10 Cash Control

Cash ControlChapter 10 of The Guide :02/12/04 1 Cash ControlChapter 10 of The Guide Accounting & Budget Services and Bursar Jud Hurd, Controller Lora Merriweather, Manager, Office of Cash Management


I. Purpose :02/12/04 2 I. Purpose Provide Departmental Administrators with information needed to control cash in their departments Ultimate focus of a business is on cash Other assets will or has potential to generate cash Liabilities will use cash Our most portable asset and highly susceptible to theft Answer all your questions about cash control


Purpose :02/12/04 3 Purpose Assistance provided by Area Accountant Office of Cash Management (OCM) Provides other educational opportunities Crime Prevention/Robbery Awareness Cash Handling/Cash Security Practices Dealing with Disruptive People


II. Overview :02/12/04 4 II. Overview Cash includes Paper currency Checks Charge card slips Coins Money orders Wire transfers Similar items


Overview :02/12/04 5 Overview Departments receive through Sales of goods or services Vendor refunds Received Over the counter – Bookstore Mail – Conference registrations


III. Pertinent Policies :02/12/04 6 III. Pertinent Policies Maintaining Security for Cash and Other Portable Property within the University Administrative Policy Statement ABS Web site A/Administrative Policy Statements/Fiscal – tab down to policy


IV. Internal Controls :02/12/04 7 IV. Internal Controls Highly portable and liquid nature, departments MUST have good internal controls Starts with Department Financial Responsibility & Accountability Act CRS 24-17-101 Annual Certification by Chancellor Hire personnel of quality and integrity


Internal Controls :02/12/04 8 Internal Controls Documentation Recording cash received Balancing Check endorsement Cash security Cash Responsibility Change in custody


Internal Controls :02/12/04 9 Internal Controls Daily deposits Separation of duties Routine reconciliation Refunds Change funds Overages/shortages Payments


A. Documentation :02/12/04 10 A. Documentation Design your departmental cash handling procedures Document them in writing Identify procedures, controls and who has what responsibility Keep them current Train everybody involved in handling cash


B. Recording Cash Received :02/12/04 11 B. Recording Cash Received Identify your procedure to record receipt of cash as soon as it is received This becomes your control document to know how much cash you should have Use lockboxes where you can Mail receipts Log or copy of checks Identify customer, date, invoice number and amount


Recording Cash Received :02/12/04 12 Recording Cash Received Cash sales Cash register, pre-numbered sales receipts Identify Date Describe items sold Quantity sold Unit price Extended amount Form of payment Provide customer with a copy


C. Balancing :02/12/04 13 C. Balancing Cash receipts must be balanced daily to the sales record From cash register totals or add up sales receipts, determine total cash you should have Add up the cash and match totals Verifies total received for the day is still there


D. Checks :02/12/04 14 D. Checks Endorse checks immediately upon receipt – both over the counter and mail FOR DEPOSIT ONLY The Regents of the University of Colorado A Corporation Wells Fargo Bank # 182-3472752 Department Name: (Department submitting cash) Speed Type: (FOPPS to charge returned checks) Account #: (Accounts receivable account)


Checks :02/12/04 15 Checks Returned check creates involuntary granting of credit NSF (non-sufficient funds) Account closed No signature Office of Cash Management will re-deposit If fails, then charge to department accounts rec Original check returned to department


Checks :02/12/04 16 Checks Make sure you have enough information for collection Name Address and phone number Other identifying info such as Colorado driver’s license number


Checks :02/12/04 17 Checks International items Checks which are not drawn on a U.S. Bank Checks not issued in U.S. dollars FOPPS will not be credited until funds are collected Fees/exchange rates will apply


Checks :02/12/04 18 Checks House Bill 03-1272 Concerning a Prohibition Against Recording Certain Information When Accepting a Negotiable Instrument as Payment Effective August 6, 2003 Prohibits us from recording or require customer to record Social Security Number of credit card number


Checks :02/12/04 19 Checks You can ask to see these, but you can’t write down the information You can write down name of a credit card issuer, but not the credit card number Customer can voluntarily record it, but you can’t ask for it


