Cash Administration

Scope

This policy provides requirements for cash administration, including Cash Receipt Locations (CRLs) and Cash Transmittal Locations (CTLs).

Reason for Policy

The purpose of this policy is to ensure that University assets are protected, accurately processed and properly reported.  Handling cash with a strong set of internal controls minimizes the potential for the mishandling of funds.

Policy Statement

The handling of cash represents an area of high risk to the University. As such it is important to outline who has authority for handling cash.  The line of functional authority and responsibility for cash handling activities is from the Board of Curators to the President to the Vice President for Finance and Administration. Authority is then delegated to the UM System Office of the Treasurer and Controller and in turn, to the Campus Division of Finance office, the campus Cashiers Offices and the cash handling departments and units.  All University units that handle cash must have both an awareness of and show a commitment to strong internal controls for cash handling. The Office of Internal Audit and Consulting Services assesses the adequacy of cash handling procedures and compliance with University policy as part of their ongoing reviews of internal controls.

Cash handling operations must be subject to daily supervisory review and management. To minimize the potential for mistakes or misappropriation of cash, the segregation of cash handling duties is required (see Segregation of Duties policy 21302). The duties of collecting cash, maintaining documentation, preparing deposits, and reconciling records should be separated among different individuals. In departments where the segregation of duties is not feasible, strict individual accountability and thorough management supervision and review is required.

A criminal background check and verification of an individual’s employment record is required for all employees in positions that handle cash regardless of whether the employee is employed on a full-time or part-time basis.  Employees in supervisory positions are expected to be above reproach in the conduct of their personal financial affairs and any knowledge of a history of problems must be carefully considered.

Cash Receipt Locations (CRLs) & Cash Transmittal Locations (CTLs)
Any request or requirement to be a Cash Receipt Location (CRL) must be authorized by the Campus Division of Finance office (Office of the Treasurer for UM System). The request should indicate whether the CRL also seeks authorization to be a Cash Transmittal Location (CTL) and, if so, whether it seeks authorization to deal directly with the bank. If this location is not a CTL, the request should indicate the CTL to which the monies are transmitted. Any request or requirement for the collection of monies for or payment of monies to the University at a location other than the Campus Cashiers Office must be authorized by the Campus Division of Finance office (Office of the Treasurer for UM System).

Requests for a CRL or CTL must be made in writing and must include the following:

• A description of the money receiving and money transmitting processes, including the types of receipts, the segregation of duties and the training provided to cash-handling employees.
• For departments requesting to be a CRL, identify the CTL that will be used
• Sufficient information regarding each of the factors used to assign a risk classification, as indicated in the Cash Security policy 25701.
• The requestor's assessment of the appropriate risk classification for the CRL.
• Based on the requestor's assessment of risk, sufficient information to evaluate the minimum security and safekeeping standards and the construction standards (Cash Security policy 25701).
• Based on the requestor's assessment of risk, sufficient information to evaluate the appropriate methods of transportation and the need for escorts and guards (Transportation, Escorts and Guards policy 25702).

Definitions

Cash Receipts - includes coins, currency, checks, money orders, credit cards and other payment forms which may be processed by a financial institution.

Cash Receipts Location (CRL) - a physical location (other than the Campus Cashiers Office) for the collection of money for or payment of money to the University. A CRL forwards its receipts to a CTL, if it is not itself a CTL.

Cash Transmittal Location (CTL) - a CRL that is authorized to transmit money received directly to the campus bank account, the Campus Cashiers Office or the credit card processing company.

Accountabilities

UM System Office of the Treasurer:
The Office of the Treasurer has primary responsibility for the collection, control and custodianship of all University funds including those for which the University has agreed to act as fiscal agent on behalf of individuals, other institutions, organizations and governmental agencies.

