Handling Cash and Cash Equivalents Training

1. Handling Cash and Cash Equivalents Training UCSB Neil Clark Office of the Controller March 2014

2. Goals • What you should get out of the training • An understanding of the UCSB cash handling process • An understanding of the key controls in the UCSB cash handling process • Understanding of your responsibility as a Campus Cash Handler • Campus Resources

3. Topics • What the training will cover • The various forms of cash payments • A review of the three types of Cash Handlers as defined by BUS-49 • A review of BUS-49 policy areas, and cash handling activities • General guidelines for Petty Cash and Change Fund custodians • Principles of good cash handling and their application in daily cashiering activities

4. Stewardship Stewardship The careful and responsible management of something entrusted to one’s care. As University employees we have a responsibility to our stakeholders, to be good “stewards” of the public trust.

5. Why is the Proper Handling of Cash Important to UCSB? • Public Trust • Taxpayer Dollars • Stakeholders • Donors • Funding Agencies • Parents • Students • Employees

6. What are the Consequences of Improper Cash Handling? • Public Image • Loss of Funding • Department Reputation • Criminal or Civil Investigation • Cost of Investigation

7. Terminology Several terms used in the BUS-49 need to be defined to help you understand the University's cash handling policy. The basic terms fall into one of the three following categories: • What is considered cash • Defining Cash Handlers and Fund Custodians • Cash Handling Roles

8. What is considered “cash” • Currency and Coin • Cash Equivalents • Money Orders • Travelers Checks • Cashiers and Certified Checks • ACH Payments and Wire Transfers • Credit and Debit Cards • Securities (Easily transferable to $) such as Parking Permits, Stamps, Tokens, Meal Tickets

9. What is a Main Cashier? Main Cashier A cashiering station to which official operating cash funds are issued, and from which, collections are deposited directly to the bank. Examples Cashiers Office UCen Cashier

10. What is a Sub Cashier? Sub Cashier A cashiering station from which collections are deposited with a Main Cashier. Examples At least 9 Sub Cashiering stations on campus, including Parking, Arts & Lectures and Housing

11. What is a Cash Handling Department? Cash Handling Department Campus operating unit that typically collects cash and deposits to either a Main Cashiering or Sub-cashiering station. Example Campus departments who receive gifts, donations, telephone or photocopy reimbursements.

12. Cash Flow

13. Custodian • A person who has been assigned responsibility for administering either a petty cash or change fund • The custodian is solely responsible and personally accountable for the fund. • Must be a University employee (career or limited appointment) or a registered UCSB student employed by the University. • New employees must successfully pass a background check.

14. 5 Steps of Cash Handling • Step 1 - Accept Cash and Endorse Checks • Verify check payee is "UC Regents" or "Regents of the University of California" • Endorse check with appropriate stamp (UC Regents) • To minimize customer disputes over an amount being paid in currency, leave the currency on the cash register ledge or other secure area visible to the customer until the transaction is completed. • Count change back to the customer. • At the end of the transaction make sure all currency, coin, or checks are placed into the cash drawer or other secure container or location. • Give the customer a receipt

15. 5 Steps of Cash Handling • Step 2 – Prepare Deposit • Prepare a deposit form as soon as total of cash and cash equivalents meet or exceed $500 • Practice dual custody • Balance receipts to cash • Keep backups of deposit forms

16. 5 Steps of Cash Handling • Step 3 – Deposit Cash • Sub-cashiers and cash handlers must deposit at least once a week or whenever collections meet or exceed $500. • Transport cash in dual custody • Deposits > $2,500 employees should be escorted by a Campus Security or Police Officer. • Step 4 - Reconcile deposits • Balance to General Ledger report at month end • Step 5 - Report losses • Report losses to supervisor

17. Cash Collection Reports • A report of cash collections signed by the preparer must accompany each deposit to a Main Cashiering Station from a Sub Cashiering Station.  • The report should include: • Cash Recorded • Cash Deposited • Shortages or Overages • Supporting Documentation (including cash register audit tapes, as applicable)

19. General Cash Handling Principles • Business and Finance Bulletin BUS-49, the UC policy related to cash handling, defines the four critical policy activities:

20. Individual Accountability • One person has sole responsibility for a fund. • Protects the University and the Employee • Access to cash should be restricted at all times to only the person (custodian) accountable for the fund. • All transfers of cash and responsibility should be documented. • A supervisor should sign and verify overages/shortages and all voids/refunds.

21. Accountability Key Components Funds remain secured Transfers are documented Passwords are not shared Keys are secured All trans. identified to a person Receipts to each customer Cash drawer to each cashier Safe combos are not shared Background checks are performed

22. Separation of Duties • More than one qualified person is involved in the key activities related to the collection, handling, depositing, and accounting processes for cash received.

23. Cash Handling Roles Matrix The matrices below shows appropriate separation of duties for cash handling roles for three person and two person operations

24. Dual Custody • Involving two people in a critical cash handling task is a special kind of separation of duties called dual custody. • Dual custody should be practiced when transporting and counting large amounts of cash, or when performing other risk critical actions. • Benefits of Dual Custody: • Encourages cash handlers to check each others work • Reduces the opportunity for robbery and theft • If loss does occur, protects cash handlers from unwarranted suspicion

25. Physical Security Per BUS-49: • Individuals who handle cash and cash equivalents are protected from physical harm • Cash and cash equivalents are protected from loss. • Technology resources involved in process cash and cash equivalents (i.e., hardware and confidential personal information) are protected from loss, corruption, or compromise to confidentiality.

26. Physical Security Per BUS-49: • Counting of cash must not be visible from outside the office. • Level of security, such as cash box, safe, or alarm requirements depends on amount of cash being stored. • Deposits must be adequately protected from loss while in transit. • Only authorized individuals are allowed in the work area.

