Systems and Procedures
A Division of The Office of Budget and Finance
A Division of The Office of Budget and Finance
In accordance with Policy FN04 Long-Term and Short-Term Advances, this procedure details the processes for requesting, reconciling, and closing long-term and short-term advances.
Advances may only be issued to employees or graduate assistants with assistantships dependent upon the type of advance requested. This is to allow a payroll deduction to be submitted if the advance is not returned in a timely manner. Any outstanding advance should be reconciled and returned before a new advance is issued. Any questions should be directed to the Central Accounts Receivable.
See Procedure TR2005 Travel: Payment Methods for complete details on requesting and reconciling travel advances and see Procedure CR2081 Student Short-Term Loans for completed details on issuing short-term loans to students
Long-term advances are established for an indefinite period and are recorded using GL 13010800 Long-Term Advances. These advances must be pre-approved by the Business Area Financial Officer or Commonwealth Campus Director of Finance & Business (hereafter, FO). If the advance is in the name of the Financial Officer, the respective Director of Financial Officers, University Park or the Associate Vice President for Finance and Business Services, Commonwealth Campuses must approve the advance request. The Office of Central Accounts Receivable is responsible for monitoring all long-term advances. Long-term advances are transferable if the fund custodian leaves the position or leaves employment with the University.
There are two different types of short-term advances: short-term advances and short-term research advances.
Short-term advances are established for 90 days or less and are recorded using GL 13010300 Short-Term Advances. These advances must be pre-approved by the Business Area FO. If the advance is in the name of the Financial Officer, the respective Director of Financial Officer, University Park or the Associate Vice President for Finance and Business Services, Commonwealth Campuses must approve the advance request. If an established short-term advance is going to exceed the 90-day limit, a request must be submitted to the Controller for extension approval. Short-term advance extensions may only be granted for 30 days and may only be granted once. An extension will not be granted past a contract or grant close date. The FO is responsible for monitoring all short- term advances. Short-term advances are nontransferable and must be immediately reconciled and closed if the fund custodian leaves the position or leaves employment with the University.
Short-term research advances are established for one year or less and are recorded using GL13010300 Short-Term Advances. These advances must be pre-approved by the Research Administrator or the FO if a business area does not have a Research Administrator. The Research Administrator is responsible for monitoring all short-term research advances. The SIMBA Chart of Accounts contains a list of Financial Officers and Research Administrators. Short-term research advances are nontransferable and must be immediately reconciled and closed if the fund custodian leaves the position or leaves employment with the University.
Change funds are used in retail operations or other areas where cash collections take place and the need to have change-on-hand exists. Change funds are the foundation of a cash drawer and, by their very nature, become intermingled with cash transactions over the course of a business day; however, these funds must be removed from the cash drawer before "cashing out the drawer" and the cash deposit prepared.
Change funds must be reconciled each time they are utilized. The Petty Cash or Change Fund Reconciliation Form is available for documenting the reconciliation. If a change fund is only used periodically, a reconciliation should occur at least monthly. The change fund must be counted as part of the fiscal year-end closing process to ensure the fund is intact. Any discrepancies must be reported and corrective action taken as part of the year-end closing process.
Written requests to establish a change fund must be submitted to the business area Finance Office for review and approval by the FO prior to establishing the advance. If the change fund will be issued in the name of the FO, approval must be obtained from the respective Director of Financial Officers, University Park or the Associate Vice President for Finance & Business Services, Commonwealth Campuses. This written request (email, memo, etc.) becomes supporting documentation to the advance request. All change funds must be established in the name of the employee (fund custodian) using the Request for Cash Advance form.
The FO has ultimate responsibility for these funds, even if the funds are created in the name of a sub-custodian.
See the SIMBA: Long-Term Advance knowledge base article for instructions on completing the transaction in SIMBA. The completed Request for Cash Advance and written approval to establish the advance are to be uploaded as supporting documentation to the Non-PO Invoice transaction in SIMBA.
The Business Area Finance Office is required to retain the original copy of the Request for Cash Advance until the advance is settled. This may be kept as a paper copy or an electronic PDF version.
