 A.

Introduction
Revolving funds and change funds are established to expedite the handling of
University business by providing funds for authorized purchases and/or to make
change. The terms revolving fund, cash fund, and change fund are often used
interchangeably. The definitions of each are as follows:

o Revolving Fund
 Checking Account -- uses pre-numbered checks for handling disbursements. Normally,
checks are written to vendors; no checks may to be written to cash, employees or independent
contractors without specific pre-approval
 Cash Fund -- for handling purchases on a cash basis. Normally, the amount of the fund
is much smaller than those in checking accounts.
o Change Fund -- used to make change in sales-type operations. The amount of the
advance never changes and purchases are not permitted.

B. Establishment
A memorandum from the department head, director, or business manager is sent to the
Comptroller requesting authorization to establish a revolving or change fund. This
memo should include a justification as to why the fund is needed, the name of the fund
custodian (the individual who will be responsible for the fund and the statements of
condition associated with the fund), and the requested dollar amount.

For cash and change funds : A completed Invoice Voucher should be submitted with the
memorandum requesting the revolving fund. Both the memorandum and the invoice
voucher should be addressed to the Comptroller, but sent to the Banking and
Investments Assistant in Accounting Services. The initial advance should be recorded
on a fund on the General Ledger using GL Account 101450 “Change & Revolving
Fund”. If you are unsure of which General Ledger Fund to use, please contact your
Business Manager. The invoice voucher should be made payable to the name of the
revolving fund and in care of the fund custodian. When the revolving fund is approved,
the voucher will be processed to provide the money to create the fund. A check will be
written in the name of the revolving fund and a Revolving Fund Receipt, will be sent to
the fund custodian with the check.
Upon receiving the University check, the revolving fund custodian must sign a Revolving
Fund Receipt and return it to the Banking and Investment Assistant. (All references to
the Banking and Investment Assistant refer to the Banking and Investment Assistant
position in Accounting Services in KPTC). This receipt will be kept in Accounting
Services. Any time the custodian or the balance of the revolving fund changes, a new
Revolving Fund Receipt will be issued.

For checking accounts: A complete Invoice Voucher should be submitted with the
memorandum requesting the fund. The memorandum, together with the Invoice
Voucher, should be addressed to the Comptroller, but sent to the Banking and
Investments Assistant. The initial advance should be recorded on a fund on the General
Ledger using GL Account 101450 “Change & Revolving Fund”. If you are unsure of
which General Ledger Fund to use, please contact your Business Manager. The Invoice
Voucher should be made payable to the revolving fund and in care of the revolving fund
custodian. When the revolving fund is approved, the Office of Treasury Operations will
work with the custodian to establish the new checking account and transfer funds into
the account.

C. Increases and Decreases

Requests for increases or decreases to the revolving fund must be made in writing. The
memo should be addressed to the Comptroller, but sent to the Banking and Investments
Assistant in Accounting Services. The request should provide an explanation for the
increase or decrease.

If an increase is requested for a cash or change fund, attach a completed invoice

voucher, made payable to the name of the fund, in care of fund custodian, and
indicating the amount of the increase. Once approved, a Revolving Fund Receipt
reflecting the new balance will be sent to the revolving fund custodian. The receipt must
be signed and returned to the Banking and Investments Assistant in Accounting
Services.
If an increase is requested for a checking account, attach a completed Invoice Voucher
made payable to the revolving fund name, in care of the fund custodian, and indicating
the amount of the increase. Once approved, funds will be transferred into the existing
checking account.
As a general rule, the revolving fund balance should accommodate a month's worth of
expenditures. If reimbursements are only requested every 45 days or more, this should
be an indication that there is more money available in the revolving fund than
necessary. If the revolving fund balance is to be decreased, a Cash Receipts Voucher
should be prepared to return a portion of the funds to the University. A new Revolving
Fund Receipt reflecting the adjusted balance will be sent to the fund custodian. The
receipt must be signed and returned to the Banking and Investments Assistant.