E. Cash Security :02/12/04 20 E. Cash Security Secure cash at all times Cash registers Safes Locked file cabinets Locked boxes Locked bags to transport to Cashiers Limit access to combinations and keys Don’t provide easy access to cash


F. Cash Responsibility :02/12/04 21 F. Cash Responsibility Limit employee access to cash Ideally, only one person has access to cash Each cashier has his/her own cash drawer Assigns sole responsibility if an irregularity should occur


G. Change in Custody :02/12/04 22 G. Change in Custody Document the amount of cash in a change of custody Count the cash Both parties agree and sign off on the amount Avoids situation where one person says I gave you a $1,000 and the other person says no, you gave me only $900 So, what happened to the $100?


H. Daily Deposits :02/12/04 23 H. Daily Deposits Cash should be deposited daily with the cashiers in Regent Hall Deposit all receipts to University treasury Don’t use any to pay expenses or create unauthorized petty cash or change funds Don’t deposit in outside bank account Designated person prepares the deposit


Daily Deposits :02/12/04 24 Daily Deposits Separate person verifies deposit equals daily cash received as documented in B. –Recording Cash Received For those who take in small amounts Can wait until you have $200 Always make final deposit last day of the month


Daily Deposits :02/12/04 25 Daily Deposits Transport to Cashiers by a person Don’t use campus mail Consider locking bank bags Custodian has a key and cashiers has a key Person making the deposit does not have a key APS requires: Armored car direct pickup for over $10,000 Recommends security escort for over $2,000 Avoid arousing public interest


Daily Deposits :02/12/04 26 Daily Deposits APS on Bank Accounts and Investments ABS Web site, A/Administrative Policy Statements/Fiscal – tab down to policy


I. Separation of Duties :02/12/04 27 I. Separation of Duties Separate duties between staff receiving and depositing cash verses staff responsible for the accounting records Cash handlers should not Reconcile monthly PS statements to verify cash deposits Have access to accounts receivable records


Separation of Duties :02/12/04 28 Separation of Duties Be involved in the accounts receivable billing process Be involved in the disbursement function (authorizing expenditures)


J. Routine Reconciliation :02/12/04 29 J. Routine Reconciliation Reconcile all: Deposits to PS To cash sales records To cash mail receipt records


K. Refunds :02/12/04 30 K. Refunds Document all refunds made from cash drawer Identify the customer Customer signature Date Reason for the refund Employee’s signature making the refund No other disbursement allowed from cash drawer


L. Change Funds :02/12/04 31 L. Change Funds Follow procedures to request the issuance of an authorized change fund Do not retain money from daily sales to create unauthorized change fund


M. Overages/Shortages :02/12/04 32 M. Overages/Shortages Human errors will be made Cash drawer count won’t balance to sales record Record full receipt for the day Difference recorded as overages/shortages Account 552630 Cash Over/Short (not on QRC and should be)


N. Payments :02/12/04 33 N. Payments Accept only payments for CU business Do not accept payments for non-University business Co-worker contributions for retirement, wedding, birthday, birth, gift, treasurer of professional organization, etc. CU will not endorse private checks to outside entities


Payments :02/12/04 34 Payments CU will not deposit and then disburse private funds to outside entities If happens, return check to preparer with explanation


Internal Control Summary :02/12/04 35 Internal Control Summary So, how does all of this come together and work to provide good controls Department hires good people, documents its cash handling procedures to ensure good controls, and trains people in their duties A record is made of all cash received and this becomes the control to ensure all that cash gets deposited


Internal Control Summary :02/12/04 36 Internal Control Summary Checks are endorsed upon receipt to limit what can be done with them Cash is secured at all times, only one individual has access to and responsibility for cash at a time, change in custody of cash is always documented between the two individuals Person with the cash prepares daily deposit and it is transported to the cashiers in a secure manner


Internal Control Summary :02/12/04 37 Internal Control Summary Someone who does not have access to cash balances the record of daily cash receipts with the daily deposit to ensure all cash received was actually deposited In order to balance you can’t make purchases from the cash, can’t withhold any for a change fund or petty cash fund People with access to cash does not have access to accounting records to cover up irregularities


