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Cash! How to Ensure You are in Compliance Presented by: Shari Zara, CFO – Queen Creek Unified School District Karin Smith, Manager – Heinfeld, Meech & Co, P.C. AASBO Spring Conference, 2013
Who is Looking at all this? • Independent auditors • Business office administrators • Auditor General’s Office • Parents • Club Sponsors/Coaches • Principals
• Attorney General • Students • Co‐workers • Media • Other districts • Legislators • Anyone and everyone!
Who or What is at Risk? • Cash is stolen • Cash is lost • Bank statement doesn’t agree with organization’s records • No audit trail • Finger pointing/accusations • Lost revenues
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In terms of internal controls, one of the highest risk areas is… CASH!
Internal Controls Cash requires a strong system of internal control because it is more susceptible to manipulation than any other asset.
What is Internal Control? A process, effected by the governing body, administration, and front line workers, designed to provide reasonable assurance regarding the achievement of objectives in the following areas: Effectiveness and efficiency of operations Reliability of financial reporting Compliance with applicable laws and regulations
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Common Audit Findings
Common Compliance Issues • Deposits are not made in‐tack and within 5 days of receipt • Deposit slips are not maintained • Lack of segregation of duties • Cash collection forms and activity reports not completed and maintained • Tickets and Ticket Logs not utilized • Cash reconciliations not completed timely • Negative ending cash balances in cash controlled funds
USFR Cash Handling Procedures
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USFR Requirements • Approved bank accounts utilized • Cash is safeguarded, promptly recorded • Segregation of duties between cash handling and record keeping • Employees bonded (through insurance) • Monies deposited within 5 days of RECEIPT • Bank deposit receipts are maintained for all deposits
USFR Requirements • Pre‐Numbered checks are issued • Checks are never made payable to cash • Checks are safeguarded, limited access • Signature plates are safeguarded • ALL checks signed by 2 signers, one being the Treasurer or Assistant Treasurer • All disbursements made by pre‐numbered checks • Cash is available before check is issued
USFR Requirements • Voided checks are stamped to prevent reuse • Written bank reconciliations are prepared monthly • Monies are invested and credited to appropriate clubs/accounts
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Cash Handling – Bank Accounts • Prescribed by Arizona Revised Statute • Must be authorized by Governing Board • County Treasurer • Certain Bank Accounts
Authorized Bank Accounts • • • • • • • • • • • • • • • •
M&O Fund revolving account ‐ A.R.S. §15‐1101 Miscellaneous Receipts clearing account(s) ‐ A.R.S. §15‐341(A)(20) Food Service Fund clearing account ‐ A.G. Opinion I60‐35 Food Service Fund revolving account ‐ A.R.S. §15‐1154 Auxiliary Operations Fund account ‐ A.R.S. §15‐1126 Auxiliary Operations Fund revolving accounts ‐ A.R.S. §15‐1126 Student Activities Fund accounts ‐ A.R.S. §15‐1122 Student Activities Fund revolving account ‐ A.R.S. §15‐1124 Federal Savings Bond Withholdings account ‐ A.R.S. §15‐1221 State Income Tax Withholdings account ‐ A.R.S. §15‐1222 Employee Insurance Programs Withholdings account ‐ A.R.S. §15‐1223 Grants and Gifts to Teachers account ‐ A.R.S. §15‐1224 Federal Payroll Tax Withholdings account ‐ USFR page VI‐H‐8 Principals’ Supplies account(s) ‐ A.R.S. §15‐354 Electronic Payments clearing account ‐ A.R.S. §15‐1221 Payroll Direct Deposits clearing account ‐ A.R.S. §15‐1221
Cash Handling Segregation of duties
Timely, intact deposit
Cash handling
At least weekly, but daily if significant
Accurate recording
Authorization
Record keeping
Pre‐numbered receipts, cash collection reports, validated deposit receipts
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Separation of Duties
3 Key Duties Cash-handling
Recordkeeping
Authorization
Segregation of Duties Different, qualified employees are expected to handle each of the following key responsibilities associated with cash handling and change fund management: • Cash receiving/cashiering and counting cash as part of the cash drawer closing process (Asset handling) • Secondary counting of cash, comparison to initial cash count, deposit preparation, and recording of cash by completing cash collection form (Recording transactions) • Making cash deposit (Asset disposition) • Comparing cash deposits recorded in general ledger to deposit amounts appearing on copies of the cash collection forms and deposit slips. (Comparison/reconciliation)
Segregation of Duties • A good plan of organization should delegate responsibilities to key departments and adequately segregate incompatible functions among employees • Operating and accounting functions should be separated so one employee does not have both recordkeeping and custodial duties • In small organization where limited personnel prohibit such segregation of duties, school management should review the work of employees performing both duties
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When to Use… Activity Reports
Cash Collection Report
Pre‐numbered tickets sales (school dance)
Cash register
Athletic events
T‐shirt sales
Candy sales
Magazine sales
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General Guidelines – Cash Handling Available funds
Pre‐numbered checks
Appropriate payees
Authorized signers
Reconciliation
Petty Cash • The cash drawer should not to be used as a petty cash fund
Change Funds • Established by check made payable to the custodian of funds
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Safeguarding Monies After count of monies has been verified, it should be maintained in a secure location • Within a cash register/safe with limited access • Cash register/safe must remained locked at all times • If cashier must step away even momentarily, cash drawer should be locked • If cash drawer will be unattended for significant amount of time (i.e., doctor’s appointment), monies should be locked in a safe
Safeguarding Monies • Ideally, a safe will be close to the area where cash is collected • If so, be sure that all collected cash is kept in the safe until deposited and all till money is kept in the safe when not in use • Access should be limited to supervisory and authorized personnel • It is very important that the safe is located where it is continually visible to department employees
Safeguarding Monies • If there is no safe, then a cashbox that can be locked must be used.
• The cashbox must be secured in area to which access is limited to the person collecting the cash and his/her immediate supervisor.
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In Summary – Cash Handling • Segregation of Duties! • Protect yourself and your colleagues • Safeguard all monies received • Complete Activity Report and/or Cash Collection Report • Deposit monies in‐tact within the required time period
QUESTIONS
Contact Information Shari Zara, CFO Queen Creek Unified School District
[email protected] 480‐987‐5936 Karin Smith, Consulting Manager Heinfeld, Meech & Co., P.C.
[email protected] 602‐277‐9449, ext 327
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