IMPREST BANK ACCOUNTS

Accounting Services Section (ACT)

PROCEDURE 5

Effective Date: 06/01/2003

Last Modified Date:11/21/2005

Procedure Description

An imprest bank account is, essentially, an account at a commercial financial institution. It is often used like a revolving loan. For example, start-up costs for a research study might be paid through an imprest bank account, which would then be reimbursed from Office of Sponsored Research funds. As the study continued, researchers might find it more convenient to both themselves and their subjects to pay the subjects from the imprest account rather than going through University channels.

The following points should be emphasized:

• Any such commercial account must be specifically authorized, in writing, by the Vice Chancellor for Finance and Administration. This procedure describes how to request that authorization.
• The account must be periodically replenished, as the University maintains only limited amounts of funds for such accounts. See "Bank Account Replenishment" below.
• Under no circumstances should imprest funds be used for the payment of personal services, payments to vendors, or loans to employees.

Establishing an Imprest Bank Account

1. The requesting department submits the following documentation to the University Controller:
   • Bank of America signature card,
   • Statement of Justification, and
   • a letter to the Controller from the appropriate supervisor.
   
   Each of these items is described in more detail below.

   Bank of America Signature Card

   All imprest checking accounts are to be established at the Bank of America branch at 137 East Franklin Street. The requesting department should obtain a Business Signature Card from either the bank (Customer Service Desk) or Accounting Services. (An example of the card is shown in ACT Appendix 12, Bank of America Signature Card.)

   The department types the names and titles of authorized signatories in the appropriate blocks in the center section of the signature card and obtains the signature(s) of the authorized signatories. Nothing else on the signature card should be completed by the department.

   Statement of Justification

   The Statement of Justification can be found at ACT Appendix 15. It will open in Word; fill it out electronically, print it, and obtain the required signatures.

   Cover Letter

   The accompanying letter should be from a dean, director, or department head. In the letter describe the purpose for the requested account.

   If a contract or grant will be used to replenish the imprest bank account, include the appropriate information in the cover letter. The Controller will obtain Sponsored Research approval on the Statement of Justification.

2. The Controller approves the request and forwards it to Accounting Services.
3. Accounting Services
   • prepares a check request, payable to the responsible individual or the designee, in an amount equal to two months' operating cash, and submits it to Disbursement Services;
   • establishes a unique account to identify the imprest bank account (e.g., 0-11XXX-1141); and
   • notifies the Vice Chancellor for Finance and Administration that the account has been approved, and sends the signature card to that office.
   • Accounting Services prepares a letter from the Vice Chancellor for Finance and Administration authorizing the establishment of the imprest checking account at Bank of America.
4. The Vice Chancellor reviews the letter to Bank of America authorizing the account and signs the signature card.
5. The Vice Chancellor's authorizing letter and the signature card are returned to the department, as is the check from Disbursement Services.
6. A representative from the department
   • takes the Vice Chancellor's letter, the signature card, and the check from Disbursement Services to Bank of America to open the account;
   • tells the customer service representative at Bank of America that the department wants to open a "full analysis business checking account";
   • directs the bank where to send monthly statements and cancelled checks (do not send them to the Office of Finance and Administration or to the University Controller);
   • after the department receives its supply of checks, notifies the Cash Management Accountant in Accounting Services of the Bank of America account number; and
   • maintains any unused checks in either a locked drawer or a safe with restricted access.

Maintaining an Imprest Bank Account

Replenishing the Account

Use a petty cash reimbursement voucher (PCRV) to request replenishment of the imprest bank account. (Note that "replenishment" does not mean "increase the balance of.") Imprest accounts should be replenished at least once a month. If replenishment is needed more frequently or less often, the balance in the account may not be in keeping with the purpose of the account. (See "Bank Account Balances" below.)

On the PCRV form, or an attached numerical schedule of checks written for the month, provide the following detail: the date, the check number, the payee, a brief statement of purpose of the check, the amount, and the University account to accept the charge. Additional documentation is required and may be one of the following:

• a list of signatures obtained as checks are distributed to study subjects
• pre-numbered receipts (Form 2533) (ACT Appendix 9, Uniform Receipt for Payments Made from Petty Cash)
• other appropriate support as prescribed by the awarding agency

The department should maintain supporting documentation for each disbursement, including proper authorization for the disbursement, in accordance with record retention policies.

Do not include paid checks or copies of paid checks with the reimbursement.

Complete the PCRV "Issue check to:" data as follows:
Name: Principal investigator or administrative representative
Dept.: Bank of America account number
CB# Appropriate campus address

Complete the PCRV account summary information from the account information in the detail check listing. This account distribution is approved by the appropriate pre-audit section and is used by Disbursement Services as input to produce a check to replenish the imprest bank account.

