Pre-condition 1: Cash handlers are authorized
Three Major Control Tasks
Unit supervisors and managers must ensure that all cash handlers are properly authorized to handle cash.
- Verify the employee's employment history (applicable to new hires)
- Request employee fingerprint/background check - (applicable to all employees who handle cash unless the dollar amount involved qualifies for one of the exceptions allowed by campus policy)
- File proper documentation (applicable to all employees who handle cash)
- Verifying the validity of statements on an applicant's employment application provides a confirmation of that person's honesty and integrity.
- A fingerprint/background check is one way in which the University ensures an employee's trustworthiness and it also lays the basis for follow-up in case of cash loss, misappropriation or outright theft.
- Therefore, University policy states that a background check is a pre-condition for delegating cash handling responsibilities. Campus policy permits an exception for staff, students and volunteers who routinely handle less than $750 per week. Similarly, fund custodians are exempt if the funds they are responsible for are less than $750.
- For fingerprint/background check services or information contact your Staff Human Resources team (see Campus resources).
File Proper Documentation
- While the University presumes the best ability and intentions of those to whom we delegate this special responsibility, we also know that cash losses do occur. This is why University policy states:
Individual accountability for cash shall be maintained throughout all cashiering operations.
All transfers of cash accountability shall be documented on appropriate forms.
- All departments authorize in writing each individual who will be responsible for handling cash in the unit by attaching a list of that unit's cash handlers to the unit's Verification of Change Fund which is submitted to the General Accounting Office on a monthly or quarterly basis (depending on the amount of the change fund.) As job duties are reassigned, student workers and temporary workers come and go, the monthly/quarterly list should change.
- Verify job applicant's employment history prior to hiring when job duties include cash handling.
- Conduct background/fingerprinting on everyone to whom cash handling duties are delegated. (Note: campus policy allows an exception for fund custodians when the amount of cash in the fund(s) is less than $750 and for staff, students or volunteers who routinely process less than $750 per week.)
Pre-condition 2: Maintain separation of duties
One of the most important steps your unit can take to protect cash -- and you the cash handler -- is to separate cash handling duties among different people. This way, no one person has control over the entire cash handling process. This principle is called Separation or Duties or Segregation of Duties.
Principle - No one person should have complete control over a transaction.
Practice - In separation of duties at least two people are involved in any cash handling transaction.
Separate cash handling duties, whenever possible, to different people.
Next we'll discuss a special application of the Separation of Duties principle, called Dual Custody. Practice dual custody when transporting cash, counting large amounts of cash, and other risk critical actions.
Watch police officers on patrol, Loomis guards transporting cash, or a grocery clerk depositing cash to a safe. When working on high risk tasks, they always work in pairs. One person carries the cash and makes the deposit, the other monitors for safety and keeps the other partner in view.
Involving two people in a critical cash handling task is a special application of Separation of Duties called Dual Custody. At UCSC, whether you are depositing cash to a drop box, counting cash, or engaging in any such critical task, having two people engaged in that activity together is an important practice.
Practicing dual custody:
- Encourages cash handlers to check each other
- Reduces the opportunity for robbery and theft
- If loss does occur, protects cash handlers from unwarranted suspicion
Summary of Pre-conditions for Effective Cash Handling and Control
You have just learned the two key pre-conditions for effective cash handling and control. Let's review them here:
Pre-condition 1: Cash handlers are properly authorized
- Control task: Verify job applicants' employment history.
- Control task: Conduct fingerprint/background checks on everyone to whom cash handling duties are delegated. (Note campus exception for fund custodians, students and volunteers who routinely handle less than $750 per week.)
- Control task: Specifically authorize an employee to handle cash by filing the appropriate form with the Cashier's or Accounting Office. This will allow the campus to keep track of and communicate with the staff members who are actually handling cash.
Pre-condition 2: Maintain separation of duties and dual custody
- Control task: Separate cash handling duties, whenever possible, to different people
- Control task: Practice dual custody when transporting cash, counting large amounts of cash, and other risk critical actions.
We will now review the 5 steps of cash handling.
Step 1 - Accept Cash and Endorse Checks
Principle: Document cash and checks properly
Thousands of dollars exchange hands daily on campus, usually in the form of cash, checks and credit cards. Cash transactions are not things, but events that begin and end. Unless they're documented, there is no way to track the movement of money. This has big consequences.
Every time you receive cash, you must engage in three control tasks:
- Accept the payment. If payment is by check, ensure the check is payable to either "UC Regents" or "The Regents of the University of California." Note: A postdated check is to be deposited without regard to the date.
