Cash Handling Procedures

Guidelines for Cash Handling Procedures

Financial Management Operations has prepared a guide to assist departments in the development of cash handling procedures to ensure proper internal controls, segregation of duties, and adequate safeguards of University assets. Departments are responsible for complying with cash handling policies and procedures outlined, and also for developing detailed written departmental operating procedures. Financial Management Operations will review the procedure documents and make any appropriate recommendations at the request of the department. Please review System Regulation 21.01.02 Receipt, Custody, and Deposit of Revenues.

Internal controls are necessary to prevent mishandling of funds to safeguard against loss. Strong internal controls also protect employees from inappropriate accusations or charges of mishandling funds by defining responsibilities in the cash handling process.

Segregation of duties is essential to prevent one individual from having responsibility for more than one component. Components of cash handling are collecting, depositing and reconciling.

When developing cash handling procedures departments should always take under consideration the importance of internal controls and segregation of duties and implement these two concepts into the procedures.

Procedures should be detailed steps of departmental processes. These detailed steps should map out the course of action so that persons not familiar with the process can follow them to perform the duties when necessary.

Below is an outline of suggested information to include in procedures.

  • Purpose and Source of Policy
    • Should state the purpose of these procedures
      • Example: To ensure funds accepted follow the same process each time so that funds can be deposited in a timely manner and easily tracked while keeping both the funds and personnel handling the funds secure
    • Should refer to System Regulation 21.01.02 Receipt, Custody, and Deposit of Revenues
  • Segregation of Duties
    • Should state the positions responsible for each role in the process
      • Position responsible for Collecting funds
      • Position responsible for Depositing funds
      • Position responsible for Reconciling account
  • Receiving Funds
    • Should include information about generating cash receipts including the method used by the department (iPayments, cash registers, manual cash receipts)
    • Should include process for handling voids
    • Should include process of receiving funds face to face or via mail
    • Should include policy of acceptable payment method
      • Include information required on checks
      • Include whether or not you will accept temporary checks and if so, will you set a threshold amount
    • Should include endorsement policy
    • Should include information about sales tax
    • Should include the display of NSF fee charges
      • Example: A fee will be charged for all returned checks
  • Custody of Funds
    • Should include departments safekeeping policy
      • Location of where funds are kept after receipt until deposited
        • Lock combinations and custody key must be kept 'on the person' and never stored in a desk drawer when funds exceed $100.00
        • Lock combinations and keys should be changed periodically and always when custody changes hands
      • Locations of initial sales site
        • Must have adequate security
    • Should include responsibilities of fund custodian
    • Should include shift change policy if applicable
    • Should include transfer of fund policy
      • Providing receipts or logging funds
    • Should include policy on emergencies for absences
      • Policy during fire drills, etc
  • Depositing Funds
    • Should include process for depositing funds via iPayments
    • Should include process of preparing deposit for bank
    • Should include process for getting deposit to bank
      • Hand deliver deposit to cashiers, drop box, currier service
      • Should include transfer of deposit bag if delivered by someone other than the person preparing the deposit
    • Should include timing of depositing fund
      • Funds $200.00 or more must be deposited daily
        • Should include what department considers business day
      • Funds under $200.00 must be deposited every 3 business days regardless of amount
      • Funds in excess of $2,500.00 must be accompanied by a security guard or picked up by Currier Service
    • Should include policy on depositing foreign checks
    • Should include policy on overages and shortages