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State Accounting and Budgetary Procedures 

Title 19 | Chapter 4 | Subchapter 8

SUBCHAPTER 8 - EXPENDITURE OF CASH FUNDS

19-4-801. Definitions.

As used in this subchapter:
(1) "Cash funds" means all moneys, negotiable instruments, certificates of indebtedness, stocks, and bonds held by or owned by any state agency which are not on deposit with or in the trust of the Treasurer of State; and
(2)(A) "State agency" means all boards, commissions, departments, agencies, institutions, offices or officers, state-supported institutions of higher learning, and any other office or unit of government of the State of Arkansas created or established pursuant to law or pursuant to any action of the Governor, functioning under appropriation made by the General Assembly or functioning as a representative of the state without appropriation of the General Assembly.

(B) "State agency" shall not include the:

(i) Governor;
(ii) Secretary of State;
(iii) Attorney General;
(iv) Treasurer of State;
(v) Auditor of State;
(vi) Commissioner of State Lands;
(vii) Supreme Court and its justices;
(viii)Circuit courts and circuit judges;
(ix) Prosecuting attorneys;
(x)Arkansas State Game and Fish Commission;
(xi)Arkansas State Highway and Transportation Department;
(xii) (a) Arkansas Lottery Commission.
       (b) However, the Arkansas Lottery Commission shall be considered a state agency for the
       purposes of §§ 19-4-810 – 19-4-816;
(xiii) General Assembly, and
(xiii)Respective staffs of the officers and agencies listed in this subdivision (2)(B).

History. Acts 1975, No. 5, §§ 1, 2; A.S.A. 1947, §§ 13-356, 13-357;Acts 2005, No. 1962 §79; 2009, No. 605, 16; 2009, No. 606, 16; Acts 2009, No. 1405, 25.

19-4-802. Authorization of General Assembly.

(a) Cash funds of the various state agencies as defined in § 19-4-801 shall be budgeted and proposed expenditures approved by enactments of the General Assembly.
(b) The General Assembly shall budget, approve, and appropriate expenditures of cash funds by the enactment of separate appropriation bills setting forth the purpose for which the moneys are to be expended and the dollar amount to be expended for such purpose.
(c) State agencies as defined in § 19-4-801 shall be required to submit such budgetary information as may be requested by the Legislative Council and shall undertake whatever budgetary procedures the Legislative Council may establish for the appropriation of cash funds.
(d) State agencies as defined in § 19-4-801 shall be required to post all financial transactions of cash funds in the state’s financial management system in accordance with procedures established by the Chief Fiscal Officer of the State.
History. Acts 1975, No. 5, § 4; A.S.A. 1947, § 13-359; 2001, No. 1453, § 17.

19-4-3. Exemptions.

(a) The following are exempt from this subchapter:
(1) Funds required by the terms of a bond indenture to be held by paying agents for the payment of interest and principal on such bonds;
(2) Petty cash funds held by the various state agencies;
(3) Memorials, endowments, bequests, gifts, and donations made to any state agency other than for normal operation of the agency;
(4) Canteen funds of state agencies other than institutions of higher learning, wherein the profits earned are used for the benefit of the people served by that agency through the purchase of services or goods other than normal salary or maintenance expenses of the agency;
(5) The Benefit Fund of the Arkansas Department of Workforce Services;
(6) The Bond Guaranty Reserve Account of the Arkansas Economic DevelopmentCouncil;
(7) The Illegal Drug Purchase Account and the Confidential Accounts of the Department of Arkansas State Police;
(8) Patient funds, where the institution is acting in a trust capacity or the funds are utilized for patient activities other than normal agency-provided services;
(09) The State Treasury Money Management Trust Fund; and
(10) Any other funds determined by the Chief Fiscal Officer of the State or the General Assembly, to be held in trust, and on deposit in a financial institution other than the State Treasury. (b)(1) Any moneys received from any millage levied by a community college district pursuant to an election under Acts 1965, No. 560 [repealed] or Acts 1973, No. 103 [repealed], or any acts amendatory to these acts, shall not be subject to § 19-4-802 or any of the provisions of this subchapter which require funds to be appropriated by the General Assembly.
(2) The board of any community college may use the funds received from the millage levied for the purposes stated on the ballot at the time of the election authorizing the millage, i.e., construction, purchasing equipment, or where so provided on the ballot, for operation of the college, and the funds shall be subject to all such other provisions of this subchapter as are not inconsistent with this subsection.
(c) The Department of Correction Plasma Center is exempt from provisions of this subchapter.
(d) The State Comprehensive Health Insurance Pool, created under § 23-79-501 et seq., and its board of directors, and the Arkansas Property and Casualty Guaranty Fund and its advisory association, referenced under § 23-90-101 et seq., and the Arkansas Life and Disability Insurance Guaranty Association and its board of directors, referenced under § 23-96-101 et seq., are hereby exempt from the provisions of this subchapter.
(e) The Tobacco Settlement Cash Holding Fund administered by the State Board of Finance shall be exempt from provisions of this subchapter.
History. Acts 1975, No. 5, § 7; 1975, No. 265, § 1; 1977, No. 713, § 14; A.S.A. 1947, §§ 13-356.1, 13-362; Acts 1997, No. 540, § 39; 1997, No. 1000, § 17; 1997, No. 1179, § 3; Init. Meas. 2000, No. 1, § 19; Acts 2009, No. 251, 10.