D. Creation of a Checking Account

Any checking account used for University business must be established with the
authorization of the Trustees of Purdue University. The responsibilities for
establishment, operation, and control of University bank accounts have been delegated
to the Vice President for Business Services & Assistant Treasurer, the Director of the
Office of Treasury Operations, and the Comptroller. If a checking account is to be
established, the Director of the Office of Treasury Operations will issue a copy of the
Bank Account Procedures to the Custodian and will work with the Custodian to establish
the account.
Once a University checking account has been established, all activity on such funds
must be handled by check and no funds, other than University funds, should be placed
in the account. There should be no cash deposits or withdrawals by the fund custodian.
The only deposits to such accounts should be the reimbursement of expenses made by
Purdue via ACH from Purdue University.
Monthly, custodians of checking accounts must prepare a Statement of Condition (see
example in Revolving Funds section below). The revolving fund must be reconciled on a
monthly basis, in conjunction with the receipt of the bank statement, and a copy of the
bank statement must be attached to the submitted Statement of Condition.
Revolving funds should not be used as a check cashing service unless it is specifically
established for that purpose (i.e. Bursar's fund). If the fund custodian permits such
activity, he/she will be held personally responsible for any bad checks cashed by the
fund.

Any exceptions to this policy must be approved by the Comptroller.

E. Handling of Interest / Bank Charges

Every effort should be made to secure checking accounts free of service charges.
Often, banks will approve accounts free of such charges for tax-exempt organizations.

There are a number of banks that now provide interest on checking accounts. This
interest should be recorded on a request for reimbursement by listing the interest
amount as a credit on the invoice voucher using GL Account 467010. This credit will
reduce the amount of the reimbursement, thus maintaining the revolving fund balance in
the bank at the amount of the original advance. Service charges, check charges, etc.,
should be recorded as a debit on the invoice voucher using GL Account 543025.
Charges of this nature should be avoided for all banks that now provide interest on
checking accounts. This interest should be recorded on a request for reimbursement by
listing the interest amount as a credit on the invoice voucher using GL Account 467010.
This credit will reduce the amount of the reimbursement, thus maintaining the revolving
fund balance in the bank at the amount of the original advance. Service charges, check
charges, etc., should be recorded as a debit on the invoice voucher using GL Account
543025. Charges of this nature should be avoided if at all possible.

F. Expenditures
Each revolving fund is established for a specific purpose as defined in the memorandum
requesting the fund. Thus, the fund is restricted to expenditures listed on the original
letter of approval. Personal advances, travel advances, and payments for items that can
be readily procured though other purchasing options are not authorized.

The following guidelines should also be considered before making a purchase:

o The amount of each check should not exceed $50.00. Exceptions to this amount are to
be approved at the time the revolving fund is established.
o Cash purchases should not be made to evade established purchasing procedures.
o Items that are carried in University Stores should not be purchased with this fund.
o Funds may not be used for reimbursing an individual for stolen or damaged personal
items.
o "Bad Checks" should not be reimbursed though a revolving fund. An Invoice Voucher
should be prepared to cover overdraft charges from a departmental account. Overdrafts
of the account should be reported immediately to the Office of Treasury Operations and the
Assistant Comptroller – Accounting Services. Inadequate management of the account may
lead to closure of the checking account. Joint recommendation for action on the account
will be made to the Comptroller.
o Travel advances or reimbursement of travel expenses should not be made through the
revolving fund unless specifically identified as an approved expenditure item for that
revolving fund.
o Advance registration fees may not be paid through the revolving fund.

G. Reimbursement of Expenditures
Revolving Funds (Checking Accounts and Cash Funds) are established to make a
number of small authorized disbursements. These funds may be established with the
intent of maintaining a balance or they may be established with the expectation that the
balance will be reduced by the authorized transactions.

o If the balance is expected to be maintained:

 The custodian of the fund will periodically submit a completed Invoice Voucher to the
Banking and Investments Assistant in Accounting Services. Original signed and dated
receipts, supporting the fund expenditures, should be attached to the invoice voucher
[NOTE: Reimbursement of revolving fund expenditures should be made electronically
(ACH or wire transfer); deviation from this must be authorized by the Comptroller.]
o If the balance is expected to reduce with authorized purchases:
 A Journal Voucher is submitted to the Banking and Investments Assistant.