The University has authorized the transfer of long-term change funds from one fund custodian to another if the original fund custodian leaves the position or leaves University employment. Completion of the Accountability Transfer Form is required to document the transfer of University funds from the original custodian to the new custodian. The original Request for Cash Advance form must be updated to reflect the name of the new custodian and the date the funds were transferred. The fund must be reconciled and a journal entry prepared.
See the "Transferring Long-Term Advances" section within the SIMBA: Long-Term Advance knowledge base article for complete details on processing the required journal entry.
Short-term change fund requests cannot be transferred. The advance needs to be settled and a new short-term advance created in the name of the new fund custodian.
If a determination has been made that a change fund is to be decreased, the fund custodian must physically count the cash on hand and deposit the funds in a University designated banking institution. See the "Decreasing Long-Term Advances" section within the SIMBA: Long-Term Advance knowledge base article for complete details on decreasing the change fund.
When a unit no longer has the need for a change fund, the fund must be reconciled and closed. See the "Closing Long-Term Advances" section of the SIMBA: Long-Term Advance knowledge base article or the "Closing Short-Term Advances" in the SIMBA Short-Term Advances KB article for complete details on processing this transaction.
Central Accounts Receivable ensures the outstanding accounts receivable has been resolved.
The Penn State Purchasing Card should be used for all petty cash type purchases where possible.
Petty cash is usually the payment method of last resort when other disbursement methods are impractical or cannot be used. Petty cash funds are NOT to be used:
Recent changes and improvements in purchasing and payment methods, banking regulations, international payments, and electronic technology reduce the need for cash in departments, as well as travel and non-travel cash advances to employees. To minimize the handling of cash, the FO, in consultation with the respective Director of Financial Officers at University Park or the Associate Vice President for Finance and Business Services at Commonwealth Campuses, considers the request for a petty cash fund only when a business area demonstrates that standard payment methods (Purchase Order, Purchasing Card, or Non-PO Invoice) do not meet the unit's business needs. The petty cash fund custodian must be an employee of the University. The FO and the respective Director of Financial Officers at University Park or the Associate Vice President for Finance and Business Services at Commonwealth Campuses may also recall a petty cash fund if it is determined that the fund is not needed.
During the fiscal year-end closing process, Business Area FOs must re-examine whether the petty cash account is still required to meet the department's business needs. Petty cash funds having no activity during the fiscal year are to be closed.
Petty cash funds are operated on a cash basis, by which receipts are secured for disbursements and kept in the petty cash box until reimbursement is requested. Thus, the total of currency and the receipts should always equal the full amount of the advance. If there is a shortage in the funds for any reason, the shortage must be immediately reported, in writing, by the Custodian to the Business Area FO and Central Accounts Receivable. In addition, the funds are subject to unannounced audits by the FO, Central Accounts Receivable, Internal Auditors, and state and external auditors.
If petty cash funds are approved, they are to be maintained in a vault or an approved safe (fireproof, bolted to the floor or otherwise immovable) or maintained in a file safe or reinforced file cabinet with a padlock and bar that secures all drawers. Cash is never to be retained in desk drawers or standard file cabinets since they are easily accessed with nominal forcing or readily available keys. In the event of theft, the petty cash fund custodian must immediately notify their supervisor, the FO, and University Police.
Petty Cash funds are NOT to be used for short-term advances.
The University qualifies for exemption on payment of Pennsylvania Sales and Use Tax. The Tax Exempt Letter must be provided to the vendor when making a purchase using petty cash funds. Any sales tax paid will not be reimbursed from petty cash funds.
Requests to establish petty cash funds must be submitted to the respective Director of Financial Officers, University Park or the Associate Vice President for Finance & Business Services, Commonwealth Campuses, via email. Upon written approval, the employee prepares a Request for Cash Advance form and a Non-PO Invoice by ACH deposit, payable to the employee is processed. See the "Establishing a Long-Term Petty Cash Advance" section of the SIMBA: Long-Term Advance knowledge base article.
