The following is a list of internal control techniques departments must employ when handling cash. Continuously assess internal controls over cash and take appropriate action to remediate any concerns noted.

Document policies and procedures that address the department’s cash handling practices.

  • Identify the purpose for which cash is maintained or received.
  • Identify cash locations (i.e., know where cash is at all times).
  • Designate the positions that are responsible for receiving & handling cash.
  • Ensure all Cash Receipt functions are properly authorized.
  • Document the steps and associated internal controls that occur from the beginning of the cash handling process to its conclusion, for each cash location.
  • Document the training of all individuals assigned responsibility for cash.

Cash must be secure at all times.

Each individual who receives (or has custody of) cash is responsible and accountable for the cash under his or her control, and individual accountability must be maintained and documented for all cash handling procedures.

  • Minimize cash at each location to the amount necessary for business.
  • Designate each cash location (e.g., cash register drawer, safe, or locked box/bag/drawer/cabinet) as being the responsibility of a single person.
  • Restrict authority for access to cash registers and locked boxes/bags/drawers/cabinets.
  • When using a safe to secure cash, limit the number of people with the combination to the safe. Ensure the combination to the safe is changed periodically and whenever there is turnover in key staff.
  • Limit the number of keys to locked boxes/bags/drawers/cabinets or other containers used to secure cash.
  • Implement appropriate security over the cash (e.g., locks, alarms, cameras, armored car) at all times, especially when cash is being transported.

Each designated cash location (cash register drawer, safe, locked box, etc.) and amount should be the responsibility of a single person: the cash custodian. The cash custodian should be the only person who has access to that designated cash. In exceptional circumstances, if access to cash cannot be restricted to a single individual, then the department should deploy appropriate mitigating controls, such as:

  • Log transactions by individuals
  • Use a camera to record access
  • Reconcile the cash between individuals having access to the cash

To transfer cash for deposit, the method used by most departments is a locked deposit bag. These are available from office supply stores and should come with two keys. The keys to the deposit bag must be controlled. One remains in the department, controlled by the person designated to prepare deposits. The other key is given to the Office of Cash Management (OCM). When transporting the deposit, the bag should be locked and no key should be transported with the bag. OCM will use their key to open the bag upon arrival

There must be a separation of duties between staff responsible for receiving and depositing the cash and the staff responsible for the accounting records.

Maintain separation of duties throughout the cash handling process. Staff authorized to physically handle cash should not:

  • Reconcile monthly Finance System statements to verify that all cash was properly deposited.
  • Have access to accounts receivable records.
  • Be involved in the accounts receivable billing process.
  • Be involved in the disbursement function (authorizing expenditures).

Where separation of duties is not possible due to the small size and limited staffing of a department, implement compensating controls appropriate for the nature and size of the operations. As an example of a compensating control, ensuring that key personnel take leave, as granted by university policy, at a minimum of at least once per year can expose an embezzlement or lapping scheme. For more information on compensating controls, call your area accountant.

Process and record cash as soon as it is received.

Cash typically is received by the university in one of three ways: from in-person cash sales, through the mail or via electronic means. No matter how cash is received, the requirements below apply:

  • Accept only U.S. currency when collecting cash. If your department has a revenue contract with a foreign entity, then it accepts the risk for accepting foreign currency or foreign checks (regardless of currency). The department will be at risk of loss due to foreign currency conversion, bank fees, etc. and any such items received will be handled as collection items per the university bank’s foreign item collection policy.
  • Accept only payments for official university business. If your department is involved in a non-university activity that generates funds, such as soliciting contributions for a monthly birthday celebration, any checks must not be made payable to the University of Colorado. The university cannot endorse these over to an individual or an organization, or deposit them into a FOPPS-account combination for later withdrawal. If this situation occurs, return the check to its maker with an explanation and a request to re-issue the check with an appropriate payee.
  • Maintain separation of duties whenever cash is collected. No single individual may have complete control over collecting cash, issuing cash receipts and depositing cash. Any individual involved in the cash handling processes should not perform tasks such as collecting accounts receivable, maintaining accounts receivable records or performing the monthly financial report reconciliation.
  • Use a Cash Receipt log. Whether cash is received in person or by mail, there must be a system to record all cash as soon as it is received. Examples of such systems include:
    • Writing out manual sales slips, preparing a log of receipts as the mail is opened or using a cash register. A cash receipt log can be used in the following ways:
      • If two or more individuals are involved, one individual collects the cash and places it in a secure container, and the other individual records the amount and type of payment received along with the payee’s name and date.
      • If only one individual is involved in collecting the cash in person, then a receipt from a receipt book containing pre-numbered, duplicate receipts must be completed by the individual. The receipt should note the payee name and date, amount and type of payment. One copy of the receipt should be given to the customer and another copy of the receipt should be maintained in the receipt book. If only one individual is involved in receipting cash due to the small size and limited staffing of a department, then compensating controls appropriate for the nature and size of the operations must be implemented.
        Note: A cash receipt log can also be used to record checks received by mail. In this case, the log should be filled out to include the payee name, date, check number, amount and type of payment.
  • Document cash sales with duplicate, pre-numbered sales receipts or through the use of a cash register. Whether the process used is manual or automated, the documentation for cash received from sales must include the name of the department, the date the cash was received, and the form of payment (e.g., cash, check, credit card). If possible, the documentation should also include a description of the items sold, the quantity sold, the unit price and the extended price.
  • When cash collection involves a cash register, assign each cashier a unique identifier. This identifier must not be shared with or accessible to other individuals. Provide each cashier with a cash drawer to which only that cashier has access. Instruct cashiers to lock all cash in the drawer or in a secure receptacle whenever they leave the immediate cash collection area. Maintain the numerical sequence of sales receipts from one sale to the next. Provide each customer with a copy of the cash register receipt.