27. Physical Security Per BUS-49: • Safe combination should be given ONLY to supervisory/authorized personnel. • Safe combination should be committed to memory. • A record of the combination must be maintained away from the safe area and sealed to prevent undetected access.

28. Physical Security Per BUS-49: • Safe combination should be changed whenever an employee leaves the unit/position, or at a minimum of once per year. • A log must be maintained showing the date of combination change and the reason for the change.

29. Physical Security Key Components Keys are secured Assets are properly stored Alarm syst. alerts police dept. Shortages/ overages are reported Cash counting not visible Safe combos are changed 2nd employee present Deposits protected while in transit Background checks performed Deposits are timely

30. Reconciliation • Cash and cash equivalents collected and reported as deposited, are reconciled with the General Ledger, and are verified as accurate. • A supervisor or someone other than the custodian should perform surprise counts of the petty cash and change fund.

31. Reconciliation Reconciliation involves the following three levels of personnel: • Level 1 – Cashier / Sub Cashier • Reconciles daily receipts by cross balancing the funds collected against the cash register totals, the receipts issued, and deposit documents received • Level 2 – Manager / Supervisor • Reconciles to ensure that receipts were issued in numerical order. Verifies that register totals and beginning and ending readings are in order. Performs surprise cash counts to ensure accuracy of staff and compliance with cash control procedures. • Level 3 – Accounting Office • Reconciles deposits by Major Cashiering sites to UC bank accounts.

32. Petty Cash Fund • Purpose:Used by units who have a need to provide funds to employees or students to acquire low value goods and services from outside vendors on an immediate or short term basis. • UCSB Policy 5255

33. Petty Cash Fund Procedures Using the Fund • All expenditures must be supported by receipts. • Receipt must be legible, dated, itemized, indicate amount and name of vendor. • Receipt must be signed by the purchaser, indicating receipt of goods. • Receipt must show evidence of having been paid.

34. Petty Cash Fund Procedures Reimbursement of the Fund • Attach receipts to a Miscellaneous Form-5 Check Request, submit to Business & Financial Services • Use the Petty Cash Reimbursement Form • All receipts must be reimbursed by June 30 for fiscal closing

35. Petty Cash Fund Procedures Transferring Custodianship • Formal documentation • Send copy of transfer information to Business & Financial Services (BFS) Returning the Fund • Reimburse all outstanding receipts • Prepare Deposit and Recording Advice (DARA) • Take DARA and fund to Cashiers Office • Send copy of DARA to BFS

36. Petty Cash Reimbursement Form • Allows for immediate reimbursement for petty cash expenses from the Cashiers Office. It was designed for those units who do not have a petty cash fund. • Procedures • Attach original receipts to the form • Obtain authorized signature • Make a copy for department records • Take original to Cashiers Office

37. Change Fund • Purpose: In a department that performs cash sales, a change fund may be established to provide the department with the ability to provide its customers with change following sales transactions. • UCSB Policy 5250

38. Change Fund Procedures Setting up the Fund • Submit request to Business & Financial Services (BFS) with Department Head approval. • BFS will contact department when check is ready. • Custodian signs acknowledgement of receipt, and understanding of the policy, and cashes check at the Cashiers Office.

39. Change Fund Procedures Transferring Custodianship • Formal documentation • Send copy of transfer information to BFS. Returning the Fund • Prepare Deposit and Recording Advice (DARA) • Take DARA and fund to Cashiers Office • Send copy of DARA to BFS

40. Change Fund Procedures Using the Fund • No expenditures may be made from the fund. • Fund must be kept separate from any other fund. • Overages/shortages in income are not to be cleared through the fund

41. Change Fund Key Points • Fund should not be used for expenditures • Fund should not be combined with petty cash • More than one person should not have access to the fund • Transfers of fund should be documented • Overages/Shortages should not be cleared through the fund.

42. Petty Cash and Change Fund 4 Critical Policy Activities • Accountability • Custodians of Petty Cash and Change Funds are solely responsible for the funds entrusted to them. • Campus policy requires that individuals who will be the custodian of a fund, successfully pass a fingerprint/ background check. • The custodian can be held personally liable for losses due to the custodian's negligence.

43. Petty Cash and Change Fund 4 Critical Policy Activities • Separation of Duties • The supervisor or someone other than the custodian, should occasionally perform a surprise count of the fund. • The supervisor, unit head, or designee reviews and approves all forms related to the operation of the fund. • The supervisor also ensures that the custodian manages the fund in accordance with established policies and procedures. 

44. Petty Cash and Change Fund 4 Critical Policy Activities • Reconciliation • The custodian should regularly ensure that the amount of the fund (cash and receipts) remains intact. • Physical Security • The fund should be locked up except when in use. See Business and Finance BUS-49 for secure storage requirements for funds in excess of $1,000. Each fund is to be maintained and stored separately, for example, in it's own cash box.

45. Audit of Funds • Audits may be performed by either Business & Financial Services or Audit and Advisory Services • Audits may also be done by a supervisor. • Purpose of the audit is to verify the fund exists and is secure, the fund is complete, and the fund is being used appropriately.

46. Resources • Policy • UC Business and Finance Bulletin, BUS-49: Policy for Cash and Cash Equivalents Received • UCSB Policy 5250: Change Funds • UCSB Policy 5255: Petty Cash Funds • Neil Clark, Campus Cash Handling Coordinator • X7667 or neil.clark@bfs.ucsb.edu. • Jonelle Miller, Acting Credit Card Coordinator • X3959 or jonelle.miller@bfs.ucsb.edu • Tracy Coy, Cashier Manager • X2177 or tracy.coy@bfs.ucsb.edu. • Audit and Advisory Services

47. Questions?