19-4-804. [Repealed.]

19-4-805. Investment of fund balances.

(a) The state-supported institutions of higher learning shall have the right to determine the depositories and the nature of investments of any of their cash funds which are not currently needed for operating purposes. In making these determinations, these institutions shall seek to obtain the highest possible rate of return for their investments. (b) All cash fund agencies other than the state-supported institutions of higher learning shall request and abide by the recommendations of the State Board of Finance as to the best investment decisions for any idle cash balances.
History. Acts 1975, No. 5, §§ 8, 9; A.S.A. 1947, §§ 13-363, 13-364.

R1-19-4-805 Management of Cash Funds

Agency Bank Reconciliations

Arkansas Code 19-6-103 states that "All taxes, licenses, fees, permits, or other income collected by any board, agency, or commission by virtue of the authority of the State of Arkansas which are designated by law to be deposited in a depository other than the State Treasury are classified as "Cash Funds" and are declared to be revenues of the State to be used as required and to be expended only for such purposes and in such manner as determined by law." Arkansas Code 19-4-801(2) defines Cash Funds "as all moneys, negotiable instruments, certificates of indebtedness, stocks and bonds held by or owned by any State Agency which are not on deposit with or in the trust of the State Treasurer."

Cash expenditures must have legislative authorization (appropriation) and are subject to Accounting, Procurement, State Printing and Arkansas State Building Services regulations unless exempt under Arkansas Code 19-4-803, as amended.

All agencies, other than institutions of higher learning, shall request and abide by the recommendations of the State Board of Finance as to the best investment decisions of any idle cash balances. The institutions of higher learning shall have the right to determine the depositories and the nature of investments of any of their Cash Funds which are not currently needed for operating purposes.

All cash activity must be recorded in AASIS using the proper transactions. This includes interest earned on investments. Various sections of the Financial Management Guide contain instructions for most types of transactions that occur in a Cash Fund and should be reviewed for the correct accounting procedure for those transactions.

The AASIS balance at month end must be reconciled to either the check register or the bank statement depending upon whether the agency is a user agency (an agency with direct access to AASIS) or Department of Finance and Administration- Office of Accounting-Service Bureau (DFA-OA-SB) agency (an agency who uses DFA-OA-SB to record transactions in AASIS-they do not have direct access). The following procedures must be followed when reconciling the AASIS balance at month end:

User Agencies

There are two different business processes that determine the method to be used for month-end reconciliations performed by user agencies: those with commercial bank accounts that are held and managed at the agency location and those with local accounts held and managed at local offices at multiple locations.

User Agency (Accounts Held at Agency Location)

If an agency has a commercial bank account(s) that is held at the agency location, transactions must be entered in AASIS on a "real time" basis. This means that transactions should be recorded on a daily basis. At any time, a trial balance pulled from AASIS should equal the balance held at the commercial bank account plus or minus any reconciling items (i.e. outstanding checks, deposits in transit, interest, etc.).

These accounts must be reconciled to the commercial bank account statement on a monthly basis using the "Cash in Bank Reconciliation" Form, P1-19-4-805. Instructions for the use of this form are provided with the form.

PLEASE NOTE: A journal entry to correct any reconciling item, caused solely by a difference in when the transaction is recorded in two different periods by the perspective parties, must be made in the month following the event that caused the reconciling item to be created.

After the reconciliation is completed, the agency must submit a copy of the first page of the bank statement and the "Cash in Bank Reconciliation" Form to DFA-OA-Fund Reconciliation. These shall be received by DFA-OA-Fund Reconciliation by the 15th of each month.

User Agency (Accounts Held at Local Offices at Multiple Locations)

If an agency has commercial bank accounts held at local offices at multiple locations, with approval from the DFA-OA-Fund Reconciliation, the agency can make an entry at month end for the total of transactions that occurred during that month. These entries must be made in the month that the transaction(s) occurred.

These accounts must be reconciled to the commercial bank account statement on a monthly basis using the "Cash in Bank Reconciliation" Form. Instructions for the use of this form are provided with the form.

PLEASE NOTE: A journal entry to correct any reconciling item, caused solely by a difference in when the transaction is recorded in two different periods by the perspective parties, must be made in the month following the event that caused the reconciling item to be created.