See the SIMBA: Non-PO Invoice Processing Overview for complete details on the SIMBA process. If the employee wishes to have a check issued and not an ACH, on the SIMBA Fiori Tile: Park Vendor Invoice on the Payment tab enter Payment Method: C.
The completed Request for Cash Advance form must be retained by the fund custodian for the duration of the advance.
After securing the permission of the Business Area Petty Cash Fund Custodian to make a petty cash purchase, the individual makes the purchase and secures a receipt (cash register or other type of receipt) for the item(s) purchased from the supplier/vendor. This expenditure must then be documented by completing a Receipt for Petty Cash Expended form. The individual having made the purchase submits the Receipt for Petty Cash Expended form, along with the supplier/vendor receipt, to the Petty Cash Fund Custodian and in exchange receives cash. The Receipt for Petty Cash Expended form and receipts are held by the Petty Cash Fund Custodian until the fund is to be replenished.
Petty Cash funds are replenished using an expense report in SAP Concur by uploading the completed Receipt for Petty Cash Expended form(s) along with the vendor receipt(s) to reflect the amount to be replenished. See SAP Concur Attaching Receipts at the Expense Entry Level documentation for complete details. The payment will be issued through SAP Concur to the employee for this reimbursement. If a check is desired instead of an ACH deposit, the FO should use a non-employee report for the reimbursement. Use of the non-employee report should be limited to only the petty cash replenishment because the payment is not associated with the FO vendor number.
Petty cash funds may NOT be replenished for amounts greater than the original amount of the fund or for amounts greater than the total of the Receipt for Petty Cash Expended forms.
The University has authorized the transfer of petty cash funds from one fund custodian to another if the original fund custodian leaves the position or leaves University employment. An email must be sent to the respective Director of Financial Officers at University Park or the Associate Vice President for Finance and Business Services at Commonwealth Campuses to obtain permission to transfer the existing petty cash funds. If the request is denied, the petty cash fund must be closed (see Closing Petty Cash Funds). If the request is approved, completion of the Accountability Transfer Form is required to document the transfer of University funds from the original custodian to the new custodian. The fund must be reconciled, and a journal entry prepared. See the Long-Term Advance knowledge base article for complete details on processing this transaction.
If a determination has been made that a Petty Cash Fund is to be decreased, the fund custodian must reconcile the petty cash fund, update the "Advance Returned" section of the section of the original Request for Cash Advance Form and signed by the Financial Officer indicating the amount of the decrease. See the SIMBA: Long-Term Advance knowledge base article for complete details on the business process.
If the determination has been made that petty cash funds are no longer necessary, a reconciliation must be performed and the funds deposited in a University designated banking institution. See the SIMBA: Long-Term Advance knowledge base article for complete details on the business process.
Short-term advances are advanced for 90 days or less and Short-term research advances are advanced for 1 year (365 days) or less and both are recorded using GL 13010300. The FO is responsible for reconciliation of the short-term advance (the actual cash) and GL 13010300 Short-Term Advance for their business area. If an established short-term advance is going to exceed the 90-day limit, the Controller must approve an extension request. The extension date must be documented within the "Date Advance will be Closed" section on the original Request for Cash Advance Form. Extensions may only be granted for 30 days and will only be granted once. An extension will not be granted past a contract or grant close date. The FO is responsible for maintaining the original Request for Cash Advance Form until advance is reconciled and closed.
Short-Term Advances and Short-Term Research Advances cannot be increased. If additional funds are required, the current advance must be reconciled and closed and a new advance created.
The FO has ultimate responsibility for these funds, even if the funds are created in the name of a sub-custodian.
Requests to establish short-term advances must be pre-approved by the Business Area FO. If the advance is in the name of the Financial Officer, the respective Director of Financial Officer, University Park or the Associate Vice President for Finance and Business Services, Commonwealth Campuses must approve the advance request. Upon written approval, the employee prepares a Request for Cash Advance form and a Non-PO Invoice by ACH deposit, payable to the employee is processed. See the SIMBA: Short-Term Advance KB article for complete details on processing this request.