Endorse checks immediately upon receipt.

The endorsement should consist of a stamp on the back of the check that records the following information:

The Regents of the University of Colorado, a corporation
Wells Fargo #: (please contact OCM 2-7219 for the bank account number)
Dept Name:
SpeedType #:
Account #:

  1. The Dept Name should be the department submitting the Cash Receipt.
  2. The FOPPS-account combination should be the FOPPS you want to use to record an account receivable in case the check is rejected by the bank.
    Generally, an Auxiliary FOPPS should be used for the check endorsement unless it is a gift directly to the university. Gift checks should be deposited to the Treasurer’s Gift Clearing speedtype 13468785, account code 070504 (Gift Clearing Suspense) and include the destination gift FOPPS in the Remarks section - see Chapter 15, Gift Accounting. When a check is returned due to non-sufficient funds, the accounts receivable is recorded using a balance sheet account, and the transaction is reflected on the monthly Finance System Balance Sheet report. A review of the transaction on the Balance Sheet Detail report will indicate whether any non-sufficient funds check accounts receivable have been recorded.
  3. Endorse checks received through the mail immediately upon receipt. Mail should be opened immediately, checks identified and deposited. Prepare a log or copy the checks. Deposit the checks and send the log or check copies to the staff that will use them to verify the FOPPS-account records and post the customer records. The staff responsible for the accounting and billing processes should never handle checks.
  4. Securely shred copies of checks once the monthly reconciliation process has shown that the checks have been appropriately deposited. Note: OCM retains secure electronic copies of checks.

Co-payable Checks

A co-payable check is one that is made out to more than one payee. At the university, this can occur when a scholarship check is made out to the student and to the University of Colorado.

If a check is jointly payable to the university and a student, the university may deposit the check without the student’s endorsement only if:

  1. The funds are applied solely to the student’s benefit.
  2. There is no wording on the face of the check that would require the student’s endorsement such as “Borrower’s Signature Required” or “Endorsement Constitutes Acknowledgement of Changed Agreement.” These restrictions are often found on certain student loan program payments received by the university.

If the check meets the above two requirements, the back of the check should be stamped with both the university’s endorsement and an ABSENCE OF ENDORSEMENT GUARANTEED stamp below that. The full amount must be deposited to the student’s account. That is, there can be no cash back nor can the funds be deposited to multiple student accounts. The university will not accept a check if the university is not named as one of the payees, or if there is more than one student named as co-payee.

The decision to accept or deposit a check on behalf of the university rests solely with the Office of Cash Management who may consult with the Office of the Treasurer and Office of Financial Aid, as appropriate.

Third Party Checks Not Accepted

A third party check is a double-endorsed check whereby the payee endorses the check by signing the back, then passes the check to a subsequent holder, who endorses it prior to cashing it. For example, a third party check to the university is created when the original non-university payee writes “Pay to the order of the University of Colorado” and then signs below. The university does not accept third party checks. A third party check differs from a co- payable check described in the previous section in which the university is named as one of the payees.

Returned Checks

Occasionally, checks accepted for payment will be returned by the bank due to insufficient funds or a closed account. When this occurs, OCM calls the department and asks that the check(s) be picked up in person. Returned checks force an involuntary credit-granting situation on the department. Therefore, sufficient information should be obtained for each check accepted to facilitate the collection process if that becomes necessary. At a minimum this information would include:

  • Name
  • Address
  • Phone number
  • Other identifying information such as student number or Colorado driver’s license number

Restrict the collection of personally identifiable information and protect unauthorized use of credit card accounts.

