Custodial Funds

Scope

All Indiana University units and employees.

In the event of a conflict, this policy shall supersede all campus, school and college, program, department, center, institute, and unit policies on any core or regional campuses of Indiana University.

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Policy Statement

It is the policy of Indiana University to handle cash activities with special care and attention. In limited circumstances, the university may authorize the use of cash by a designated custodian to meet a specific operational needs within the custodian's area of responsibility, otherwise known as a custodial fund.  

For a custodial fund to be authorized, circumstances must be such that normal payment procedures, overseen by the Office of Procurement Services, including the use of purchase orders, check requests, or procurement cards, are not adequate to meet the operating needs of the unit involved. A custodial fund may not be used to compensate an employed individual in lieu of the university’s normal payroll process.  

The Office of the University Controller authorizes custodial fund usage and monitors compliance. Prior to obtaining a custodial fund, advance written approval must be obtained from the department’s respective Vice President, Chancellor, or designee (eg Vice Chancellor for Finance). When such a fund is authorized, a Custodial Fund Agreement is retained by the Office of the University Controller.  

The Office of the University Controller (UCO) has established the IU Accounting Standards, which detail relevant university accounting and control procedures. These standards, while not exhaustive, are mandatory to carry out fiscal audit and compliance responsibilities. All units must adhere to the IU Accounting Standards with regard to the establishment, modification, operation, and deactivation of custodial funds, as well as related controls. 

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Reason for Policy

To establish standards for the establishment and use of custodial funds.

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Definitions

Custodian: Must be an employee of the university who is a faculty member, unit head, business manager, or fiscal officer. The custodian is personally responsible for safeguarding, properly using, and returning the funds entrusted to them.The actual handling of the fund may be delegated in some cases, but responsibility for the fund remains with the custodian.

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Sanctions

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Additional Contacts

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History

This policy was established on October 1, 1990.

This policy was updated on August 18, 2021

This policy was updated on November 18, 2025.

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