3/29/2013 Cash!HowtoEnsureYou areinCompliance Presented by: Shari Zara, CFO – Queen Creek Unified School District Karin Smith, Manager – Heinfeld, Meech & Co, P.C. AASBO Spring Conference, 2013 WhoisLookingatallthis? • 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! WhoorWhatisatRisk? • Cash is stolen • Cash is lost • Bank statement doesn’t agree with organization’s records • No audit trail • Finger pointing/accusations • Lost revenues 1 3/29/2013 In terms of internal controls, one of the highest risk areas is… CASH! InternalControls Cash requires a strong system of internal control because it is more susceptible to manipulation than any other asset. WhatisInternalControl? 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 2 3/29/2013 CommonAuditFindings CommonComplianceIssues • 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 USFRCashHandling Procedures 3 3/29/2013 USFRRequirements • 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 USFRRequirements • 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 USFRRequirements • Voided checks are stamped to prevent reuse • Written bank reconciliations are prepared monthly • Monies are invested and credited to appropriate clubs/accounts 4 3/29/2013 CashHandling– BankAccounts • Prescribed by Arizona Revised Statute • Must be authorized by Governing Board • County Treasurer • Certain Bank Accounts AuthorizedBankAccounts • • • • • • • • • • • • • • • • 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 CashHandling 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 5 3/29/2013 SeparationofDuties 3 Key Duties Cash-handling Recordkeeping Authorization SegregationofDuties 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) SegregationofDuties • 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 6 3/29/2013 WhentoUse… Activity Reports Cash Collection Report Pre‐numbered tickets sales (school dance) Cash register Athletic events T‐shirt sales Candy sales Magazine sales 7 3/29/2013 GeneralGuidelines– CashHandling Available funds Pre‐numbered checks Appropriate payees Authorized signers Reconciliation PettyCash • The cash drawer should not to be used as a petty cash fund ChangeFunds • Established by check made payable to the custodian of funds 8 3/29/2013 SafeguardingMonies 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 SafeguardingMonies • 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 SafeguardingMonies • 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. 9 3/29/2013 InSummary– CashHandling • 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 ContactInformation ShariZara,CFO QueenCreekUnifiedSchoolDistrict [email protected] 480‐987‐5936 KarinSmith,ConsultingManager Heinfeld,Meech&Co.,P.C. [email protected] 602‐277‐9449, ext 327 10 3/29/2013 11