After the reconciliation is completed, the agency must submit a copy of the first page of the bank statement and the "Cash in Bank Reconciliation" Form to DFA-OA-Fund Reconciliation. These shall be received by DFA-OA-Fund Reconciliation by the 15th day after the cutoff date of the statement period.

DFA-OA-SB Agencies

If an agency uses DFA-OA-SB to record transactions in AASIS, the agency must send in transactions on a "real time" basis to be entered. This includes both incoming and outgoing cash transactions for both appropriated and non-appropriated accounts.

The agency must reconcile its check register to the commercial bank account statement at month end and submit a copy of the reconciliation and the commercial bank account statement to DFA-OA-SB by the 15th of the following month. DFA-OA-SB will reconcile the agency’s account balance with AASIS utilizing the reconciliation.

PLEASE NOTE: A journal entry to correct any reconciling item, caused solely by a difference in when the transaction is recorded in two different periods by the perspective parties, must be made in the month following the event that caused the reconciling item to be created. ALSO NOTE: This section shall not apply to institutions of higher education which maintain full accounting records separate and apart from AASIS. Receipts and disbursements of such agencies shall be submitted in summarized form for general review and reference.

R2-19-4-805 Agency Investment(s)

If an agency has investments, interest earned or any other transactions occurring must be recorded in AASIS on a monthly basis. When a monthly statement is received, the statement must be submitted to DFA-OA-Fund Reconciliation by the 15th of each month. If the investment statements are received quarterly, semi-annually or annually, those statements must also be submitted by the 15th of the following month.

The agency must reconcile the investment statement balance to AASIS balance to verify that all transactions have been recorded. If the agency determines that there are reconciling items, a "Cash in Bank Reconciliation" Form must be completed and submitted with copies of the investment statements to DFA-OA-Fund Reconciliation.

PLEASE NOTE: This section shall not apply to institutions of higher education which maintain full accounting records separate and apart from AASIS.

R3-19-4-805 Deposit Accounts

Cash funds to be deposited are to be placed with an eligible bank or banking institution within the borders of the State of Arkansas as outlined in the State Board of Finance Rule on Management of Cash Funds. Common deposit accounts include:

a. Demand Deposit Accounts: These are non-interest bearing checking accounts. Depositors are not required to give notice prior to withdrawal.
b. Savings Accounts: These are interest bearing accounts that place restrictions on the number of withdrawals allowed each month. Checks cannot be written on these accounts. Notice may be required before making a withdrawal. A fee may be imposed for excessive withdrawals.
c. NOW (Negotiable Order of Withdrawal) Accounts: These are checking accounts in which the institution can impose a waiting period of at least seven (7) days before releasing. The account may bear interest but at a low rate.
d. Money Market Deposit Account: These are savings account that allows the owner to make a limited number of transactions each month.
e. Certificates of Deposits: This is a savings instrument that pays interest for a specific period of time at either a set or variable interest rate. It is redeemable upon maturity. A fee may be imposed for early withdrawal.

R4-19-4-805 Collateralization of Cash Funds

Cash fund deposits plus accrued interest less any amounts insured by Federal Deposit Insurance Corporation (FDIC) coverage requires collateralization. Collateralization is the process of pledging securities to the depositing agency by the financial institution receiving the deposit with the pledged securities held by a third party custodian. Collateralizing deposits protects public funds in the event of default by the financial institution. It is the responsibility of the agency to abide by the collateralization policy stated in the State Board of Finance Rule on Management of Cash Funds.

The following discussion on FDIC coverage is based on current Federal law and regulations. Agencies should keep informed of any changes to FDIC coverage.

The standard FDIC insurance amount is $250,000 for all interest-bearing accounts and $250,000 for all non-interest bearing accounts per government depositor.

The Dodd-Frank Deposit Insurance Provision became effective December 31, 2010. Under this provision, non-interest-bearing transaction accounts have unlimited deposit insurance coverage until December 31, 2012. Covered accounts include demand deposit (checking) accounts and any unlimited withdrawal accounts that cannot earn interest. After December 31, 2012, all accounts will be under standard FDIC coverage. The following website provides more information on this program: http://www.fdic.gov/deposit/deposits/unlimited/faq.pdf

For purposes of determining the amount due a government depositor, the FDIC aggregates the amount of all interest-bearing deposits and separately aggregates the amounts of all non-interest bearing in the insured depository institution which are maintained by a government depositor except for certain trust funds. Agencies with trust funds should consult current FDIC regulations for coverage. (12 U.S.C. 1821 (a)(1))

A government depositor is defined as an officer, employee, or agent of a state having official custody of public funds and lawfully investing or depositing the same in time and savings deposits of the insured depository institution. (12 U.S.C. 1821 (a)(2))

The FDIC uses a three-prong test to determine if a government depositor would be considered separate for purposes of determining insurance coverage:

      1. The department is expressly authorized by state statute;
      2. Some functions of government are delegated to it by state statute, and;
      3. Funds have been allocated to it by state statute for its exclusive use and control.

