Internal Controls

Each department must document in writing:

• Cash handling procedures
• Persons/positions that are responsible for receiving and handling cash
• Staff training on established guidelines and procedures

Each department must record a receipt of cash as it is received through the use of:

• Cash registers
• Manually prepared sales slips
• Or a manually prepared log of receipts as mail is opened

Deposit all cash and/or checks received daily (for exceptions, see small deposits). Money received that is not a gift must be deposited through the Office of Cash Management (OCM) in Regent Administrative Center, Room 175, using the cash receipt form on the Office of University Controller’s website. Submit the deposit at the department window located inside the Bursar’s Office.

Depositing university cash to outside bank accounts is prohibited unless authorized by the Treasurer. Cash received must not be used to pay department expenses, to create unauthorized petty cash or change funds. Do not substitute checks for cash received.

Designate an individual to be responsible for preparing the daily deposit (see Internal Controls). Never send cash and/or checks through campus mail. Leave the yellow and pink copies on the cash receipt—you will receive the pink copy back stamped with the time and date of deposit with OCM. The validated yellow copy will be returned after the deposit has been entered into PeopleSoft Finance System.

Mailed payments are normally checks but may occasionally include currency. The staff responsible for the accounting and/or billing processes should never handle payments (see Establish Responsibility). Mail should be opened upon arrival, checks endorsed (see Check Endorsement) and included with the daily deposit. Maintain a list of the checks including amount, maker and check number or make copies of the checks for your records. The person responsible for reconciling the department’s accounts will need to see these records to ensure that the deposit is correct and is reflected properly in PeopleSoft Financials.

Document all sales using either a cash register or pre-numbered duplicate receipt forms. The sales documentation should include the date, a description of items sold, quantity sold, unit price and the form and amount of the payment (e.g., cash, check, credit card, etc.). Be sure to use the pre-numbered receipts in sequence to maintain accurate records and reduce any suspicion of fraud. When the sales transaction has been completed, provide the customer with a copy of the cash register receipt or a copy of the pre-numbered receipt.

Checks and cash received must be balanced to the recorded sales daily. The person responsible for balancing (see Establish Responsibility) must add up the checks in his/her possession and make sure that the total matches the amount of checks recorded in the sales documentation (e.g., cash register tape, pre-numbered receipts or mail log). Repeat this balancing process for cash and checks received or credit cards processed. List the total amount of each type of tender (cash, checks, credit cards, etc.). Document the total of all tenders. The total of all tenders should equal the total amount of sales for the day as recorded in the sales documentation. Record any overage/shortage.

The person balancing the sales should sign the balancing form to indicate that they agree with the total. Keep and file the balancing form with the sales documentation and create a cash receipt to deposit the payments received with the Office of Cash Management.

Access control is the best way to safeguard cash. Examples of access control are as follows: cash registers, safes, locked file cabinets with key control, locked doors, key pad systems and lockable bank bags for transporting cash to the Office of Cash Management in Regent Administrative Center, Room 175.

Restrict authority to get into cash register. Store cash in safes and limit access to storage areas. Limit the number of people who know the combination to the safe. Limit the number of keys to locked boxes or bank bags. During hours of operation, secure coins, currency and checks to restrict access. At other times store all coins, currency and checks in a safe or other locked secure place until they are deposited.

Control is most effective when only one person is responsible for a given task. It is the responsibility of the department manager to ensure that those charged with processing cash receipts are trained in the proper procedures for receiving, recording and depositing university funds.

Assign cash responsibility to a single individual. Never have more than one person responsible for or have access to the same cash drawer. Each cashier should be assigned their own cash drawer.

Separation of duties is critical to effective internal controls and reduces the risk of impropriety and inappropriate actions. It is a deterrent to fraud because it requires collusion with another person to perpetrate a fraudulent act.

Separate the components of cash handling so that one individual does not have responsibility for more than one component. The accounting/reconciling and cash custody functions should be separated among employees. Separate duties between staff responsible for receiving and depositing cash versus staff responsible for accounting records. When these functions cannot be separated, due to small department size, a supervisory review of related activities should be in place as a compensating control. The staff person who is authorized to handle cash should not have any of the following responsibilities:

• Reconciling monthly PeopleSoft statements
• Access to accounts receivable records
• Involvement in the accounts receivable billing process
• Involved in the disbursement function (authorizing expenditures)

Examples of separation of duties are as follows:

• The person who opens the mail and prepares a listing of checks received should not be the person who makes the deposit.
• The person who opens the mail and prepares a listing of checks received should not be the person who maintains the accounts receivable records.
• The person who maintains and reconciles the accounting records should not have custody of cash or checks.

When transferring cash responsibility from one person to another, document change in cash custody. Both people should verify the amount of cash being transferred. The person, if other than the person who prepared the deposit, who delivers the deposit to the Office of Cash Management (OCM) should sign a log to indicate the amount of the deposit that was taken to OCM.

Locked bags can be used to transfer deposits to OCM. The keys to the deposit bag must be controlled. The person preparing the deposit should keep one key in the department and OCM should keep the other key.

Reviewing reports, statements and other financial information is an important control activity. It provides for a basis for detecting problems. Reconcile all deposits in PeopleSoft Financials to the cash sales and mail receipt records. Data should be reviewed for consistency and reasonableness. Department managers should review reports, statements, reconciliations, as well as provide supporting documentation for resolution of items noted for follow-up.