The following statement is required on the PCRV form in the signature area for Sponsored Research funds: "The checks listed on this reimbursement have been made for the purpose of the award and conditions of the agreement."

Account Overdrafts

The department is responsible for maintaining a positive cash balance in the account. An overdrawn imprest account will be charged the overdraft fee. Frequent overdrafts will cause the account to be closed.

Deposit of Reimbursement

The department is responsible for depositing the reimbursement checks to the Bank of America account according to the daily deposit requirements of the State of North Carolina.

Bank Reconciliation and Check Retention

The department is responsible for monthly reconciliation of the bank statement, including the following controls:

• Identifying, resolving, and clearing reconciling items.
• Having a supervisor review and sign off on the reconciliation.
• Assigning the duties of writing checks and reconciling the imprest account to two different people.
• Documenting any communications or discussions with a Bank of America employee regarding the account.

Retain paid checks in the department until year-end. The University Controller's Office will provide instructions for transmittal to Accounting Services, where the checks will be available for review by State and Federal auditors.

Void Checks

List void checks in the numerical listing for the month, with the payee shown as "void." Deface the void check and retain it with the bank statement for the appropriate month. Do not destroy or throw away the void check.

Bank Charges

List bank charges for printing checks and deposit slips on the PCRV and expense them to 2611, office supplies. Attach a copy of the bank statement that reflects the charges to the PCRV. Other charges and interest credits should not appear on the bank statement. If a monthly service charge appears on the statement, contact the Cash Management Accountant in Accounting Services.

Bank Account Balances

The balance in an imprest account should equal approximately two months' operating cash needs (that is, two months' average expenditures and charges). Departments should periodically review activity and the balance in each imprest account to determine if the account is funded appropriately, and make changes as needed.

Increase Bank Account

To increase the balance of the imprest bank account, submit a check request with ACT Appendix 15, Statement of Justification, justifying the need to the University Controller. Justification to increase an account includes an increase in the number of study subjects. If more frequent submission of PCRV forms will improve cash flow, use this method rather than requesting an increase.

Decrease Bank Account

To decrease the balance of the impresst bank account, complete the PCRV, typing NO CHECK REQUESTED on the "Issue Check To" line. Provide the Bank of America and the imprest cash account numbers assigned by Trust Funds on the PCRV, e.g., 0-10XXX-1141, on the address lines. The imprest bank account will be decreased by a journal entry in the amount of itemized documentation attached to the PCRV.

To Close a Bank Account

Imprest bank accounts that become inactive should be closed in a timely manner. To do so, follow the decrease procedures for recording the expenditures and write a check payable to the University of North Carolina at Chapel Hill for any balance remaining in the bank account, less any outstanding checks. Deposit this check at the University Cashier, via a Daily Cash Transmittal, to the imprest bank account (0-10XXX-1141). Please note the department's intention to close the account on the Daily Cash Transmittal. Return all unused checks and deposit slips to the Cash Management Accountant to be destroyed. The Cash Management Accountant will initiate a letter to Bank of America from the Chancellor to close the bank account.

Escheat of Checks

Outstanding checks will have to be escheated (returned) to the State of North Carolina. The current escheat law states checks issued and not presented to the bank for payment within the past five years must be escheated. Outstanding checks may be escheated earlier if the University deems it necessary. Contact the Cash Management Accountant at 962-0036 for forms and assistance in escheating checks to the State. The check payable to the State of North Carolina for escheats will not be recorded in the University accounting system.

Annual Confirmation

Accounting Services will request annual confirmation of the imprest bank account. The confirmation will include a request for a reconciliation of the funds in the bank account with the amount of the imprest account on the University financial accounting system. A copy of the June 30 statement and the bank reconciliation for June, including a list of outstanding checks, is also to be submitted to Accounting Services. Annually, the paid checks should be transferred to Accounting Services for audit and long-term retention.

Student Accounts and University Receivables, Student Aid, Student Stores, Extension Division, Travel Services, Utilities Division of the Facilities Services Department, and others as appropriate participate in a combined imprest account located with the State Treasurer. Schedules of checks, receipts, and/or paid invoices should support reimbursement to the imprest funds. The Cash Management Accountant is responsible for deposit and certification of the deposit to the State Treasurer and monthly reconciliation of the bank statements for these accounts.

Additional Information

See also:

ACT Policy 29, Imprest Bank Accounts

ACT Appendix 12, Bank of America Signature Card

ACT Appendix 15, Statement of Justification for Imprest Bank Account

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