasonable charge; original receipts.

11. Pay for meetings, conferences, etc. - Requires same as 10 above.

12. Pay for Notary Public fees - Requires justification and receipts or copy of check required.

13. Pay for tuition - Specific agency policies dictate percent of reimbursement. Usually a copy of the bill is required.

14. Pay for certain expenditures unique to a particular State agency, which require specific approval and requirements of OSC.

          A petty cash advance cannot be used for the following purposes:

1. Pay for any meals and mileage in excess of the allowable federal rates.

2. Payments to individuals (non-employees) for personal service.

3. Any contract payment except 'P' contracts.

4. Payments covered by medical fee schedules or hospital rate schedules.

5. Payments for family care or personal care.

REQUIRED DOCUMENTATION FOR PETTY CASH REIMBURSEMENT

          Guidelines as well as illustrative forms required for petty cash reimbursements are explained in the following. Reimbursement vouchers will be rejected if they do not adhere to these guidelines.

          In addition to the general reimbursement requirements explained in Section 4.0230, the following specific requirements apply to petty cash reimbursements:

1. Batch Transmittal - Use batch type VRN

2. Special Charge Voucher (AC916) and special coding outlined in User Procedure Manual, Vol III, Section 4.1408.

3. Petty cash Recapitulation

Must show check number, date issued, payee name, description of merchandise or services purchased and amount of check.

If more than one invoice is being paid to a single vendor and the check exceeds $250, invoice numbers and amounts should be shown.

DOCUMENTS REQUIRED FOR POST AUDIT

          All original receipts and supporting documentation must be retained at the agency for audit review.

  • Purchases made from the petty cash account should be supported by a receipt from the vendor, listing the articles or services purchased and the total amount paid. 
 
  • The person making the purchase or the vendor shall describe the articles or services purchased, indicate the date and the total amount disbursed. 
 

CONTROL OF CHANGE FUNDS or CASH BOXES


      The business office should keep a record of the amount of each change fund and its location. Signed receipt forms should be on file from the fund custodians. Periodic physical counts should be made of the change funds by business office personnel. Cashing of personal checks from change funds should not be permitted. The amount of each change fund should remain constant and be withheld at the close of each day from the total cash in the register or cash drawer and used as the fund with which to begin the following day. The remaining cash is turned in as representing the current day's receipts. Cash receipts should not be retained with the change fund after the close of the business day.


CONTROL OF IMPREST FUNDS


      Ordinarily, petty cash funds are maintained on an imprest basis; i.e., the fund is replenished for the exact amount of the expenditures reported. Caution should be exercised to ensure that the size of the fund is consistent with the needs for which it was created. Periodically, the necessity for the fund and the amount thereof should be reevaluated.


      State agencies may have petty cash funds which are operated as checking accounts through local banks and/or which represent actual cash in the possession of their employees. Controls to be exercised for funds retained in bank accounts are discussed in the preceding sections of this Chapter.


      All disbursements from non-bank petty cash funds should be supported by invoices that are properly approved and dated. These should be examined and cancelled when the fund is reimbursed. This reimbursement should be frequent and the distribution of the charges clearly shown on the voucher submitted for reimbursement.


      Periodic physical counts should be made of these funds by someone other than the custodian of the fund. The cashing of personal checks from these funds must not be permitted.