The FDIC will classify an agency on a case-by-case basis after consideration of relevant facts. An agency may ask for an advisory opinion from the FDIC for a determination of its classification. (12 CFR §330.15)

The following procedures are to be followed when collateralizing deposits:

    1. The depositing agency shall follow the State Board of Finance Rule on Management of Cash Funds.
    2. Securities eligible to be pledged as collateral are prescribed in State Board of Finance Rule on Management of Cash Funds. The monetary amount of the pledged security is to be based on its current market value. The State Board of Finance Rule on Management of Cash funds specifies the minimum level of pledged collateral. The minimum level is expressed as a percentage of the deposits in excess of FDIC coverage. Agencies must ensure that the amount of collateral pledged is equal to or greater than the minimum required level. Agencies can require a financial institution to pledge collateral at higher levels.
    3. The agency shall perfect its interest in the collateral. The FDIC will look to applicable State law in determining if an agency has a perfected security interest in pledged collateral. In determining what collateral is pledged to deposits, the FDIC will refer to the records of the financial institution. The agency shall ascertain that the financial institution has sufficiently identified specific assets pledged to specific deposit and that the identification is in writing. (FDIC Advisory Opinion 91-17)

      The Uniform Commercial Code, codified in Title 4 of the Arkansas Code Annotated, provides guidance on perfection of security interest. However, the law of other jurisdictions may apply depending on several factors including the collateral pledged, location of the custodian, and location of the pledging financial institution.
    4. The agency shall obtain a letter from the financial institution designating officers authorized to 
      conduct business with the agency.
    5. The agency shall furnish the financial institution a list of agency employees authorized to conduct business with the financial institution.
    6. The agency shall execute a Custodial Services Agreement with a Custodian for safekeeping of pledged securities. If the agency uses the agreement form approved by the State Board of Finance, it shall be considered to have complied with this requirement.
    7. The Custodial Services Agreement shall be in writing and filed by the agency. The agency shall make the agreement available to auditors upon request.
    8. The Custodial Services Agreement shall be reviewed and reauthorized, if necessary, no less than every two years.
    9. A new Custodial Services Agreement shall be executed if a change occurs in the ownership, affiliation, or name of the custodian or the pledging financial institution.

The following procedures are to be followed for management of pledged collateral:

  1. The depositing agency shall maintain a perpetual inventory of pledged assets. The inventory record shall contain the following information:

    a. Pledging bank;
    b.Date pledged;
    c.Date released;
    d.CUSIP number;
    e.Description;
    f.Interest rate, if applicable;
    g.Par value;
    h.Maturity date;
    i.Current market value as of the last business day of the previous month.
  2. The agency shall update the pledged asset inventory immediately upon notification that collateral has been pledged, released, or substituted.
  3. The agency shall reconcile the inventory of pledged assets to the financial institution’s report.
  4. The agency shall review and verify the current market value when collateral is pledged and during each monthly reconciliation. Sources of market values are:

a. Quotations published in the Wall Street Journal;
b.Closing price on any national security exchange, if listed:

      1. New Your Stock Exchange
      2. American Stock Exchange
      3. Chicago Board of Trade

c.Dealer bid price quoted by a recognized dealer;
d.Price quoted by a recognized pricing service

      1. Prudential American Securities Financial Information Center
      2. Standard & Poor’s Financial Services
      3. Interactive Data Corporation
      4. Street Software Bond Pricing (www.sstbond.com/sst.aspx)

e.MunicipalBonds.com (operated by Standard & Poor’s Financial Services)

19-4-806. Petty cash accounts.

(a) State agencies operating under the provisions of this subchapter are authorized to establish petty cash accounts. These accounts must be approved by the Chief Fiscal Officer of the State and only minor expenditures or emergency purchases shall be made therefrom.
(b) State-supported institutions of higher learning and other agencies that can demonstrate the need for large petty cash accounts during brief periods of time, such as student registration periods, are authorized short-term petty cash accounts.
History. Acts 1975, No. 5, § 10; A.S.A. 1947, § 13-365; Acts 2003, No. 656, § 1.

R1-19-4-806 Imprest Fund Accounts

Authority

"Imprest" fund accounts may be established and maintained by State government agencies, boards, commissions and institutions. Authority to establish such accounts is authorized in ACA 19-4-806, ACA 19-4-1802 and 19-4-904 (d). Record keeping and documentation requirements of such accounts are prescribed by ACA 19-4-1108 and ACA 19-4-815.

The authority to establish imprest accounts is vested in the Chief Fiscal Officer of the State. All requests to establish, increase or decrease the authorization of such accounts must be submitted on an "Imprest Fund Request" Form, P1-19-4-806 and submitted to DFA for review and approval prior to opening any new commercial bank account.

