ALL AGENCIES, DEPARTMENTS, AND DISTRICTS GOVERNED
BY THE BOARD OF SUPERVISORS
EFFECTIVE: 12/92
REVISED: 11/00
_________________________________
David E. Sundstrom, Auditor-Controller
1.
POLICY
Certain Officers of the County may use a revolving
cash fund in accordance with guidelines established
by the Auditor-Controller, County Purchasing Agent,
Board of Supervisors, and State of California.
1.1
Purpose
The purpose of this procedure is to define
the authorized uses of a revolving cash fund
and to advise County Officers how to properly
establish, increase, spend, replenish, safeguard,
reduce, transfer, and discontinue a revolving
cash fund in accordance with Board of Supervisors,
Auditor-Controller, and State of California
policies.
1.2
Authority
1.2.1
State of California Government Code
Sections 29320 through 29334
Authorizes the Board to delegate authority
to the Auditor-Controller to establish
revolving funds for offices, departments/agencies,
and institutions.
1.2.2
Board of Supervisors' Resolution No.
85-1684 dated November 26, 1985
Establishes revolving funds, provides
for expenditure limitations, and authorizes
the functions of the Auditor-Controller
and the Purchasing Agent to be performed.
1.2.3
Board of Supervisors' Resolution
No. 92-1008 dated September 15, 1992
Amends Resolution No. 85-1684 to set
the limit for individual expenditures
at $1,000.
1.3
Definitions
1.3.1
Officer
"Officer of the County"
includes any elective or appointive
officer of the County and any person
in charge of any office, department,
service, or institution of the County,
or a division or branch thereof and
as enumerated in Section 24000 of the
Government Code.
1.3.2
Revolving Cash Fund
A fund in which a fixed amount of
money is set aside for:
making change, or
handling disbursements that do
not exceed $1,000 for individual
purchases, including sales tax and
any delivery costs, or
making cash advances for traveling
or other expenses related to such
travel that do not exceed $1,000
for each cash advance, or
making cash advances for traveling
or other expenses related to such
travel over $1,000 that are approved
by the department head.
1.3.3
Individual Purchase
An "individual purchase"
is the total of all receipts from a
vendor on a specific day. Transactions
from a particular vendor cannot exceed
$1,000 per day including tax and shipping.
1.3.4
Cash Advance
A payment of cash to County employees
to provide for traveling or other expenses
related to such travel. Cash advances
for travel are discussed in more detail
in County Accounting Procedure (CAP)
No. C.1., Cash Advances
- Revolving Funds.
1.3.5
Fixed Asset Component
A "fixed asset component"
is an integral part or piece of the
fixed asset.
1.4
Unauthorized Uses
1.4.1
Circumvention of County Bidding Process
The revolving fund may not be used
to circumvent the bidding process as
established in the County Of Orange
Contract Policy Manual. Examples include:
Splitting large purchases of goods
and/or services into smaller components
in order to avoid exceeding the
bid requirements or Board approval
limits set in the Contract Policy
Manual.
Procuring supplies and/or services
that are available through existing
countywide or departmental contracts.
Purchasing additional supplies
and/or services from a contract
vendor in lieu of using a change
order or contract modification.
Purchasing publishing services
that are available through PFRD
Publishing Services.
Purchasing components of fixed
asset items to avoid normal budgetary
and approval requirements for fixed
assets.
Purchasing items without required
special approvals (such as alterations
to County-owned buildings) or items
that have Contract Policy limitations
(see the Contract Policy Manual
for details).
1.4.2
Payment for Services
The revolving cash fund cannot be
used to pay for services, (e.g., repairs,
spraying for insects), if the service
provider is not on the CEO Purchasing
Insurance Master Control Listing. Service
providers on the listing have provided
CEO Purchasing with a Certificate of
Insurance naming the County as an additional
insured. The user must certify on the
invoice "Insurance Verified."
Reimbursement will not be made if the
invoice is not certified.
1.4.3
Delivery Charges
Delivery charges are not to be paid
from the revolving cash fund when the
Purchasing Agent or Deputy Purchasing
Agent has not authorized the delivery
charges on a purchase order or by separate
memo.
1.4.4
Employee Check Cashing/Loans
The fund must not be used to cash
checks or loan money to employees (except
advances for properly pre-authorized
revolving cash purchases and travel
advances).
1.4.5
1099 Requirements
Revolving funds should not be used
to purchase services from sole proprietorships
or partnerships due to the 1099 tax
form reporting requirements.
1.4.6
Deposits/Advances
"Good Faith" deposits or
advances that can be refunded before
an event (e.g., conference or seminar)
occurs will not be reimbursed to the
revolving cash fund until the event
has occurred.
1.4.7
Unethical Practices/Conflicts of
Interest
This fund may not be used for unethical
purposes. Unethical purposes include
the purchasing of items from sources
who represent a conflict of interest,
(e.g., employee relatives), have been
barred from doing business with the
County, are unlicensed contractors,
exchange gratuities for business considerations,
or other practices which violate fair
and ethical business standards. An Officer
for whom the fund is established will
have an obligation to monitor the fund's
use to ensure that unethical practices
are not occurring.
