Systems and Procedures
A Division of The Corporate Controller's Office

Procedure NL2002 - Cash Operating Fund - Nittany Lion Inn

Auxiliary and Business Services

Policy Steward facilitating procedure: Associate Vice President for Auxiliary & Business Services

Table of Contents:


Due to the nature of their business operations, the Corporate Controller has authorized the establishment of a special checking account for the Nittany Lion Inn. This account, hereafter referred to as the Operating Fund, is to be used for transactions unique to the Inn's hotel operation that require payment upon receipt of merchandise and/or services, and as such, are more appropriately handled through the Operating Fund than the University accounts payable system.

The Operating Fund will be the source of funds for the following expenditures:

  1. Petty Cash and Change Fund requirements
  2. Payment of Travel Agency Commissions
  3. Entertainment expenditures
  4. Purchase of alcoholic beverages
  5. Room Deposit Refunds
  6. Specialized and/or emergency repairs and services

Except as noted in Petty Cash Handling" (an exception to Policy FN04 approved by the Corporate Controller), Operating Fund monies are not to be intermingled with other funds; likewise, the fund may not be used for services to employees, such as check cashing or making loans.

The Nittany Lion Inn General Manager is the fund custodian, with the Associate Manage being authorized to administer the fund in the Manager's absence. The fund custodian is ultimately responsible for making the necessary arrangements to adequately safeguard the fund and to insure that the fund is properly administered.

This procedure documents the authorized uses and controls necessary for proper disbursement, recordkeeping, reimbursement, and reconciliation of the fund.



Petty Cash and Change Fund Handling

Portions of the monies comprising the Operating Fund have been designated for on-going petty cash and change fund requirements. For accountability/audit trail purposes, the specific amounts established for each fund are to be recorded via completion of a Request for Cash Advance .

Petty Cash Handling

All expenditures using petty cash are to be considered as emergency in nature, as the normal purchase of goods and services is to be accomplished through University purchasing procedures. Reimbursement to employees making such purchases may be issued by the Front Desk only, as outlined in this procedure.

The Associate Manager will act as the custodian of the Petty Cash Fund, monitoring all petty cash activity on a regular basis.

When petty cash purchases are necessary, the purchases must secure a vendor's receipt, and present it to the Front Desk Cashier for reimbursement.

The Front Desk Cashier will complete a Receipt for Petty Cash Expended form, indicating the nature of the disbursement and other pertinent data, as required on the form. The purchaser will sign the form as the "employee to receive reimbursement," at which time the Front Desk Cashier will reimburse the purchaser with funds from his/her bank.

At shift end, the Front Desk Cashier will replenish his/her bank from the days receipts for the amount of petty cash expended so that their bank remains intact. All Receipts for Petty Cash Expended are placed in the Cashier's shift deposit envelope with the remaining receipts, and submitted to the General Cashier (responsible for preparing the daily bank deposit).

The General Cashier will then exchange the Receipts for Petty Cash Expended for cash from the Petty Cash Fund, so the daily deposit will be intact and may be completed. Receipts for Petty Cash Expended will be retained in the Petty Cash Fund, pending review by the Petty Cash Fund Custodian and eventual replenishment of the fund.

The Petty Cash Fund Custodian will review the Receipts for Petty Cash Expended (and corresponding receipts) for appropriateness, proper completion, etc. Upon satisfactory review, the Petty cash Fund Custodian will approve the transaction(s) via signature in the specified area of the Receipt for Petty cash Expended. The Custodian will retain both the Receipt for Petty Cash Expended (and the receipt[s]). pending replenishment of the Petty Cash Fund.

To replenish the Petty Cash Fund, the Petty Cash Fund Custodian will submit the Receipts for Petty Cash Expended (with corresponding receipts) to Accounts Payable (A/P) Clerk, who will generate a check (from the NLI's Operating Fund) payable to the Petty Cash Fund Custodian as discussed in Recordkeeping and Payment Processing .

Upon receipt of the reimbursement check, the Petty Cash Fund Custodian will cash the check and replenish the Petty Cash Fund.

Receipts for Petty Cash Expended (and support) will be retained in the Accounting Office with the non-negotiable copy of the reimbursement check (discussed in Recordkeeping and Payment Processing ).

Change Fund Handling

When small bills and change are needed, the Front Desk Cashier on duty will remove cash from the front desk cash drawer and bring it to the back office, where authorized personnel will open the safe and exchange the cash for change of an equal amount from the primary Change Fund.

NOTE: Back office personnel authorized to disburse change are the General Manager, Associate Manager, Manager on duty and the General Manger's Secretary.

Like the primary change fund above, sub-funds (issued to Bartenders, Dining Room Clerks, etc.) must also be secured in the back office safe when not in use.