- Record the transaction with a receipt to the customer.
- When not in use, place all cash in a designated secure location.
A few campus units receive a large volume of payments by mail rather than in person. Processing remittances present special risks, since the payer is not standing in front of you waiting for his/her receipt. Separation of duties requires that at least 3 employees be involved in the processing of remittances.
- One person opens the mail, endorses and logs the check, including payment amount.
- Another person processes the check (i.e. records the payment).
- The third person verifies that all checks received are deposited and account coded correctly.
In this situation, when a receipt is not mailed to the payer, the payment is recorded to the appropriate account. At the end of the day, the logged remittance amount must balance with the amount processed into either a cash register and/or an accounts receivable system. In a campus unit/department that only occasionally receives a remittance, the individual check is recorded directly onto the cash collections deposit form.
An unidentified check
Sometimes a unit/department receives a check and it is not immediately clear why the check has been sent. In this situation the unit should photocopy the check, and proceed to process the check for inclusion in the unit's next deposit to a main cashiering station.
- The amount of the check is debted to account 116010 - Cash Received Undistributed-Cashier.
- The photocopy is routed within the unit to identify the purpose of the payment.
- Once the purpose of the payment is identified, a transfer is processed in FIS/Banner to move the payment to the correct FOAPAL.
Control Task: Endorsing Checks
Whenever you receive a check, you must endorse it on the back to prevent it from being negotiated inappropriately before depositing it with the main cashier's office or the bank.
Applying the principle of individual accountability, either the stamp needs to identify the individual cash handler (with a unique number or letter) or the cash handler can initial next to the endorsement.
Since all monies become the responsibility of the Regents of the University of California you must stamp endorse all checks payable to: "Regents of the University of California" or to "UC Regents"
Here's the information that is to be included on an endorsement stamp.
1233 Pay to the order of 1233
BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION
FOR DEPOSIT ONLY
THE REGENTS OF THE UNIVERSITY OF
CALIFORNIA-UC SANTA CRUZ
Insert department name and cashier identification code here
Step 2 - Prepare Deposit
So far, you have endorsed the check(s), given a receipt to the customer, and kept your cash in a locked and secure location. The next step is to complete the proper deposit slip.
Staff working in a main cashiering unit, will complete the bank's deposit slip for Bank of America. Staff working in all other campus units will complete a Departmental / Sub Cashier Cash Collections Deposit Form (sold in packets at the Bay Tree Bookstore).
Control Task - Use the correct deposit form/slip and document accurately:
- Campus units run adding machine tape(s) of all checks received and a separate tape for all credit card sales. Attach the tapes to the corresponding checks and/or credit card receipts.
- Accurately provide all appropriate information on the form. To provide individual accountability, the preparer and reviewer sign or initial the deposit form.
- Include other supporting documentation (e.g. cash register's "Z" tape, copies of hand written receipts, beginning and ending ticket numbers, etc.)
When completing deposit slips
- Include adding machine tapes of the checks and credit card receipts with your deposit to the cashier's office.
- Practice dual custody by completing the deposit form/slip with another person whenever possible.
- Make sure you balance cash/receipts to your deposit.
- Report any losses (including over or short amounts.)
- Keep a copy for your records.
Step 3 - Deposit Cash
Control Task - Control Amount of Cash On-hand
What would you do if someone walked in and said, "Stick'em up! Give me all your money!"?
Of course it's hard to hand over money with your hands still in the air, but the robber won't quibble with you . . . she or he will want the cash! The wise thing, of course, is for you to hand it over.
But, why give more than you have to? Keep just the minimum amount of cash at your station by making regular cash deposits to a main or sub-cashiering station or the night deposit. If using a cash register, remove extra accumulated cash and store it in a secure location until the deposit can be processed.
Step 3 - Deposit Cash - Control Tasks
Minimize the Risk
Count cash in a location where no one outside of the office/unit can see you doing it. If others don't know that you have cash, especially a lot of cash, they are less likely to be barging in demanding the money.
At the end of the workday, secure all funds and leave the register's cash drawer open so that it is obvious that the register contains no cash.
When to Deposit Cash, Checks and Credit Card receipts
Cash Handling depts/units
To prevent too much cash from accumulating at your in-take point, the University specifies when you are to deposit excess cash at the Main Cashier's office located on the first floor of the Hahn building.
Sub-cashiers and cash handlers (unit personnel) must deposit at least weekly or sooner if your collections meet or exceed $500.