Imprest fund accounts authorized for agencies, boards, commissions and institutions include:

A. Petty Cash Fund
B. Change Fund
C. Activities Revolving Fund
D. Travel Advance Revolving Fund

Under no circumstances may imprest accounts be used to circumvent purchasing regulations or make payroll advances.

All cash and cash equivalents must be recorded on AASIS or the agency’s original book of record.

If an agency has an internal audit function, each imprest fund account shall be included in the annual internal audit plan risk based analysis to determine the timing and extent to which the accounts shall be auditied. . If the agency does not have an internal audit function, then each imprest fund account must be reviewed by management personnel on an annual basis. The review must include, at a minimum, tying the reconciliation balance to the amount reflected on the AASIS trial balance or the agency’s original books of record and verifying that reconciling items are cleared within a two month period.

A. Petty Cash Fund

Purpose

As authorized by ACA 19-4-806, a petty cash account is a small account that may be utilized to pay for minor expenses such as postage due, freight, etc. It should generally be used to pay for:

1. Items requiring prompt payment;
2. Items on which the cost of using the regular disbursing channels would offset any savings that could be realized by immediate purchase and payment.

As authorized by ACA 19-4-1802, a petty cash imprest fund can be approved by the Chief Fiscal Officer of the State and is subject to limitations with respect to the amount and use of the funds. Petty cash imprest funds shall not be used to circumvent purchasing regulations nor used for the purpose of reimbursing individuals for travel expenses. Examples would include cash operating funds at non-local offices (i.e. DHS, Dept. of Health and ASP Troop Accounts).

Establishment

If a Treasury Fund is used to establish a Petty Cash Fund, a warrant must be issued. When recording the warrant, expense code 5120010000 should be used. A journal entry must be made to reclassify this warrant from expense using a Non-Budget Relevant (NBR) general ledger account to the petty cash or imprest bank funds general ledger account. The journal entry would be as follows:

For petty cash held at agency
Debit 1010103000 Petty Cash
Credit 5080029000 NBR Other Expenses and Services

For petty cash held at a financial institution
Debit 1100002100 Imprest Bank Funds
Credit 5080029000 NBR Other Expenses and Services

If a commercial bank account is used to establish a Petty Cash Fund, the following entry will be made:

For petty cash held at agency
Debit 1010103000 Petty Cash
Credit 1100002000 Non-AASIS House Bank or the agencies AASIS House Bank

For petty cash held at a financial institution
Debit 1100002100 Imprest Bank Funds
Credit 1100002000 Non-AASIS House Bank or the agency’s AASIS House Bank

Agencies that use AASIS to process checks and warrants will need an agency vendor number set up by the Department of Finance and Administration-Office of State Procurement (DFA-OSP). The title should include the agency name, agency employee "Custodian" and "Petty Cash." More detailed instructions are located following the section on Travel Advance Revolving Fund.

If the petty cash funds are held at the agency, the general ledger account is 1010103000. If they are held at a financial institution, the general ledger account is 1100002100. In either case, the general ledger account should remain at the set amount unless the amount of the petty cash fund is changed. In the event that the established amount needs to be increased, petty cash should be debited and cash in bank credited if a commercial bank account is funding the petty cash increase.

Control

In order to properly control a petty cash system certain restrictions and regulations must be established and maintained. The minimum requirements include:

One person (Custodian) is to be responsible for the fund. This person must be appointed by the agency head or designee.

One person other than the Custodian shall authorize disbursements.

Petty cash vouchers shall be numbered with the prefix representing the fiscal year (such as FY03), a hyphen, and number beginning with 1 (one) each year and progressing upward, sequentially, until the end of the fiscal year.

The Custodian and the person, who authorizes the disbursement, must not have access to bank accounts, cash receipts and/or general accounting records.

Petty cash funds shall not be used to cash personal checks, make personal loans, or reimburse individuals for travel expenses.

Petty cash vouchers shall be reconciled monthly and internally audited.

Accounting for and Replenishing

Prior to making petty cash disbursement, a petty cash voucher must be completed and signed by the person responsible for authorizing the disbursement. The petty cash voucher used must contain, at a minimum, the following information:

  • Petty cash voucher number
  • Date
  • Name of the person receiving the cash (expended by)
  • Business area number
  • Amount of the disbursement
  • A description of the disbursement (purpose or product)
  • The cost center code to be charged
  • The general ledger codes to be charged
  • The initials of the person approving the disbursement
  • The initials of the person receiving the cash
  • The signature of the person disbursing the funds.

A receipt, sales slip or other evidence of indebtedness must support all petty cash vouchers. See Appendix P2-19-4-806 to view a sample of an acceptable petty cash voucher. In the case of recurring items such as postage due, a summary sheet, P3-19-4-806, may be used in lieu of a petty cash voucher.