The Short-Term Advance account will be Open Item Managed which will allow a reconciliation to clear these transactions from the account. This account will represent a receivable from the employee. The FO is responsible for monitoring the physical short- term advance and reconciling GL 13010300 Short-Term Advance for their business area.
The employee is required to present the FO with cash, receipts and/or documentation that totals the amount of the advance to settle the accounts receivable. The SIMBA Short-Term Advance KB article contains specific details on reconciling the short-term advance.
The FO ensures the outstanding accounts receivable has been resolved.
If a determination has been made that a Short-Term Advance is to be decreased, the fund custodian must physically count the cash on hand and deposit the funds in a University designated banking institution. See the "Decreasing Short-Term Advances" section within the SIMBA Short-Term Advances knowledge base article for complete details on decreasing the Short-Term Advance.
Short-term advances must be reconciled and closed by the "advance to be closed" date on the original Request for Cash Advance form. See the "Closing Short-Term Advances" in the SIMBA Short-Term Advances KB article for complete details on processing this transaction.
If a one-time extension was granted, the email communication from the Controller is also to be uploaded as supporting documentation.
Failure to follow the business processes outlined within policy and procedure may result in the denial of future advance requests.
Violation of a financial policy and/or procedure should be reported to y our supervisor, unit manager, Human Resources representative, and/or office responsible for the policy and/or procedure. Where those resources are inadequate, you may choose to make an anonymous report through the Penn State University hotline by calling 1-800-560-1637.
Annually, Central Accounts Receivable performs audits on all outstanding advances in the 13010800 GL account.
The FO performs audits on all outstanding advances in the 13010300 Short-Term Advances GL account.
The Financial Officer is responsible for ensuring that procedures pertaining to the accountability and safeguarding of all cash receipts, cash funds, and other assets are established and followed in accordance with approved University policies and procedures. Regular audits relating to advances, cash, travel, equipment accountability, and other expenditures provide a means to protect University assets. The Financial Officer is responsible for collaborating with Internal Auditing when audits are being performed in the administrative area. Audits pertaining to sponsored activities or other audits performed by external auditors may also be performed. The Financial Officer is also be responsible for collaborating with the external auditor and/or a central University office related to these procedures.
University Records retention must be managed in accordance with Policy AD35 University Archives and Records Management, and retention schedules approved by the Records Management Advisory Committee, the Office of General Counsel, and Senior Vice President and Chief of Staff. These Records Retention Schedules are derived from - or based upon - federal, state, and local statutes or regulations (i.e., Federal Acquisition Regulations, the OMB Uniform Guidance, Internal Revenue Service, and other regulations governing the auditability and retention of financial records), University Policy, industry standards, and business needs. All University Records must be maintained in such a manner to provide ease of access, establish a suitable audit trail for all transactions, and to be reviewed prior to disposition.
University Records and Transitory/Disposable Records are defined below. See Policy AD35, Definition of Terms for additional information.
Upon completion of the retention period, University Records must be disposed of via secure destruction or transfer to University Archives, unless an exception to the disposition process set forth below applies. In many cases, retention periods and disposition methods may be generally determined by comparing the type of record (i.e., reports, correspondence, etc.) to similar records series with known retention periods listed on the Records Retention Schedule. If the disposition method for University Records states "Review by Archives" on the Records Retention Schedule, the Unit responsible for those records should consult the University Archivist for a final determination of disposition. For University Records that must be securely destroyed, units may arrange for shredding services by either contacting the Blue/White Shredding Program or the Inactive Records Center (IRC).
Exceptions to the disposition process are as follows:
To safeguard the privacy of individuals, records that contain Personally Identifiable Information (PII), as defined in University Policy AD53 Privacy Policy, or student records, as defined in University Policy AD11 Confidentiality of Student Records, must be destroyed beyond recovery. For additional information regarding privacy and the protection of an individual's personal information, see Policy AD53 Privacy Policy.
Additional questions may be directed to the Office of Records Management.
There are no exhibits associated with this document.
For questions or additional details please contact the Business Area Financial Office.
To request changes to this procedure, please contact the Office of Systems & Procedures by submitting a GURU Technical Support Request Form.
August 14, 2024