Step 4 - Reconcile Deposits
Control Task - Ensure cash and receipts balance
1. With each deposit - Cash = Deposit = Credit to bank account
- Whenever money changes hands or accounts, make sure you record the exact amount. Then, balance accounts daily and monthly to ensure that:
- The Accounting Office ensures that the above also
- = amount credited to our bank account.
2. On a routine basis
- Regularly, compare the amounts reported on deposit slips to the amounts recorded in the General Ledger (FIS).
- All cash amounts recorded on receipts and deposit slips must equal each other.
- Therefore, if $10 was received,
- the receipt must record $10,
- the deposit form must show $10,
- and our bank records and the FIS report must show that we received credit for $10.
3. Monthly, balance accounts as follows:
- Balance to General Ledger (FIS) at month's end
- Report any discrepancies to General Accounting
Step 4 - Reconcile Deposits - Control Tasks
Control Task - Investigate all Cash Differences
There will be times when your cash and receipt amounts will be different and won't balance the first time. This is very common and most often due to clerical errors.
As a cash handler, you must investigate the differences to determine its source. You must account even for small cash differences, because over time they add up to large losses for the University.
Find the Source of Cash Differences
To investigate cash differences, consider the following possible causes:
- Was the cash in the till counted incorrectly?
- Was your arithmetic or keying incorrect?
- Run a second tape to double check the accuracy of your 1st tape.
- Running two balance tapes daily is a good habit to get into.
- Was change counted incorrectly back to a customer?
- This is a loss and the reason needs to be documented and reported.
- Were numbers transposed on your receipt/deposit slip?
- If so, double check your figures and slow down next time.
- Is cash missing?
- If so, this is a loss and must be reported.
Step 5 - Report Losses
Though most cash differences can be traced to clerical errors, be especially alert to mysterious losses or patterns of loss.
Summary / Request Exception / Things to Avoid / Reference
Summary of Course
In this course, we intended to raise your awareness of important cash handling principles and practices to support UCSC's core values of Ethics and Integrity. We discussed your fiduciary responsibility, i.e. your responsibility to protect the University's cash assets. We outlined the Five Cash Handling and Control phases:
- Accept Cash and Checks
- Prepare Deposits
- Deposit Cash
- Reconcile Deposits
- Report Losses
For each phase, we provided simple, but key control tasks for you to accomplish. A list of contacts is available under Campus Resources. These tasks are summarized in the chart on the next page which you can use for reference.
Request for Exception
In rare situations, a campus unit is physically/budgetarily unable to provide the appropriate controls, e.g. separation of duties as required by policy. Therefore, the campus has created a process that allows a campus unit to request an exception. Requests should be addressed to the campus' Cash Handling Coordinator, mail stop: Accounting Office. Include the following information in a request for an exception:
- A brief description of your current procedures
- A statement regarding the policy requirement to which you are requesting an exception
- An explanation as to why an exception is needed
Things to Avoid
Cash handlers are not to exchange checks for currency to make change for each other. Nor are employees of a cashiering station to cash checks for themselves or for co-workers. Also, it is not appropriate to replace any portion of a deposit with a personal check. If you need cash, you can cash a personal check up to $25 at the main Cashier's Office in Hahn. There are also ATM's available near Bay Tree bookstore for Wells Fargo, Bank of America and Bay Federal.
Do not take a deposit with you except when you are going directly to the Cashier's Office.
- Cash handlers must be specifically authorized to handle cash after verification of employment, completion of a credit check (optional) and a fingerprint/background check
- Each cash handler must be assigned separate duties that require coordinating with another cash handler
Step 1 - Accept cash/checks/credit cards
- Verify check payee is "UC Regents" or "Regents of the University of California"
- Endorse check with appropriate stamp (UC Regents)
- Give the customer a receipt
- When appropriate, show correct posting campus unit/department
Step 2 - Prepare deposit
- Prepare a deposit form as soon as total of cash, checks and credit card slips meet or exceed $500
- Practice dual custody
- Balance receipts to cash
- Keep backups of deposit forms
- Prepare journal entries as appropriate
Step 3 - Deposit cash
- Deposit cash at least weekly or sooner
- Cashier's Office (102 Hahn) - In-person window hours are 9am - 3pm. A 24-hour depository is located outside the North entrance.
- Note: Deposits made after 3pm will not be posted until the following day.
Step 4 - Reconcile deposits
Step 5 - Report losses
- Report losses to supervisor
- If needed, report suspicious losses to the campus internal auditor 9-2241 or e-mail firstname.lastname@example.org