Payment of Travel Agency Commissions

Travel agencies who are members of the International Air Transport Association (IATA) are eligible to receive commissions for clients they book at participating hotels/motels. Such commissions are payable only to those agencies providing a valid IATA number (as verifiable by the Inn), are payable only to the applicable agency (not the AGENT making the arrangements), and are payable only upon completion of a client's stay at the Inn. Travel agency activity is monitored periodically by the Associate Manager.

Biweekly, participating agencies will be reimbursed at the agreed upon rate for clients who have completed their stay at the Inn. The A/P Clerk will generate a "Travel Agency Payable Detail Report" ( Exhibit "A" ), which lists agencies that the Inn currently owes. Using the report, checks will be generated for each agency owed and forwarded with the Travel Agency Payable Detail Report to the General Manager for review and approval, as discussed in Recordkeeping and Payment Processing .

Entertainment Expenditures

Entertainment is provided for the enjoyment of NLI guests. The entertainers (or their booking agencies, where applicable) will submit a bill to the NLI Accounting Office after services have been rendered. Upon verification of the amount billed to the agreed upon rate, the A/P Clerk will initiate the payment process as discussed in Recordkeeping and Payment Processing .

Purchasing Alcoholic Beverages

To accommodate its guests, alcoholic beverages are sold in the dining area, cocktail lounge, and to groups who rent the Inn's banquet facilities. As a result, inventory must be replenished regularly.

Weekly, the Food Steward will check the existing inventory in the secured beverage area, compile a list of needed items, and forward the information to the Banquet Supervisor. The Banquet Supervisor will then place orders with the beer distributor and/or State Store, as applicable.

Beer Purchases

When an order is filled, the beer distributor will deliver the order to the Inn. Upon delivery, the order will be checked in/verified. Any back orders or discrepancies will be recorded by the Food Steward on the invoice when the order is unloaded. The Food Steward will initial the invoice and the driver will then take the invoice to the Accounting Office for payment. A check is prepared as discussed in Recordkeeping and Payment Processing .

Liquor Purchases

When an order is filled, the State Store will notify the A/P Clerk that the order is ready for pickup, items on back order (if any), and the amount due. The A/P Clerk will generate a check in a similar fashion as discussed in Recordkeeping and Payment Processing .

NOTE: Unlike other Operating Fund expenditures, checks for liquor purchases are submitted to the NLI General Manager for a signature prior to receiving the actual invoice. This is because the State Store requires payment before releasing merchandise to customers.

When notified, the order and its corresponding invoice will be picked up by an authorized employee (as specified on the license issued by the Commonwealth of Pennsylvania - typically, the Banquet Supervisor or the Food and Beverage Manager). The check will be given to the State Store upon verification of the order.

After the order is checked and returned to the Inn, the invoice will be forwarded to the Operating Fund Custodian for review and signature. Once reviewed, the A/P Clerk will file both the invoice and corresponding check copy as documented in Recordkeeping and Payment Processing .

Refunding of Room Deposits

The room deposit refunding process is initiated when a prospective guest notifies the Reservations Clerk to cancel the prospective guest's reservation. The applicable folio will be forwarded to the Associate Manager, who reviews the folio to determine if sufficient notification was given to Reservations to permit issuance of a refund.

If a refund is disallowed, the deposit will be retained. If, however, the prospective guest has canceled within the proper time period, the Associate Manager will mark the folio "approved for refund," thereby authorizing the issuance of a refund for any advance deposit received. The folio will be forwarded to the A/P Clerk, who prepares a Miscellaneous Charge Slip ( Exhibit "B" ) from the information on the folio. A refund check is then prepared and processed as discussed in Recordkeeping and Payment Processing .

Specializing and Emergency Repairs/Services

The Operating Fund may be used for service of both a specialized and an emergency nature which require prompt attention and immediate payment. Examples include motor rewinding, piano tuning, and draper/bedspread repair.

Upon presentation of an invoice by the vendor providing the service or merchandise, the A/P Clerk will initiate payment as discussed in Recordkeeping and Payment Processing .

Recordkeeping and Payment Processing of Authorized Expenditures

Daily, requests for payment (and their corresponding support documents) are forwarded to the A/P Clerk. The A/P Clerk will access the "Accounts Payable Menu" of the Inn's computer system, selecting the PROCESSING option. Within this option, the A/P Clerk will select the "Post Invoice/Handcheck" category to (1) record each request (expenditure) in its appropriate category, and (2) assign the next available check number. Checks are then generated in duplicate - the negotiable copy ( Exhibit "C" )and a non-negotiable copy. Checks are submitted to the Operating Fund Custodian (or designee) for review and signature, along with their corresponding support documents.

Once signed, the duplicate, non-negotiable copy (yellow) will be separated from the negotiable copy, attached to its corresponding support document(s) and retained in the appropriate vendor file for reconciliation and audit trail purposes. The negotiable copy (white) will be mailed (or given) to the vendor.