H. Statement of Condition
The Statement of Condition is a reconciliation of the balance in the revolving or change
fund to the approved amount as recorded in the General Ledger Fund.

REVOLVING FUNDS:
Monthly, the revolving fund custodians must complete, sign, and forward a Statement of
Condition (or a reasonable facsimile) to the Banking and Investments Assistant by the
20th of the month following the month end for which the statement is being prepared.
(i.e. January 31st report is due by February 20th) Each report must include the
Revolving Fund Number for identification purposes, the Custodian's name, the month
it's for, the preparer's signature, and a copy of the bank statement. No reimbursements
or increases will be made if a current Statement of Condition is not on file.
The Statement of Condition should identify the acknowledged revolving fund balance,
cash on hand, reimbursement request(s) in process, and receipts not yet processed. A
list of all checks aged over 60 days should be attached to the Statement of Condition or
included on the statement itself. If any outstanding checks are aged over two years,
contact Accounting Services. Statement of Condition
If the custodian is unable to sign the statement of condition, it should be delegated in
writing to someone else. The written delegation form should be on file with the Banking
and Investments Assistant in Accounting Service. Only those who have been delegated
by the fund custodian have authorization to sign in his/her absence.

CHANGE FUNDS:
        Quarterly, the revolving fund custodians must complete, sign, and forward a
Change Fund Balance of Record Statement, indicating the “amount of record” for the
change fund , to the Banking and Investments Assistant by the 20th of the month
following the month end for which the statement is being prepared. (i.e. January 31st
report is due by February 20th).  The custodian must verify the amount, sign the
statement, and return it to the Banking and Investments Assistant.  Complete all items
in red.  Change Fund Verification Form
 If the custodian is unable to sign the Change Fund Balance of Record Statement, it
should be delegated in writing to someone else. The written delegation form should be
on file with the Banking and Investments Assistant in Accounting Service. Only those
who have been delegated by the fund custodian have authorization to sign in his/her
absence.  Complete all items in red. Change Fund Signature Delegation Form  Revolving
fund signature delegation form
 Change fund custodian signature form
 Revolving fund custodian signature form

I. Loss of Funds
If money from a revolving fund or change fund is lost or stolen, the University Police and
Internal Audit should be notified immediately. An Invoice Voucher must be processed to
replenish the fund to the amount of the original advance. The charge will be against a
departmental fund and cost center using expense GL Account.

J. Audits
The revolving fund custodian is responsible for maintaining the fund in a business-like
manner so that it may be audited at any time by Internal Audit or by the field examiners
of the Indiana State Board of Accounts. Bank statements, canceled and voided checks,
check books, and other pertinent information should be retained until audited and
authorized to be destroyed as outlined in the record retention policy.

K. Closing Revolving Funds and Change Funds

The custodian is responsible for accounting for any advanced funds. The Banking and
Investments Assistant may be contacted to obtain an expected balance of the revolving
fund. When a revolving fund or a change fund is no longer needed the custodian should
prepare a final Statement of Condition and complete the following procedures.

CASH FUNDS
Prepare a Journal Voucher to record any expenses not yet reimbursed and attach
original receipts. Credit GL Account 101450 on the appropriate General Ledger Fund
and debit the appropriate expense fund and cost center. The Journal Voucher should be
routed to the Banking and Investments Assistant in Accounting Services. Any remaining
cash should be deposited on a Cash Receipts Voucher using GL Account 101450 on
the appropriate General Ledger Fund.

CHECKING ACCOUNTS
If you wish to close a bank account for a revolving fund, contact the Office Treasury
Operations. They will instruct you on the proper procedures to close an existing bank
account that has been created in the name of the University.