Safeguarding Cash and Cash Equivalents Policy

University at Buffalo (UB, university) departments that handle cash and cash equivalents must have both an awareness of and commitment to strong internal controls. Internal controls encourage good stewardship, safeguard assets, promote accurate financial reporting, prevent mishandling and loss of funds, and protect employees from allegations of impropriety. 

The university’s objective is to minimize handling cash and cash equivalents across all departments and affiliates. To reduce risk and prevent theft, loss, or misappropriation of funds, whenever practical, acceptance of cash and checks should be avoided. The university’s preferred method for receiving payments is via the ePay process, collection through a student account for student-related charges, electronic funds transfer (EFT), and credit or debit cards. Cash transfers between affiliates (State, Research Foundation (RF), University at Buffalo Foundation (UBF), Faculty Student Association (FSA)) will be conducted via EFT and credited to departmental accounts.

University departments that collect cash and cash equivalents are responsible for implementing strong internal controls.

• All cash receipts must be deposited daily into an approved university, RF, UBF, or FSA bank account.
  • Independently established bank accounts are strictly prohibited for state and UBF deposits.
  • Refer to the State University of New York State Bank Accounts Procedure.
  • Distinct RF bank accounts may be established for specific projects or programs with the approval of the RF Operations Manager.
  • Refer to the RF Bank Account Establishment Policy.
• Maintain proper segregation of duties as outlined below.
• Establish written procedures for receiving, depositing, and reconciling cash or checks.
• Access to cash and checks must be restricted to individuals with authorized fiscal responsibility.
• Accurately record all cash collected at the time of receipt with record of receipt documentation.
• Safeguard all cash and checks:
  • Immediately upon receipt
  • By restrictively endorsing all checks immediately
  • By storing in a locked and secured location until the funds are deposited

• Separate responsibility for receiving cash, maintaining accounting records, preparing deposit slips, making bank deposits, disbursing cash, and reconciling cash when feasible. With proper segregation of duties, no single person has control over the entire cash handling process.
• Different individuals should:
  • Receive and record cash and checks
  • Deposit cash and checks
  • 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
  • Issue adjustments, credits, and refunds
• Implement alternating and compensating controls and additional supervision by department managers when segregation of duties is not possible. Additional controls may include:
  • Tests of reasonableness
  • Review of records and reconciliations at unannounced times
  • Reassignment of responsibilities after a period of time

• Emphasize physical security to those who handle cash and checks.
• Restrict access to cash and checks to as few individuals as possible.
• Count cash in a non-public area, with more than one individual present, when possible.
• Deposit cash and checks daily.
  • Request approval from Financial Management if it is not feasible to deposit cash and checks daily.
• Eliminate cash and checks held overnight.
  • Request approval from Financial Management if cash and checks must be held overnight.
• Lock cash and checks in a secure location and minimize employee access.
• Provide combinations/passwords only to authorized personnel.
• Change combinations/passwords at least annually or with turnover of related personnel.

• Maintain written procedures documenting the cash and check handling process.
  • Follow the procedures for the funding source of the account into which the cash receipts are deposited.
  • State funds – Deposit IFR, DIFR, SUTRA Revenue and Cash
  • RF funds – Deposit RF Revenue and Cash
  • UBF funds – Deposit UBF Revenue and Cash
• Define and document the responsibilities of staff responsible for handling cash and checks.
• Ensure staff are trained in cash and check handling procedures.
• Record cash immediately upon collection to prevent loss. Mishandled cash without a record of receipt is extremely difficult to trace and reconcile.
  • The employee recording the cash receipts should not have any further involvement in handling, depositing, or reconciling cash.
• Record cash receipts using pre-numbered receipts, cash registers, or pre-numbered event tickets.
  • Note the reason for the payment and the method of payment (i.e., cash, check, credit card) on the receipt.
  • Ensure that signs advising payers to request a receipt are visible in cash collecting areas.
  • Do not “net” payments; receipts must be itemized.
• Restrictively endorse checks and money orders immediately upon receipt.
• Record the receipt of cash and checks for tracking and reconciliation.
• Be aware of and safeguard against the acceptance of counterfeit currency.
  • Inspect $20, $50, and $100 bills for counterfeit traits.
  • Refer to the U.S. Currency Education Program on how to authenticate U.S. currency.
• Follow cash receipt internal controls for debit/credit card transactions.
  • Refer to the Credit/Debit Card Merchant Requirements Policy.
• Do not make refunds from cash receipts.
• Develop and document reconciliation procedures.

