Establishing a Change Fund

Overview

Change Fund procedures provide a guideline for the systematic administration of cash funds held by units.  All Twin Cities (TC) campus requests, both permanent and temporary, and all requests for permanent change funds on system campuses, are approved by the Office of Investments and Banking (OIB).  The business/cashier offices on system campuses have authority to grant temporary change funds in order to support their respective campus activities. 

A change fund is used for facilitating customer transactions where cash is exchanged in the course of completing a sale of goods or services (e.g. cashier operations).  After reconciling for sales transactions, the balance of the change fund typically remains unchanged, unless a unit is pre-approved to increase or decrease the balance of the fund due to business cyclicality.  No disbursements from the fund are allowed for paying expenses.  Additionally, units are not allowed to establish a change fund in an independent and off-balance sheet manner, whereby a unit cashing a contingent fund check creates a fund, or revenue is held back from a deposit. 

Change funds are considered a cash advance and a financial asset of the University.  As such, units are required to manage these funds in accordance with the guidelines set forth in this procedure, and in observance of all applicable University policies and procedures, in order to minimize the University’s risk of misuse and financial loss.  To minimize the handling of cash, approval of change funds are granted when a department demonstrates a specific business need. Unnecessary or excess cash in departments has an impact on the University as it relates to:

• Compliance with federal and state regulatory reporting requirements
• Insurance deductibles and premiums as it relates to the increase risk of loss, fraud, or embezzlement
• Available cash for investment and interest earnings in support of the University’s mission

Procedures

Procedures outlined below reflect the specific guidelines required for the TC campus.   The procedures generally apply system-wide.  However, each system campus will have nuances in procedures specific to their campus.  Units submitting a change fund request must complete and submit the appropriate campus request form.  Forms are listed below in the forms section of this procedure.  Note: the Duluth campus does not utilize a request form.  Units on the Duluth campus are instructed to contact the Duluth Cashier’s Office for specific instructions. 

Establish/Increase/Decrease

A unit completes  a change fund request form and submits via email to the appropriate campus office for processing. 

• A copy of the deposit report is included with the submission of the request form for all TC campus requests

Close

The individual acting as the fund’s 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 (TC campus only)
• Completes the request form indicating the fund will be closed. Email the form and a copy of the deposit report to OIB

Change of Fund Custodian

When a need arises to change the individual listed as the fund custodian, the unit department head (i.e. Dean, Director, etc.) is notifies  OIB and Accounting Services.  Units are instructed to send a memorandum to OIB and Accounting Services that reflects the unit name, name of the individual assuming the custodial role and contact information to include: telephone number, email address, and mailing address.  The department head and the new custodian sign the memorandum acknowledging the transfer of responsibilities.  The new custodian is instructed to count the fund to ensure it is intact at the time they assume the role and prior to signing the memorandum.

Denomination Exchange:   In the normal course of business, units with change funds may need to exchange currency denominations.   In these cases, a unit  submits a request to OIB via email, or contacts a system campus cashier’s office in order to execute the exchange. On the TC campus, the funds will be delivered to the unit via armored courier.

Unit Responsibilities

Reconciliation

All units maintain a reconciliation log.  The fund custodian is responsible for maintaining the reconciliation log for general accounting and audit review, and ensures the balance of the fund remains intact.  Frequency of reconciliation is dependent on frequency of activity. At a minimum, a fund must be reconciled on a monthly basis and documentation provided to Accounting Services to ensure accurate general ledger reporting.  The University’s retention policy governs all documentation concerning the fund activity.

Physical Security

The individual designated as the custodian is responsible for the safeguarding of the assets on a daily basis.  It is the custodian’s responsibility in coordination with a unit’s management level staff (i.e.  Deans, Directors, etc.) to make all necessary provisions to properly safeguard the funds entrusted to the unit. At no time should the funds be kept on one’s person, or deposited in a personal bank account.  Unless pre-approved, funds are prohibited from being taken off campus or to one’s home for safekeeping.  Cash must be kept in a lockbox in a secure location, such as a fireproof file cabinet or safe to which access is restricted and difficult for unauthorized individuals.  Level of cash on hand will determine the level of security required. 

Restrictions 

Use of a change fund for any reason outside the purpose for which the fund was established is strictly prohibited.

The fund is NOT to 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

Discrepancies due to misuse or theft are the responsibility of the unit.  Discrepancies must be followed up on and resolved immediately. In case of theft, units must notify the University Police Department and OIB.  When a loss occurs, the fund will need to be replenished.  A copy of the police report with accompanying documentation must be submitted to OIB and system campus cashier offices if applicable.  Any misuse of funds may result in the fund being closed by OIB.