The petty cash voucher must be entered in an Imprest Account Journal, and the original copy shall be retained as documentation to replenish the fund. See Appendix P2-19-4-806 to view a sample petty cash journal. The petty cash replenishment postings are always made for the amount of actual expenditure from the fund, with the agency name, agency employee "Custodian" and "Petty Cash" as payee on the warrant or check. Petty cash accounts will be replenished as needed and at the end of each fiscal year so that expenses for one year will not carry over to the following year.

At all times petty cash accounts must have a total of cash and/or expenditure receipts equal to the amount reflected at the trial balance level. Issues from and reimbursements to the fund will be subject to audit or inspection by the Department of Finance and Administration and the Division of Legislative Audit at any time.

Moneys and transaction documents of petty cash accounts should in no way be combined with change fund accounts or cash receipts.

B. Change Fund

Purpose

An agency/institution that receives cash for sales or services will find it necessary to have a "Change Fund" account.

Establishment

If a Treasury Fund is used to establish a Change Fund, a warrant must be issued. When recording the warrant, expense code 5120010000 should be used. A journal entry must be made to reclassify this warrant from expense using a Non-Budget Relevant (NBR) general ledger account to the change fund general ledger account. The journal entry would be as follows:

For change fund established by Treasury Fund
Debit 1010102000 Change Funds
Credit 5080029000 NBR Other Expenses and Services

If a commercial bank account is used to establish a Change Fund, the following entry will be made:

For change fund established by commercial bank
Debit 1010102000 Change Funds
Credit 1100002000 Non-AASIS House Bank or the agency’s AASIS House Bank

Control

The Change Fund should be small and must be maintained completely separate from any Petty Cash Fund accounts or cash receipts kept by the agency.

Good accounting practices require that the amount of the Change Fund is verified daily, and all overages and shortages are shown in the Imprest Account Journal.

Accounting for and Replenishing

No expenditures are to be made from the Change Fund.

On June 1, 20XX, the agency must reimburse any shortages by charging the appropriate expense.

C. Activities Revolving Fund

Purpose

Some state agencies and institutions of higher learning have a need for an Activities Revolving Fund to cover the costs of travel expenses to out-of-town games, contests and events, including emergency purchases away from the immediate locale of the institution.

The costs of lodging and commercial transportation should be "direct billed" when possible using the Arkansas Agency Travel Card. Limitations on advances are governed by

R1-19-4-1008 "Travel Advance Revolving Funds". For those expenses not direct billed, an "Activities Revolving Fund" may be established and used to purchase goods or services such as:

  • Commercial or chartered transportation for official staff and team/group members to and from out-of-town events/contests in which the school is participating;
  • Meals and lodging for official staff and student participants while attending out-of-town events;
  • Emergency medical services for official staff and participants injured in the course of school related activities;
  • Emergency equipment repair or replacement costs;
  • Out-of-town official recruitment expenses;
  • Any goods or services which place human life or State property in jeopardy unless purchased immediately;
  • Payments to students or others working in concession stands and selling tickets to events and to or on behalf of students and/or student athletes for meal allowances when they are required to be on campus during official institutional student holidays in accordance with institutional policy and NCAA regulations;
  • Payment to officials and security guards for events;
  • Payments to or on behalf of prospects for official expenses associated with a campus visit including travel, meals and entertainment expenses in accordance with institutional policy and NCAA regulations.

Establishment

Activities Revolving Fund accounts are to be applied for and maintained as cash funds on deposit with a financial institution with disbursements made in the form of a check, warrant or electronic deposit rather than cash (currency). The "Imprest Fund Request" Form must be used to request the establishment of an Activities Revolving Fund. The amount authorized for each Activities Revolving Fund will be determined by the particular needs of the agency/institution. The initial funds to establish the revolving fund are provided by the benefiting agency/department and must be charged to Commitment Item 02 (Operating Expenses). Another entry is required to reclassify the expense using a NBR general ledger account that will not restore appropriation and record the cash in the imprest fund. The entry is as follows:

Debit 1100002100 – Imprest Bank Funds
Credit 5080029000 – NBR Other Expenses & Services

Control

The administrative head of the agency/institution or his/her designated agent is responsible for approving all advances of funds and all expenditures from the fund established for the activities of each applicable department for student events. The minimum requirements include:

  • One person (Custodian) is to be responsible for the fund.
  • A person other than the Custodian shall authorize disbursements.
  • The Custodian and person authorizing disbursement must not have access to bank accounts, cash receipts and/or general accounting records.
  • Activities Revolving Funds are not to be used to cash personal checks or make personal loans.
  • Revolving fund accounts should be reconciled monthly and internally audited.
  • All issues from and receipts to the fund must be supported by signed documents that shall be retained until audited by the Division of Legislative Audit or an independent accounting firm.