• Establish and terminate cash funds and locations of cashiering operations and set limits on the use of funds.
• Establish and enforce policies and procedures governing the receipt, handling, custody and disbursement of money and cash receipts.
• Require the establishment and maintenance of records giving full account of monies received and paid by the University.
• Propose for Board consideration, banking depositories to be used and policies governing their use.
• Establish and maintain banking arrangements for receiving, holding and disbursing University monies.
• Authorize at the bank those individuals who can endorse checks, cancel endorsements or receive money from the bank.
• Assist new CRLs and CTLs with obtaining an initial supply of deposit stamps, deposit slips and deposit bags.
• Delegate responsibility and authority to others and define the limits of responsibility and authority of those designated persons.
• Establish and enforce minimum security standards applicable to all University cash handling operations.

UM System Controller's Office:

The Controller has responsibility for ensuring that cash receipts and disbursements are recorded accurately and timely in the University accounting system. This office is also responsible for the daily reconciliation of the cash receipts recorded in the accounting system to the amounts deposited in the University bank accounts. Bank reconciliation is a critical control function necessary to safeguard cash.

Internal Audit:

Throughout the University, ongoing reviews of internal controls are conducted by the Office of Internal Audit and Consulting Services. As a part of these audits, the adequacy of cash handling procedures and compliance with University policy may be assessed.

Campus Level Responsibility for Cash Administration:

Campus Division of Finance:

• Implement and enforce University cash handling policies and procedures.
• Collect, control and maintain records of custodianship for all campus funds.
• Designate a campus Cashiers Office to function with specific designated responsibility.
• Delegate responsibility and authority to others and define the limits of that delegation.
• Conduct periodic reviews of cash handling activities for Cashiers and other areas to determine that all systems are functioning as intended and that all applicable standards are being followed.  The frequency and extent of reviews depend upon the degree to which duties are or are not segregated and other factors such as the dollar volume of transactions, the amount of cash involved, or the nature of the operation (Segregation of Duties policy 21302).
• Ensure that new employees responsible for cash funds are appropriately trained in accordance with University rules for cash handling. 

Campus Cashiers Office: Cashiers Office has administrative responsibility for all cash collections on a campus. The Cashiers Office has the responsibility and authority to:

• Receive and deposit funds.
• Act as advisor for all cash handling activities of the campus.
• Verify that deposits of Cash Receipts Locations (CRLs) are handled and prepared in accordance with University policy and procedures.
• Conduct periodic reviews of all cash handling activities within the Cashiers Office to determine that all systems are functioning as intended and that applicable standards are being followed.  The frequency and extent of reviews depend upon the degree to which duties are or are not segregated and other factors such as the dollar volume of transactions, the amount of cash involved, or the nature of the operation (Segregation of Duties policy 21302). 
• Monitor direct deposit areas for timely deposits and recording of those deposits.
• Provide depository services for all departments not authorized to deal directly with the bank.

Campus Departments:

• Campus departments and campus Finance will work together to establish emergency procedures to be followed in case of fire, tornado, power outage, robbery and any other emergency situation.
• Campus departments are responsible for ensuring that employees responsible for cash funds are appropriately trained in accordance with University rules for cash handling.  Specifically, employees responsible for cash funds should be familiar with:
  
  • Cash handling policies and how to access them.
  • The roles of the campus Cashiers Office, Campus Division of Finance and the Office of Internal Audit and Consulting Services.
  • Basic elements of internal control over cash funds.

Campus Division of Finance can assist with providing training resources when employees are granted access to the cash receipts module.

Additional Details

Forms

Related Information

Additional assistance may be provided by the University’s Treasurer’s Office.

Policy 21302 on Segregation of Duties
Policy 25701 on Cash Security
Policy 25702 on Transportation, Escorts and Guards

History

This policy combines the following former policies:

• Cash Receipts Manual 101 – Functional Responsibility and Authority (effective 4/27/2004)
• Cash Receipts Manual 102 – Personnel Administration, Orientation and Training (effective 2/28/1997)
• Accounting Policy Manual 25.10 – General Cash Transaction Guidelines (revised 7/8/2011)

Procedure