1.4.8
Extraordinary Circumstances
If an Officer, for whom the revolving
fund is established, authorized an individual
purchase exceeding $1,000, or a purchase
for an unauthorized use defined above,
the Purchasing Agent may approve such
purchases provided that the Officer
submits written justification explaining
the extraordinary circumstances which
led to the transaction. The Purchasing
Agent will review the explanation and
make a determination regarding its validity.
If the Purchasing Agent determines that
it is valid and that the purchase was
reasonable and generally met competitive
procurement standards, the Purchasing
Agent shall transmit the approval to
the Auditor-Controller by memorandum.
The Officer will be advised by the Purchasing
Agent of each such approval. Any purchases
not approved by the Purchasing Agent
in this manner may be referred by the
department head to the Board of Supervisors
for approval.
2.
PROCEDURES
2.1
Establishing or Increasing the Fund
2.1.1
Written Request to CEO
Any Officer wishing to establish or
increase a revolving cash fund must
forward a written request to the Purchasing
Agent, stating the need for the fund
or the reason for the increase, and
the amount requested. The Purchasing
Agent will review the request and forward
it to the Auditor-Controller General
Ledger Unit with a recommendation.
2.1.2
Auditor-Controller Review
The Auditor-Controller reviews the
request and the Purchasing Agent's recommendations
for compliance with statutory provisions
and County procedures and operating
rules, and authorizes the issuance of
a check establishing or increasing the
fund. The Auditor-Controller will assess
the size of the fund needed based on
revolving cash, Purchasing Card usage,
and cash advance activity.
2.1.3
Material Control Weaknesses
The Auditor-Controller may elect not
to increase the fund of a department/agency
with significant revolving cash fund
internal control weaknesses until such
weaknesses are corrected.
2.1.4
Treasurer-Tax Collector Assistance
Upon notification from the Auditor-Controller
General Ledger Unit, the County Treasurer-Tax
Collector will assist a department/agency
in establishing a checking account without
bank service charges.
2.2
Making Disbursements from the Fund
2.2.1
Approval by Authorized Individual
Purchases or cash advances from the
revolving cash fund must be approved
by an authorized person who does not
also have revolving fund custodian,
check signer, or reconciliation duties.
2.2.2
Revolving Cash Voucher/Supporting
Documentation
Before disbursing currency or issuing
a revolving cash fund check to reimburse
an employee for a purchase, the fund
custodian is to record the final purchase
amount and expenditure coding on a Revolving
Cash Fund Voucher (Exhibit I). The
custodian is to examine all supporting
documents (e.g., handwritten or cash
register receipts) for appropriateness,
and obtain signatures from the persons
approving the purchase and receiving
the reimbursement. When monies are disbursed
from the fund, all supporting documents
should be immediately canceled by the
custodian (e.g., by marking "Paid
by check no. 18762" thereon).
2.2.3
Advanced Amounts
Before advancing revolving fund cash
for purchases, the fund custodian must
record the advance on a Revolving
Cash Fund Voucher (Exhibit I) and
obtain proper signatures. The employee
receiving the advance must later return
the original receipts and/or money totaling
the advanced amount to the custodian,
who should then examine the voucher
and all supporting documents for appropriateness
and immediately cancel all supporting
documents.
Drawing checks to "cash"
or signing blank checks is prohibited.
Checks should be made out to the vendor
or to the employee, whichever is appropriate.
2.3
Reimbursing the Fund
2.3.1
Revolving Cash Reimbursements
When a department/agency wishes to
have its fund reimbursed for expenses
other than cash advance travel expenditures,
a Revolving
Cash Fund/Cash Advance Reimbursement
claim (Exhibit II) envelope is completed,
and Revolving Cash Fund Vouchers (Exhibit
I), with all supporting documents attached,
are enclosed. An authorized signer reviews
the envelope's contents for propriety,
signs and seals the envelope, and submits
to the Auditor-Controller Claims and
Disbursing Section. All reimbursements
will be provided by means of electronic
funds transfer, unless otherwise specified
with the Treasurer-Tax Collector's Cash
Management Officer.
2.3.2
Travel Cash Advance Reimbursements
When a department/agency wishes to
have its fund reimbursed for cash advance
travel expenses, the custodian shall
complete a Revolving Cash Fund/Cash
Advance Reimbursement claim envelope
and enclose all Mileage and Other Expenses
Claim forms and supporting documents
attached. An authorized signer reviews
the envelope's contents for propriety,
signs and seals the envelope, and submits
to the Auditor-Controller Claims and
Disbursing Section.
Claims for reimbursement for cash advance
travel expenditures shall be submitted
separately from other reimbursement
claims.
Original invoices or receipts must
accompany all vouchers included in revolving
fund reimbursement requests. Departments
may submit a copy or fax of an original
invoice or receipt only if it includes
a certification that the original has
been lost or destroyed and the item
has not previously been reimbursed.
The certification must be signed by
someone within the department/agency
who is authorized to approve purchases
and is not the revolving cash custodian.
