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Internal Control Practices: Cash

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Finance Internal Control Practices:


Internal Control
Practices
Cash
Last updated December 11, 2009 5:11:11 PM PST Give more feedback
Accounts Payable
Cash If you handle cash for your department, learn these best practices.
Entertainment Expenses
Equipment Management
Background
UCSD transacts thousands of dollars in over-the-counter business every day. To ensure that you protect,
Honorariums accurately process, and properly report University assets, follow the internal control practices of separating
Information Systems duties, obtaining appropriate authorizations and approvals, securing assets, and reconciling cash.

Payroll Definition: The University defines cash as currency, coins, checks, money orders, and e-commerce
transactions like credit card transactions.
Purchasing
Travel 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
Search Blink the entire cash process.

Best practice is to have different people:


Receive and deposit cash
Departments Record cash payments to receivable records
Reconcile cash receipts to deposits and the general ledger
Office of the Controller
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:
Who has access to cash
Why they have access to cash
Where cash is at all times
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

http://blink.ucsd.edu/finance/accountability/controls/practices/cash.html[4/5/2011 4:19:05 PM]


Internal Control Practices: Cash

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

For information about cash handling responsibilities, contact the Cashier's Office, (858) 534-3725.
For information on internal control practices, contact Debbie Rico, (858) 822-2797.

UC San Diego 9500 Gilman Dr. La Jolla, CA 92093 (858) 534-2230


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