Replenishment of the Operating Fund

To replenish the Operating Fund, the A/P Clerk will first generate a Check Register Report ( Exhibit "D" ) summarizing all payments that have been issued from the Operating Fund since the last replenishment. A Special Request for Check ( SRFC ) will then be prepared for the per the Check Register Report. The Check Register Report will be attached to the Special Request for Check and forwarded to the General Manager for review/approval signature.

The Special Request for Check (with Check Register Report attached), will be submitted to the Financial Officer - Vice President for Business and Operations for final approval and processing, as appropriate per Policy IP04 .

NOTE: Documents supporting the Check Register Report will remain on file at the Inn and do not accompany the Special Report for Check, per prior arrangement with Accounting Operations.

When the replenishment check is received from Accounting Operations, the General Manager will endorse the check for deposit to the Inn's Operating Fund Account at the Inn's depository bank.

Increasing the Operating Fund

The General Manager may request that the fund be increased, either permanently or temporarily, by submitting a Special Request for Check to the Financial Officer - Vice President for Business, charged Fund 0207, Accounts Receivable Long-Term Advances for permanent increases, or Fund 0206, Accounts Receivable-Short Term Advances for temporary increases. If the request is for a permanent increase, a letter of justification must be attached and submitted to support the need for additional funds. If the request is for a temporary increase, an explanation for the increase may be entered in the space provided on the Special Request for Check. In addition, it must be clearly indicated that the need is temporary and must include a settlement date for return of the funds.

Reducing the Operating Fund

To reduce the Operating Fund permanently or to return a temporary advance, the General Manager must first write a check drawn on the fund and payable to The Pennsylvania State University. A Report of Cash Receipts ( ROCR ) will then be prepared. Specific details must include the name of the fund custodian (i.e., the General Manager) and the appropriate fund number to be credited (either 0206 or 0207). Once copy of the ROCR must be forwarded to the Financial Officer - Vice President for Business and Operations.



Each month, the A/P Clerk will reconcile the Operating Fund checking account and the Operating Fund. The checking account will be reconciled on the form provided by the bank; reconciliation of the Operating Fund will be performed using the format suggested on Exhibit "E" . All voided and/or missing check numbers will be accounted for, briefly explained, and included as part of the formal reconciliation.

Reconciliations will be forwarded to the General Manager (or designee) for his review. Such review will be evidenced by the reviewers initials and date on the Operating Fund Reconciliation form. Once reviewed, reconciliation forms shall be retained as documented in Record Retention.

Auditing Responsibilities

The Petty Cash and Change Fund portions of the Operating Fund will be monitored on a regular, surprise audit basis by Financial Officer - Vice President for Business and Operations, in accordance with the guidelines set forth in the Financial Officers Procedures Manual .

Periodically, the Operating Fund as a whole will be subject to audit, examination, and review by the University Auditing Department to verify the accuracy and appropriateness of the transactions reported, and to insure NLI adherence to this procedure and all other pertinent policies and procedures.




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 working with Internal Audit when audits are being performed in the administrative area.


Record retention must be managed in accordance with Policy AD35 - University Archives and Records Management , and records schedules approved by the Records Management Advisory Committee, Office of General Counsel, and Office of the President. These retention requirements are the University's retention criteria, either derived or based upon federal, state, and local statute or regulations, industry standards, and business needs. Retention beyond recommended time periods require justifiable reasons and warrant review by the Records Management Officer or designee. All documents must be maintained in such a manner so as to provide ease of access for review, and to provide a suitable audit trail for all transactions.

Upon expiration of a stated period of time, documents must be discarded and/or destroyed, unless permission is granted by Records Management Officer or designee to retain the records. Archival records created more than 20 years prior to the current date must be reviewed before destruction. Units should also contact the University Archivist before discarding any document which may be of permanent or historical value to the University. To safeguard the privacy of individuals, documents that contain salary information, personally identifiable information (PII), or student records must also be shredded. See Policy AD53 - Privacy Policy and AD22 - Health Insurance Portability and Accountability Act for additional information regarding privacy and the protection of an individual's personal information. For documents that must be shredded, departments may arrange for Blue Bag service by contacting the Blue/White Shredding Program of the Office of Physical Plant. Exceptions to the practice are as follows:

  • Documents subject to a Legal Hold (see AD35, Legal Hold). A legal hold will remain in effect until it is released in writing by the Office of General Counsel.
  • Documents under audit or review, either internally or externally. The retention period extends until released by the Corporate Controller's Office. The Financial Officer will be notified regarding any accounts which are under audit; the Financial Officer will be responsible for contacting the department.

Additional questions may be directed to the University Archivist or the Records Management Officer.



For questions, additional detail, or to request changes to this procedure, please contact the Financial Officer - Auxiliary & Business Services..


Procedure Status:

Date Approved: 10/18/1990

Most recent changes:

  • 10/5/1990

Revision History (and effective dates:)

  • Original - Date unknown