Accounting for and Replenishing

Upon receipt of the warrant or check to establish the fund, the fund Custodian will cause a ledger to be established and maintained which reflects:

  • The initial amount of the fund and date established;
  • Each issue of funds indicating the date issued, issue document number and check number, individual receiving the funds and amount;
  • Each receipt of reimbursement indicating the receipt number, individual making the reimbursement, date of reimbursement or receipt and amount;
  • Balance of cash in bank.

The Custodian responsible for administering the fund must have on hand at all times either cash in bank and/or signed receipts for travel advances outstanding equal to the amount established for the fund. Issues from and reimbursements to the fund will be subject to audit or inspection by the Department of Finance and Administration and the Division of Legislative Audit at any time. The ledger and supporting documentation as specified herein for all entries made thereon must be maintained in proper order for audit purposes.

The persons who received advances will reimburse the Activities Revolving Fund through a deduction from their travel reimbursement (Submitted on Form TR-1).

PLEASE NOTE: Moneys or transaction documents of Activities Revolving Fund should in no way be combined with petty cash accounts, change fund accounts or cash receipts.

D. Travel Advance Revolving Fund

Purpose

A Travel Advance Revolving Fund is established to provide travel funds for employees who have no other means to pay for travel on official business in connection with their jobs. Travel advances are to be issued and repaid in accordance with R1-19-4-1008, "Travel Advance Revolving Funds".

Establishment

Travel Advance Revolving Fund accounts are to be applied for and maintained as cash funds on deposit with a financial institution with disbursements made in the form of a check, warrant or electronic deposit rather than cash (currency). The "Imprest Fund Request" Form is used to request the establishment of a Travel Advance Revolving Fund. The initial funds to establish the revolving fund are provided by the benefiting agency/department and must be charged to Commitment Item 02 (Operating Expenses) and GL # 5120010000 (Imprest Fund Establishment).

A journal entry must be made to reclassify this warrant from expense to the travel advance general ledger account. The journal entry would be as follows:

Debit 1100002100 Imprest Bank Funds
Credit 5080029000 NBR Other Expenses & Services

The general ledger account 1100002100 should remain at the set amount unless the set amount of the Travel Advance Fund changes.

Control

The administrative head of the agency/institution or his/her designated agent is responsible for approving all advances of funds and all expenditures from the fund. The minimum requirements for administering the fund include:

  • One person (Custodian) is to be responsible for the fund.
  • A person other than the Custodian shall authorize disbursements.
  • The Custodian and person authorizing disbursement must not have access to bank accounts, cash receipts and/or general accounting records.
  • Travel Advance Revolving Funds are not to be used to cash personal checks or make personal loans.
  • Revolving fund accounts should be reconciled periodically and internally audited.

Accounting for and Replenishing

Upon receipt of the warrant or check to establish the fund, the fund Custodian will cause a ledger to be established and maintained which reflects:

  • The initial amount of the fund and date established;
  • Each issue of funds indicating the date issued, issue document number and check/warrant number, individual receiving the funds and amount;
  • Each receipt of a warrant/check indicating the warrant/check number, individual for whom the warrant/check was issued, date of warrant/check and amount;
  • Balance of cash in bank.

The Custodian responsible for administering the fund must have on hand at all times either cash in bank and/or signed receipts for travel advances outstanding equal to the amount established for the fund. Issues from and reimbursements to the fund will be subject to audit or inspection by the Department of Finance and Administration and the Division of Legislative Audit at any time. The ledger and supporting documentation as specified herein for all entries made thereon must be maintained in proper order for audit purposes.

Replenishment will be accomplished when the employee to whom funds were advanced repays the travel advance fund by check or money order after their travel reimbursement (submitted on Form TR-1) has been processed.

Moneys or transaction documents of the Travel Advance Revolving Fund should in no way be combined with petty cash accounts, change fund accounts or cash receipts.

A vendor number must be assigned to the custodian of the petty cash accounts. It must be a vendor number created by DFA-Office of State Procurement (DFA-OSP). Questions should be sent to DFA-OSP.

To establish a vendor number, use the following link: http://www.arkansas.gov/dfa/procurement/se_forms/vendor_request_w9_se.pdf

19-4-807 – 19-4-809. [Repealed.]

19-4-810. Voucher examination and approval - Responsibilities of state agency executive administrators.

(a) RESPONSIBILITIES OF STATE AGENCY EXECUTIVE ADMINISTRATOR. It shall be the responsibility of each executive head of a state agency handling cash funds to establish adequate internal administrative procedures and controls to ensure prompt and accurate payment of obligations to be liquidated from such funds in order to promote good public relations and to take advantage of all available discounts.
(b) It shall also be the responsibility of the state agency executive head to establish a system of pre-audit within his agency to ensure that checks and vouchers, before being released by the state agency, are prepared in accordance with all applicable purchasing and fiscal laws on the subject by performing the following functions. He shall determine that:
(1) Services, materials, supplies, and equipment received comply with specifications indicated on purchase documents;
(2) Quantities received, as being indicated on the invoice, agree with those shown on the receiving report; (3) Unit prices agree with those indicated on the purchase documents;
(4) The extensions and footings of the invoice are correct;
(5) The voucher or check is prepared in sufficient time to take advantage of all available discounts being offered;
(6) Sufficient legislative authorization for expenditures and funds is available for payment of the obligation;
(7) The obligation was incurred in conformity with all purchasing and fiscal laws applicable to state agencies operating out of the State Treasury.
History. Acts 1991, No. 21, § 1.