Do not record credit card or social security numbers on checks. Colorado law prohibits recording certain information when accepting a negotiable instrument as payment, such as a check. A person accepting payment by check shall not record or require the maker of the check to record a credit card or social security number given as identification or proof of creditworthiness. Refer to the Collection of Personal Data from Students and Customers, APS #7003 for more information.

Credit Card Receipt Processing

Per State Law C.R.S. 6-1-711 departments that accept credit, charge, or debit card payments and print receipts electronically must:

  • Print no more than the last four digits of a customer’s card number or print the card expiration date on the customer’s card receipt.
  • Transmit the credit/debit card information to the university’s financial institution using the approved system. (Consult Treasurer’s procedures.)
  • Obtain the authorization # and record it in the cash register or receipt log.
  • Not retain the full credit card information outside of the approved Treasury credit card procedures. 

See the Payment Card Compliance Program, APS #4056 for more information.

Cash receipts must be balanced daily to the sales records.

Before cash can be deposited, cash receipts must be balanced daily to the sales records. This includes daily balancing of cash drawer receipts with sales records or cash register tapes, and balancing cash received through the mail with the mail log. A totaling of a cash register tape is referred to as a “Z” reading. An “X” reading is a subtotal of a cash register tape. Include in the daily balancing the daily recording of the tape number and the cumulative total. Cash custodians should sign the form used to record this balancing.

Cash and/or checks received should be deposited daily in most cases.

This daily deposit must be made through the Office of Cash Management (OCM) in Regent Administrative Center. Daily receipts must be deposited in their entirety as they were collected and must not be used to pay expenses, create unauthorized petty cash or change funds, or as a source of funds for personal check cashing. Checks cannot be substituted for cash. In other words, if cash is received for a sale, it must be deposited as cash. The deposit of university funds to outside bank accounts is prohibited unless authorized by the University Treasurer. 

Designate an individual to be responsible for preparing the daily deposit. If the individual preparing the deposit is not the same as the one delivering the deposit to OCM, see 'Change in Custody of Cash/Cash in Transit' section.

Small cash amounts: Some departments take in small amounts of cash or checks on a sporadic basis. In this case, it is permissible for the department to hold the deposit in a secure fashion until the amount on hand totals $200. However, deposits must be made by the end of each week, even if the total is less than $200. No cash or checks are permitted to remain in the department over the weekend, unless approved by the campus controller. Also, all cash and checks must be deposited during the month in which they were received which means they must be deposited before the close of business on the last business day of the month.

All deposits must be made in person at the OCM’s office using a locked bag. Never send cash and/or checks through campus mail.

For additional information about depositing cash, refer to the OCM website, the Administrative Policy Statement Bank Account and Investment Account Restrictions, APS# 4004 and the Cash Control section of the Accounting Handbook.

Reconcile all deposits in the Finance System to the cash sales records and to the cash mail receipt records.

This ensures that all cash sales recorded for the day were properly deposited in a timely manner with the Office of Cash Management and were correctly recorded in the Finance System general ledger.

  • Provide for the reconciliation of cash activity to the Finance System through the financial report review process.
  • Reconciliations should be performed at least monthly.
  • Investigate and correct any discrepancies noted in the reconciliation as soon as possible.

Thoroughly document all refunds.

Ensure that cash is not disbursed unless specifically authorized per university policy and procedures (limited to petty cash funds, change funds, cash advances, refunds.)

Refunds made from a cash location (e.g., cash box, cash register drawer) must be approved by an authorized individual other than the employee making the refund and must be documented with a receipt. Receipts must include the customer’s signature, date of the transaction, reason for the refund, and the signature of the employee who made the refund.

Consider requiring a counter-signature approval from a supervisor for refunds exceeding a set amount. If only one individual is involved in making refunds due to the department’s limited size and staff, then implement compensating controls appropriate for the nature and size of the operation. Large operations should handle refunds at a separate customer service location.

Voided transactions should be documented and reviewed in order to prevent and detect fraud.

Separation of cash handling duties and periodic review of voided transactions by the supervisor will make it more difficult for a cashier to accept a payment, issue a receipt, void the transaction, and take the cash.

Document a change in the custody of cash.

Any change in the custody of cash must be documented (e.g., a receipt acknowledging the transfer that is signed and dated by both parties) because the responsibility for the cash switches from one individual to another. For example, require the person (if different than the person preparing the deposit) who delivers the receipts to OCM to sign a logbook to show the deposit amount taken to OCM. The person delivering the receipts should verify the amount of cash being transferred before signing the logbook. Use a locked deposit bag to transfer deposits to OCM. The keys to the deposit bag must be controlled. The person preparing the deposit keep one key in the department, and OCM keeps the other. These procedures protect both the person preparing the deposit and the person delivering the deposit.

Consult with your area accountant for questions about cash handling and the associated internal controls.