2.3.4
Canceled Checks
Canceled checks (if received from
the bank) should be retained by the
department/agency for five years, and
should not be placed in Revolving Cash
Fund/Cash Advance Reimbursement envelopes.
2.3.5
Auditor-Controller Review
The Auditor-Controller will review
the claim, deduct amounts for any item(s)
not authorized pursuant to this procedure,
and issue payment to the Officer for
the approved amount.
2.3.6
Unauthorized Purchases
Purchases of a type not authorized
by the Auditor-Controller or the Purchasing
Agent represent a personal liability
of the Officer.
2.3.7
Department/Agency Certification
Signing and submitting the Revolving
Cash Fund/Cash Advance Reimbursement
claim envelope for reimbursement of
the revolving fund shall represent department/agency
certification that all expenditures/cash
advances were made in accordance with
policies and procedures established
for revolving cash funds and cash advances
for travel purposes.
Signature and submittal is also a representation
that any cash advances outstanding more
than 60 days after completion of the
travel event have been brought to the
attention of the department head and
are being actively pursued for collection
at the earliest possible time.
2.4
Safeguarding the Fund
2.4.1
Fund Custodian
Custodianship for each revolving fund
must be vested in only one person. Another
person, however, should have controlled
access to the fund in case of absence
or emergency. There should be a separate
custodian for each fund (i.e., change
fund assignment or revolving cash fund
assignment at each departmental location
with an assigned fund). The custodian
of the fund must not have any other
cash handling responsibilities, including
the ability to sign checks or authorize
revolving fund disbursements.
2.4.2
Currency/Checking
Monies in the revolving cash fund
may be in the form of currency, or in
a bank checking account, or a combination
of both. The amount of currency should
be held to a minimum to safeguard against
theft or misplacement of funds.
2.4.3
Unused Checks/Voided Checks
All unused checks should be adequately
safeguarded and periodically inventoried.
Voided checks should be retained for
five years.
2.4.4
Checking Account Reconciliations
Bank checking accounts should be reconciled
monthly by an independent person with
no revolving fund duties. Reconciliations
should also include an inspection of
canceled checks for signatures and proper
endorsement, and a comparison of checks
to check register for number, payee,
date and amount. Unusual reconciling
items should be brought to the attention
of management. The reconciliations should
be initialed and dated by the preparer
to document timeliness and responsibility.
Also, the reconciliations should be
reviewed, initialed, and dated by a
supervisor.
2.4.5
Fund Reconciliations
A reconciliation of the revolving
fund shall be performed once per month
by a person with no other revolving
fund duties. The revolving fund should
reconcile to the checking account balance,
the revolving fund cash balance, and
the unreplenished balance as recorded
on Revolving
Cash Fund Vouchers (Exhibit I) and
Revolving
Cash Fund/Cash Advance Reimbursements
requests (Exhibit II). The same
individual can perform the fund reconciliation,
and the checking account reconciliation,
described in section 2.4.4.
2.4.6
Travel Cash Advances
Cash advances for travel should be
monitored separately from other revolving
fund activities, but a specified amount
attributable to cash advances does not
need to be separately established. For
example, a revolving fund of $10,000
may have at various times $2,000, $4,000,
or $3,000 of outstanding cash advances,
for which a separate accounting should
be maintained. (See
CAP C.1., Cash Advances - Revolving
Funds.)
2.4.7
Surprise Cash Counts
Surprise cash counts of revolving
fund monies should be conducted at frequent
intervals and be conducted by someone
other than the fund custodian. The department
should maintain a record of the date
and the amount counted and resolve any
issues identified.
Cash overages should be resolved based
upon how they originated. If they resulted
from a canceled payment for which a
revolving cash fund reimbursement has
already been received, they should be
listed as a credit against other expenditures
on the next reimbursement request. If
they resulted from normal cash handling
procedures, they must be deposited into
the County's Overage Fund. Refer to
CAP No. C.6., Overage Fund, for
more detailed procedures.
2.6
Decreasing the Fund
An Officer wishing to decrease the amount
of an established revolving cash fund may
do so by notifying the Purchasing Agent in
writing, and depositing the amount of the
reduction into the County Treasury. The Purchasing
Agent will forward the notification to the
Auditor-Controller.
2.7
Transferring the Fund
The procedure for transferring a revolving
cash fund will be followed whenever an outgoing
Officer's duties or responsibilities change
and he/she is no longer responsible for the
revolving cash fund, and the outgoing and
incoming Officers are both available and willing
to sign the transfer request. This procedure
is explained in CAP No. M.4.,
Requirements of Elected or Appointed Officials
Assuming or Leaving Office.
A revolving cash fund may be discontinued
in accordance with procedures explained
in CAP No. M.4.,
Requirements of Elected or Appointed
Officials Assuming or Leaving Office.
2.8.2
Material Control Weaknesses
Either the Auditor-Controller or the
Purchasing Agent can recommend discontinuance
of the fund of a department/agency with
material revolving cash fund internal
control weaknesses.
The Internal Audit Department and CEO Purchasing
will periodically review department/agency
revolving cash fund functions for cost effectiveness,
internal controls, and overall appropriateness.
Legal