• Deposit cash and checks daily, at the close of each business day.
  • Request approval from Financial Management if:
    • It is not feasible to deposit cash and checks daily
    • Cash and checks must be held overnight
• Safeguard cash and checks awaiting deposit in a secure location, either in a locking safe or lockbox.
• Transmit deposits using the appropriate deposit transmittal form; follow the appropriate procedures for the funding source of the account to which the cash receipts will be credited.
  • State funds – Deposit IFR, DIFR, SUTRA Revenue and Cash
  • RF funds – Deposit RF Revenue and Cash
  • UBF funds – Deposit UBF Revenue and Cash
• Use pre-numbered deposit transmittal forms when making deposits.
  • Obtain pre-numbered deposit transmittal forms from University Print Services.
• Deposit cash and check receipts in total.
• Do not use cash receipts for petty cash, or to make change or refunds.
• Utilize a courier service or University Police to transport deposits centrally for either remote deposit capture (RDC) or armored car service pick-up.
  • Departments must receive approval from the Office of the Controller to make deposits directly to a university or university-affiliated account.
  • Departments may contact University Police for same-day requests for a police escort.
• Obtain a receipt for all deposits and retain for reconciliation purposes.

Controls and safeguards must be adequate to provide management with reasonable assurance that cash and cash related transactions are properly accounted for and controlled.

This policy applies to all cash collected by university departments and deposited into a state, Research Foundation, or University at Buffalo Foundation account.

Armored Car Service

Service operated by a security firm to transport cash deposits from the university to a financial institution.

Cash

Currency, coin, checks, credit/debit card recordings, bank notes, bullion, traveler’s checks, registered checks, and money orders.   

Cash Handling

Includes the responsibility for receiving cash, maintaining accounting records, preparing deposit slips, making bank deposits, disbursing cash, and reconciling cash.

Cash Receipts

Payments received in return for goods or services; includes cash, checks, debit/credit card payments.

Cash Register

Machine used to regulate money transactions with customers.

Counterfeit Currency

Currency that is made in imitation, so as to be passed off fraudulently or deceptively as genuine.

Electronic Funds Transfer (EFT)

The electronic transfer of money from one back account to another over a computerized network without any paper money changing hands or direct intervention of bank staff.  Examples of EFT include credit or debit card payments, direct deposit, wire or ACH transfers.

Event Ticket

A slip of paper or cardboard that serves as evidence that the holder has paid a fare or admission or is entitled to a service. Event tickets are pre-numbered and tracked in sequential order for seating and reconciliation purposes.

Internal Control

The integration of the activities, plans, attitudes, policies, and efforts of the people of a department working together to provide reasonable assurance that the department will achieve its mission. An action or procedure designed to promote efficiency, assure the implementation of a policy, or safeguard assets to avoid fraud and error.

Lock Bag

A deposit bag with a lock to transport cash and checks securely between locations. While no bag is completely theft proof, lock bags offer a higher degree of security due to their locking system and construction of the bag.

Lockbox

A post office box established for receiving payments. A lockbox service with a financial institution may be established to process payments and deposit them directly into the university’s bank account.

Payment Card Industry Data Security Standard (PCI DSS)

An information security standard for organizations that handle cardholder information, defined by the Payment Card Industry Security Standards Council.

Post Dated Check

A check written for disbursement at a future date from the date the check is written because payment is not due until the later date.

Pre-Numbered Receipt

A press numbered, triplicate form that acts as a record of receipt when cash is received. The original is given to the payer and copies are retained for accounting purposes.

Reconciliation

An accounting process that compares two separate sets of records to ensure the figures are accurate and in agreement.