19-4-811, 19-4-812. [Repealed.]

19-4-813. Erroneous or improper payments.

The responsibility for recovery of erroneous or improper payments shall be with the state agency head, the bonded disbursing officer, or his designated bonded assistant; and the Chief Fiscal Officer of the State shall not be liable under his surety bond for any erroneous or improper payments so made.
History. Acts 1991, No. 21, § 1.

19-4-814. Supporting documentation.

Requirements for supporting documentation for disbursements shall be determined as follows:
(1) In connection with purchasing procedures the Chief Fiscal Officer of the State shall prescribe and define the necessary documents and other evidence which shall be retained by the agency for the purpose of determining whether the proper purchasing procedures have been complied with;
(2) In all instances where the evidences of indebtedness are represented by vendor's invoices, the agency shall retain in the permanent file of the business office of the agency the original invoice and corresponding documentation of actual payment in accordance with procedures established by the Chief Fiscal Officer of the State;
(3) In connection with printing contracts, provided for by the Constitution and laws of this state, the supporting documentation shall be those prescribed by the Auditor of State or by the Department of Finance and Administration, as appropriate;
(4) In connection with the laws or regulations governing travel, where individuals are reimbursed for expenses incurred for travel in connection with their official duties, the supporting papers shall be the forms or statements of such expenses prescribed by the Chief Fiscal Officer of the State. In the case of per diem or other expenses established by law, the disbursing officer shall attach to the voucher issued in payment of such allowances a citation of his or her authority for making such payments;
(5) Any indebtedness or expense incurred in connection with an approved resolution of any state board or commission shall be made a part of the permanent minutes of such board or commission, and copies of such resolution or minutes authorizing any indebtedness or expense shall be attached to the voucher issued in payment of any such indebtedness or expense;
(6) In instances where the General Assembly has authorized grants to public schools, public welfare recipients, counties, municipalities, and for other purposes specifically provided for by law, for payments made to individuals under retirement systems, and for income tax refunds, the Chief Fiscal Officer of the State shall prescribe the forms of the vouchers to be used and the procedure to be followed in making such payments.
History. Acts 1991, No. 21, § 1; 2001, No. 1453, § 21.

19-4-815. Original of supporting documentation to be retained by the agency.

(a) The original evidences of indebtedness, including documents prepared in connection with purchasing procedure, and all other original contracts, invoices, statements, receipts, petty cash tickets, bank statements, cancelled checks drawn upon bank accounts, and other original supporting papers shall be retained in the permanent file of the business office of each state agency, or attached to the office copy of the agency's voucher, and such documents shall be kept in a safe place subject to audit and shall not be destroyed until authorization is given for their destruction by the Legislative Auditor.
(b) With the approval of the Legislative Auditor of the state, a state agency may retain evidences to satisfy record retention policies of indebtedness and other contracts, invoices, statements, receipts, petty cash tickets, bank statements, cancelled checks drawn upon bank accounts, and other supporting papers by microform or a form of stored images in a computer system or other form of computer technology in lieu of retaining the originals of such documents.
History. Acts 1991, No. 21, § 1; 1997, No. 541, § 1; 2001, No. 1453, § 22.

19-4-816. Contracts for procurement of commodities and services.

Each state agency which is authorized by law or under the purchasing procedures of this state to enter into contract for the procurement of property, commodities, or services shall keep on file in its respective place of business a copy of such contract for public inspection or audit and shall make a copy of any such contract available to the Chief Fiscal Officer of the State when so required by him or her.
History. Acts 1991, No. 21, § 1; 2001, No. 1453, § 23.

PROFESSIONAL AND CONSULTANT SERVICES CONTRACTS

R1-19-4-816 Contracts for Procurement of Commodities and Services

Act 1315 of 2003 repealed ACA §19-4-1701 - 19-4-1717, et seq. relating to professional and consulting service contracts between the State of Arkansas and all of its agencies, boards, commissions, departments and institutions. The responsibilities for the maintenance of policies and procedures for this area have thus been assigned by State law to the Office of State Procurement. The State Procurement Director is authorized by ACA § 19-11-243 to adopt regulations regarding the competitive bidding process, requests for proposals, approval of professionals, etc. The regulations relative to professional and consultant services contracts can be found on the Office of State Procurement’s web site at: http://www.dfa.arkansas.gov/offices/procurement/Pages/default.aspx