13-3: Cash transaction rounding

Effective: January 8, 2026
Approved by: Van Christensen
References: Utah Code 13-11 (Utah Consumer Sales Practices Act), Utah Code 51-4-1, The Division of Consumer Protection pub. “Business Advisory Regarding Penny Shortage”, 13-1: Minimum requirements for cash receipts procedures

Purpose

This policy outlines the accounting procedures agencies must follow for cash transactions involving rounding variances due to the penny shortage caused by the United States Mint’s discontinuation of the penny. These procedures ensure consistent and accurate handling of revenue and tax reporting.

Definitions

Agency – Any state of Utah department, division, or entity that receives cash payments for goods or services.

Cash rounding – The process of adjusting a cash payment to the nearest nickel when pennies are not available.

Cash transaction – A transaction where payment is made using physical U.S. currency (coins and notes).

Electronic transaction – A transaction where payment is made by credit card, debit card, electronic funds transfer, or other non-physical payment method.

Final total – The total amount due from a customer after all applicable taxes and fees are calculated.

Rounding variance – The financial difference between the exact sales price and the actual cash collected from a customer.

Transaction amount – The exact price of goods or services before rounding, which agencies must use for calculating sales tax.

Policy

A – Agencies must follow the state’s rounding procedures

1 – Agencies must round the total amount of a cash transaction to the nearest nickel if exact change isn’t available.

1a – Individual items must not be rounded.

2 – Electronic transactions and check payments are not rounded and must be processed for the exact final total.

3 – If exact change isn’t available, employees must round the total transaction amount (including tax) as follows:

$X.X1 or $X.X2 must be rounded down to $X.X0;
$X.X3 or $X.X4 must be rounded up to $X.X5;
$X.X6 or $X.X7 must be rounded down to $X.X5;
$X.X8, or $X.X9 must be rounded up to $X.10; and
$X.X0 or $X.X5 are not rounded.

B – Agencies must notify customers

1 – In compliance with the Utah Consumer Sales Practices Act, all agencies must post a notice that is clear and easily seen at all points-of-sale where cash is accepted.

1a – The Division of Consumer Protection has provided a flyer agencies may use to notify customers of rounding practices.

2 – The notice must be visible to customers before a transaction is completed.

C – Agencies must record exact transactions

1 – Agencies must record the sale in the accounting system at the exact transaction amount, not the rounded cash amount.

2 – Agencies must calculate and remit sales tax based on the exact transaction amount.

3 – Agencies must not adjust the sales revenue or sales tax liability accounts to absorb rounding differences.

D – Rounding must be accounted for and reconciled

1 – Employees reconciling cash drawers must compare the total unrounded sales receipts against the actual physical cash collected.

2 – The difference between the sales receipts and the physical cash created by rounding is the rounding variance.

3 – Agencies must record rounding variances in the cash over and short revenue source code.

3a – Debit the over and short revenue source code for a shortage.

3b – Credit the over and short revenue source code for an overage.

4 – Agencies must not record variances as miscellaneous revenue or operating expenses.

5 – If the variance exceeds agency-established thresholds for investigation, managers must review the transaction logs to ensure the variance is due to rounding and not theft or error.