Record of Receipt

A document or form that provides an acknowledgement of having taken into possession a specified amount of money.

Refund

To reimburse or give back money that was paid previously for goods or services.

Remote Deposit Capture

Ability to deposit a check remotely through scanning a digital image of the check and transmitting the image to the bank.

Restrictive Endorsement

The action that limits the negotiability of a check or money order to the deposit of a bank account.

Returned Check

Check that is returned by the bank to the depositor due to reasoning such as insufficient funds, improper endorsement, amount mismatch between words and numbers, post dated or stale dated checks, or stop payment orders.

Segregation of Duties

The means by which no one person has sole control over the lifespan of a transaction. No one person should be able to initiate, record, authorize, and reconcile a transaction.

Stale Dated Check

A check that was written more than six months prior to being deposited to the bank. The bank is no longer obligated to process this check after this time period.

State Accounts

State accounts include:

•  Dormitory Income Fund Reimbursable (DIFR) – self-supporting accounts used to administer room rental fees and charges.

•  Income Fund Reimbursable (IFR) – self-supporting accounts used to track cash collections and the matching expenditures associated with the educational and related activities provided to students and other customers. An IFR account differs from a State Operating account in that it is supported by cash receipts.

•  State Operating – accounts that are a combination of allocation from state tax dollars and campus revenue from tuition and certain other sources.

•  State University Tuition Reimbursable Account (SUTRA) – self-supporting programs funded from tuition revenue related to overseas programs, contract courses, summer session, and enrollment overflow. SUTRA accounts operate similar to IFR accounts.

• Safeguard cash and cash equivalents.
• Report occurrences of misappropriation of funds to Internal Audit.

• Follow the established cash receipts procedures for the appropriate funding source.
• Safeguard all undeposited cash receipts by keeping them in a locking safe or lockbox.
• Record cash and checks immediately using pre-numbered receipts, cash registers, or pre-numbered event tickets.
• Restrictively endorse all checks and money orders immediately.
• Deposit cash and check receipts daily.
• Examine appropriate denominations of currency received for possible counterfeits.
  • Refer to the U.S. Currency Education Program on how to authenticate U.S. currency.
• Follow appropriate policies and procedures for cash receipts from debit/credit cards.
  • Refer to the Credit/Debit Card Merchant Requirements Policy.
• Process refunds through Financial Management; do not make refunds from cash receipts.
• Perform cash receipts reconciliations as designated by departmental management.

• Establish and document departmental cash handling procedures and responsibilities, including appropriate internal controls, in the limited circumstances when cash and cash equivalents are collected for approved fees.
  • Read the guidance to Develop and Manage State Fees.
• Ensure all charges to students are made via the student account billing process.
  • For instances when it is not possible to bill a student account, utilize the e-Payment process.
  • Refer to the Electronic Payment (ePay) Application.
• Ensure staff has an understanding of cash handling procedures and their responsibilities.
• Maintain segregation of duties.
  • Assign cash handling responsibilities to different employees.
  • Provide additional supervision as a compensating control when staff is not available.
• Safeguard cash against loss, theft, or misappropriation.
• Deposit cash and checks daily.
• Request approval from Financial Management when:
  • it is not feasible to deposit cash and checks daily
  • cash and checks must be held overnight.
• Define and document cash reconciliation procedures and designate staff to perform reconciliations on a regular, timely basis.

• Assist department managers in developing strong internal controls related to cash handling and documenting cash handling procedures and responsibilities.
• Provide suggestions for improvement to department managers regarding cash handling, when appropriate.
• Review and approve, as appropriate, departmental requests to:
  • deposit cash and checks less frequently than daily
  • hold cash and checks overnight.

• Approve, as appropriate, requests from departments to make deposits directly to a university or university affiliated account.

• Approve, as appropriate, requests from departments to establish RF bank accounts for specific projects or programs or to make deposits directly to a university affiliated account.

• Review departmental controls over cash and cash equivalents for operational effectiveness.
• Investigate reported occurrences of misappropriation of funds