Internal Control Summary :02/12/04 38 Internal Control Summary Overages and shortages are recorded in separate account Investigate if any employee has an abnormal number or amount of overages or shortages Insufficient staff to have separation? Small departments would have small amounts of cash – limits risk but still a risk Have to have department head involved in periodic reviews and testing of cash


V. Cash Receipt Form :02/12/04 39 V. Cash Receipt Form CR form available from Office of Cash Management (OCM) 3-part form with instructions on the back Call 492-7219 to request CR forms This is your deposit slip for the Cashiers Completed form must accompany all cash submitted to OCM


Cash Receipt Form :02/12/04 40 Cash Receipt Form Some customers pay by Automated Clearing House (ACH) or wire transfer instead of check Federal customers especially Forward a completed CR to OCM if expecting wire transfer or ACH payment Call OCM if you are looking for a customer payment 492-0348 or 492-4438


Cash Receipt Form :02/12/04 41 Cash Receipt Form Indicate all FOPPS/account combinations for recording the total deposit plus any cash overage/shortage PS will make offset entry to cash Your debit entry = credit to cash Your credit entry = debit to cash


Cash Receipt Form :02/12/04 42 Cash Receipt Form Verify all transactions recorded correctly in PS Detail Report of Budget, Revenue, Expenses and Transfers Balance Sheet Transaction Report Call OCM for assistance, missing and unidentified transactions 492-0348 or 492-4438


VI. Cash Disbursement :02/12/04 43 VI. Cash Disbursement Done only to achieve goals of the University via: Payroll Accounts payable Vending machine refunds Demand warrants by Bursar Petty Cash


Cash Disbursement :02/12/04 44 Cash Disbursement Travel or expense advances Treasurer PS accrual transactions First entry from payroll and AP feed is Debit FOPPS/account indicated on the transaction Credit a payable account AP same FOPPS account 100000 Payroll System FOPPS Departmental FOPPS cash is credited


Cash Disbursement :02/12/04 45 Cash Disbursement Second entry Pay the liability AP same FOPPS Debit account 100000 Credit cash 000100 Payroll System FOPPS Department is done after the first entry


VII. Change Fund :02/12/04 46 VII. Change Fund Amount of money advance to departments that accept cash and, therefore, must have cash available to make change Issued temporarily for single event Issued continuing for on-going business Issued to a specific custodian with approval of department head


A. Proper Use of Change Fund :02/12/04 47 A. Proper Use of Change Fund Use only to make change Occasionally for vending machine refunds Can’t use To cash personal checks For loans to faculty, staff, students or others To make purchases To make purchases and sales – stamps to employees


B. Requesting a Change Fund :02/12/04 48 B. Requesting a Change Fund Custodian should submit the request Responsible to University for the change fund Sign Request for Petty Cash Funds and Change Funds – Statement of Responsibility and Instruction to Designated Custodians (Request Form) Primary form to request and document custodian responsibility Complete Request Form and Payment Voucher


Requesting a Change Fund :02/12/04 49 Requesting a Change Fund Request form signed by Department Head Send both forms to ABS, 579 UCB ABS will return approved copy of Request for Petty Cash Funds and Change Funds ABS will forward payment voucher to PSC Custodian will cash check at cashiers


Using and Maintaining a Change Fund :02/12/04 50 Using and Maintaining a Change Fund Keep in a secure location At end of shift, balance total cash with day’s sale record plus change fund amount Notify UCB Police Department if theft occurs Prepare payment voucher for amount of theft


Using and Maintaining a Change Fund :02/12/04 51 Using and Maintaining a Change Fund Charge loss to account 552630 Attach police report and send to PSC Increase to fund – follow same process Decrease or return of fund Contact ABS to get FOPPS/account to use Deposit change funds to FOPPS/account Take validated deposit slip to ABS


Using and Maintaining a Change Fund :02/12/04 52 Using and Maintaining a Change Fund ABS signs Statement of Responsibility and gives copy to custodian This is official custodian release of responsibility


