Audit Guidance

KEY CONTROLS OVER CASH RECEIPTS
December 12, 2008

OVERVIEW

Campuses must establish strong internal controls over cash receipts (currency, checks, and other negotiable instruments) to prevent mishandling and to safeguard against loss. These controls include written policies and procedures, adequate separation of duties, cash receipt forms, timely deposits, security of funds, establishing accountability, reconciliation procedures, and supervisory reviews. To assist in strengthening internal controls over cash receipts, we offer the following audit guidance. This audit guidance should be considered in conjunction with State Guidelines.

Whenever possible, cash should be collected in a centralized location such as the bursar's office. However, when this is not practical, campuses should establish the appropriate controls over remote cash collection areas. The following guidance has been separated between central cash collection areas and remote cash collection areas such as university police, library, adult education, and sporting events.

CENTRAL CASH COLLECTION AREA

• Develop written policies and procedures. Procedures should address, at a minimum, staff responsibilities, key control activities, timelines, and the safeguarding of receipts. Procedures should be updated, distributed, and reviewed on a regular basis for applicability.
• Segregate responsibility for receiving cash, maintaining accounting records, preparing deposit slips, making bank deposits, disbursing cash, reconciling cash, registering students, and posting financial aid awards, when feasible. Implement additional supervisory reviews for those procedures that can not be segregated amongst different employees.
• Ensure that all individuals who are in a position to receive cash are bonded.
• Restrictively endorse checks ("for deposit only") immediately upon receipt.
• Cash receipts received through the mail should be safeguarded to ensure all payments received in the mail have been properly recorded. This may be accomplished by having someone open the mail that does not have any other responsibility for posting, depositing, or reconciling cash receipts. When it is not feasible to segregate these responsibilities, mail should be opened by two designated employees. The number of payments received should be recorded and acknowledged by both employees and reconciled at the end of the day to internal accounting records to ensure all funds are accounted for.
• Display signs advising payors to request a receipt.
• Issue a press-numbered receipt form or a computer generated receipt or statement to acknowledge the receipt of cash.
• Require supervisory approval for all voided transactions, and ensure that the supporting documentation includes evidence (i.e. signature) of these approvals.
• Utilize a safe to store funds between bank deposits. A lockbox at the campus' local depository should be used whenever possible.
• All cash receipts must be deposited into a bank account designated and/or approved by the Office of the State Comptroller.
• Deposits should be made daily.
• Deposits are to be made "intact" as received, i.e., cash for needed expenditures should not be deducted from a deposit nor should personal checks be cashed from the funds.
• Utilize a courier service, whenever possible.
• Reconcile daily cash receipts to the receipts posted within the accounting records and daily deposit slips. Investigate and resolve any discrepancies.
• Deliver bank statements unopened to the individual responsible for bank reconciliations. Complete bank reconciliations in a timely manner, ensure outstanding checks are not aged and deposits are appropriate, and conduct supervisory reviews over completed bank reconciliations.
• Periodically perform cash audits of remote cash collection areas.

REMOTE CASH COLLECTION AREAS

• Establish written cash collection procedures.
• Endorse all checks immediately upon receipt (preferably with an endorsement stamp).
• Signs should be displayed advising payors to request a receipt form.
• Cash receipts should be controlled by using press-numbered receipts, cash registers, or pre-numbered tickets.
• Press-numbered receipt forms should be printed in triplicate. The original should be given to the payor, the duplicate used to establish accountability for the cash collected, and the triplicate retained in numerical sequence to establish accountability for the forms printed and used.
• A cash receipts log should be maintained when using press-numbered receipts for tracking each receipt. The cash receipts log should include:
  • Receipt Number
  • Date each remittance was received.
  • Name of the remitter.
  • Amount of each remittance.
  • Form of each remittance (e.g. check, cash, and money order).
  • Check number and date.
  • Purpose of the collection (if known).
• Cash receipts received through the mail should be safeguarded to ensure all payments received in the mail have been properly recorded. This may be accomplished by having someone open the mail that does not have any other responsibility for posting, depositing, or reconciling cash receipts. When it is not feasible to segregate these responsibilities, mail should be opened by two designated employees. The number of payments received should be recorded and acknowledged by both employees and reconciled at the end of the day to internal accounting records to ensure all funds are accounted for.
• Reconcile cash received to the cash register tapes or to the cash receipts log at the end of the day or at the end of each shift.
• Turn over cash receipts with a record of funds collected to the central cash collection area at the close of each business day, if feasible. If daily transmittal is not feasible, transmittals should be made at least once a week.
• Safeguard cash in a safe or lockbox to safeguard funds between deposits.
• Deliver deposits to the bursar's office (or central cash collection location) in a safe manner such as a police escort. Paper currency and coins should be delivered manually and never sent via campus mail.
• Reconcile deposits provided to the bursar's office (or central cash collection location) to internal records (income fund reimbursable or agency account) to ensure all deposits transmitted to the central cash collection area have been properly reported in the accounting system.
• Periodically conduct unannounced audits of cash receipts at remote locations.

Additional Information

New York State Accounting System User Procedures Manual Volume XI Section 3.0210:  http://www.osc.state.ny.us/agencies/accmanual/index.htm

For additional information, please contact the Office of the University Auditor at 518-320-1533 or University.Audit@sysadm.suny.edu