Internal Control Practices | Cash

The university defines cash as currency, coins, checks, money orders, and e-commerce transactions

UC Davis transacts thousands of dollars in over-the-counter business every day. To ensure that you protect, accurately process, and properly report university assets, follow the internal control practices of separating duties, obtaining appropriate authorizations and approvals, securing assets, and reconciling cash.

If you handle cash for your department, learn these best practices:

Separation of duties
One of the most important steps your unit can take to protect cash — and you — is to separate cash handling duties among different people. With proper separation of duties, no single person has control over the entire cash process.

Best practice is to have different people:

> Receive and deposit cash
> Record cash payments to receivable records
> Reconcile cash receipts to deposits and the general ledger
> Bill for goods and services
> Follow up on collection of returned checks
> Distribute payroll or other checks

Note: The key to effective cash control while separating duties is to minimize the number of people who actually handle cash before it's deposited.

Potential consequences if duties are not separated:

> Concealed errors or irregularities going unchecked
> Lost or stolen cash receipts
> Inaccurate application of cash receipts to department accounts
Accountability, authorization, and approval
Cash accountability ensures that cash is accounted for, properly documented and secured, and traceable to specific cash handlers.

When proper cash accountability exists, you can answer the four W's during a process:

1. Who has access to cash
2. Why they have access to cash
3. Where cash is at all times
4. What has occurred from the transaction's beginning to end

Best practices:

> Record cash receipts when received.
> Keep funds secured.
> Document transfers.
> Give receipts to each customer.
> Don’t share passwords.
> Give each cashier a separate cash drawer.
> Supervisors verify cash deposits.
> Supervisors approve all voided refunded transactions.

Potential consequences if accountability does not exist:

> Lost or stolen cash receipts
> Inaccurate application of cash receipts to departmental accounts
> Improper use of University assets
Security of assets
Be sure to keep all of your resources physically protected, including your cash handlers. Follow these practices to promote a safe work environment when working with cash.

Best practices:

> Conduct the proper background checks on prospective cash handlers.
> Follow physical layout standards prescribed by policy.
> Restrict access of cash to as few people as possible.
> Lock cash in a secure location like a safe or locked storage facility.
> Provide combinations, passwords only to authorized personnel.
> Change combinations, passwords annually, or when someone leaves.
> Minimize the amount of funds held overnight.
> Use a buddy system when taking funds from one location to another.
> Count cash in a non-public area not easily visible to others.

Potential consequences if cash is not secured:

> Unsafe work environment
> Lost or stolen cash receipts
> Loss of liability coverage with university insurance carriers
Review and reconciliation
Your reconciliation activities confirm that you've recorded transactions correctly. Perform monthly reconciliations of cash receipts and bank account statements to provide good checks and balances.

Best practices:
> Compare receipts to deposit records.
> Record cash receipts when received.
> Count and balance cash receipts daily.
> Perform periodic surprise cash counts.

Potential consequences if review and reconciliation activities are not performed:

> Errors, discrepancies, or irregularities not detected
> Lost or stolen cash receipts
> Inaccurate application of cash receipts to department accounts

Resources

Policies

Questions?

For questions on cash handling responsibilities, contact the Cashier & Payment Solutions Office. For questions on internal control practices, contact Controls & Accountability.