Using and Maintaining a Change Fund :02/12/04 53 Using and Maintaining a Change Fund Change in custodian New custodian must count and verify the change fund is in tact Old and new custodian should sign a document acknowledging transfer of the change fund New custodian must complete the Request Form and send to ABS


VIII. Petty Cash :02/12/04 54 VIII. Petty Cash An amount of money issued to a department to be used on a revolving basis for the payment of small and incidental expenses Issued to a specific custodian with approval of department head Generally limited to $500 per department


Petty Cash :02/12/04 55 Petty Cash Exception for formal procurement methods Procurement Card is preferred method to make small purchases Refer to PSC policy on Petty Cash Reimbursement


A. Use of Petty Cash Funds :02/12/04 56 A. Use of Petty Cash Funds Use to make small, incidental purchases But don’t use for Alcohol Payroll expense Payments to other university departments Travel Cash personal checks or make loans Purchase and sales – stamps, flower fund or coffee fund


Use of Petty Cash Funds :02/12/04 57 Use of Petty Cash Funds Custodian will make purchase and obtain receipt Custodian will reimburse people for purchases based on actual receipt May advance funds to employees to make purchases Document each advance Make sure advance is accounted for – return receipt and change


B. Requesting a Petty Cash Fund :02/12/04 58 B. Requesting a Petty Cash Fund Basically same process as change fund But check Petty Cash Fund block


C. Control of the Petty Cash Fund :02/12/04 59 C. Control of the Petty Cash Fund Custodian must make sure safe and secure at all times Keep locked up Restrict access to the fund Obtained signed receipt from individual to whom funds are advanced Obtain receipt and change after purchase


Control of the Petty Cash Fund :02/12/04 60 Control of the Petty Cash Fund Obtain receipt for all purchases Reimburse on a timely basis Count weekly Verify total fund still in tact in form of Cash, receipts, reimbursement vouchers in process Shortage Add to next voucher – account 552630


Control of the Petty Cash Fund :02/12/04 61 Control of the Petty Cash Fund Overage Deposit to account 552630


D. Reimbursement of the Petty Cash Fund :02/12/04 62 D. Reimbursement of the Petty Cash Fund Reimburse when too low to meet needs of the department Allow for PSC processing time Do at least quarterly and at year-end Prepare payment voucher Payable to custodian PSC has a list of these people Include explanation of purchases


Reimbursement of the Petty Cash Fund :02/12/04 63 Reimbursement of the Petty Cash Fund Receipts = total of reimbursement & contain all information required by PSC for payment of voucher reimbursements Date and description of items purchased Quantity of items and total cost Vendor FOPPS to charge each purchase Add any information not provided by the vendor Obtain signature of department head


Reimbursement of the Petty Cash Fund :02/12/04 64 Reimbursement of the Petty Cash Fund Back up custodian Primary custodian is not available to fill the reimbursement voucher Backup custodian may submit the voucher Explanation why not being made payable to primary custodian


E. Return or Reduction of a Petty Cash Fund :02/12/04 65 E. Return or Reduction of a Petty Cash Fund Prepare final payment voucher to reimburse fund to original amount Required only for full return Prepare cash receipt form for amount Deposit at cashiers Send a validated copy of the cash receipt to ABS at 579 UCB ABS will sign the Request Form and return it to the custodian


F. Increasing a Petty Cash Fund :02/12/04 66 F. Increasing a Petty Cash Fund Follow the procedures for establishing the original petty cash fund


G. Cancellation of a Petty Cash Fund :02/12/04 67 G. Cancellation of a Petty Cash Fund Continued violation of these policies and procedures will be cause for the discontinuance of a petty cash fund


H. Theft of a Petty Cash Fund :02/12/04 68 H. Theft of a Petty Cash Fund Follow the same procedures as for a Change Fund


I. Change in a Petty Cash Fund Custodian :02/12/04 69 I. Change in a Petty Cash Fund Custodian New custodian must count and verify the petty cash fund is in tact Old and new custodian should sign a document acknowledging transfer of the petty cash fund New custodian must complete the Request Form and send to ABS