Establishing a Change Fund

Overview

This procedure governs the administration of change funds held by University units. The Office of Investments and Banking (OIB) approves all Twin Cities campus requests — both permanent and temporary — and all permanent change fund requests on system campuses. System campus business and cashier offices may approve temporary change funds to support local campus activities.

A change fund supports cash transactions during the sale of goods or services (e.g., cashier operations). Following reconciliation, the fund balance remains constant unless a unit has prior approval to adjust it for business cyclicality. Funds may not be used to pay expenses. Units may not establish an off-balance-sheet change fund by cashing a contingent fund check or withholding revenue from a deposit.

Change funds are University financial assets treated as cash advances. Units must manage them in accordance with this procedure and all applicable University policies to minimize the risk of misuse and financial loss. Approval is granted only when a unit demonstrates a specific business need. Excess departmental cash may impact the following:

• Compliance with federal and state regulatory reporting requirements
• Insurance costs, due to elevated risk of loss, fraud or embezzlement
• Available cash for investment and interest earnings in support of the University’s mission.

Procedures

The procedures below are specific to the Twin Cities campus but apply generally across the University of Minnesota. Consult your campus business or cashier’s office with questions. Appropriate campus request forms are listed in the Forms section in the policy.

Establish/Increase/Decrease

To make a request, the unit completes the change fund request form and submits it via email to the appropriate campus office.

• Twin Cities and Duluth campus requests must include a copy of the deposit report.

Close

The fund custodian:

• Reconciles the fund to verify the amount on hand equals the authorized amount.
• Prepares a deposit to credit the general ledger account listed on the request form (Twin Cities campus only).
• Completes the closure request form and emails it with a copy of the deposit report to OIB and Accounting Services (Twin Cities campus only).

Change of Fund Custodian

When the fund custodian changes, the unit’s RRC or Finance Manager notifies OIB and Accounting Services by email (i.e., [email protected], [email protected]) of the change to include the unit’s name and the incoming custodian’s name and contact information. The new custodian should validate the balance of the fund to ensure the actual balance reflects the amount recorded on the centralized balance sheet maintained by Accounting Services.

Denomination Exchange: Units needing to exchange currency denominations submit a request to OIB via email or contact their system campus business or cashier’s office. On the Twin Cities campus, change funds are typically delivered by armored courier.

Unit Responsibilities

Reconciliation

The fund custodian maintains a reconciliation log to support accounting and audit review and to confirm the fund balance remains intact. Reconciliation frequency should match activity levels; at minimum, funds must be reconciled monthly and documentation submitted to Accounting Services for accurate general ledger reporting. All fund activity documentation is subject to the record retention schedule in Administrative Policy: Managing University Records and Information.

Physical Security

The custodian, in coordination with unit management (Directors, RRC, Financial Managers, etc.), is responsible for daily safeguarding of fund assets. Funds must never be kept on one’s person or deposited into a personal bank account. Unless pre-approved, funds may not be taken off campus or to a personal residence. Cash must be stored in a lockbox within a secure, access-restricted location such as a fireproof file cabinet or safe. The required level of security corresponds to the amount of cash on hand.

Restrictions

Change funds may only be used for their approved purpose. The fund may not be used for:

• Cashing personal or payroll checks
• Paying wages (regular or overtime) to any employee
• Paying non-University individuals for work performed or services rendered
• Making personal loans
• Purchasing alcohol
• Reimbursement of local or out-of-state travel-related expenditures (e.g., parking fees) or to provide a travel advance
• Paying for prizes, awards, small gifts of appreciation, floral arrangements, donations to charities/foundations
• Making purchases that would not be approved under any other University policy.

Discrepancies and Theft

Units are responsible for all discrepancies, whether due to misuse or theft, and must resolve them immediately. In the event of theft, the unit must notify the University Police Department and file a report if applicable. Following a loss, the fund must be replenished or formally reduced. A copy of the police report and any supporting documentation must be submitted to OIB and Internal Audit in alignment with the Administrative Policy: Reporting Suspected Misconduct. Fund misuse may result in closure of the fund by OIB.