13-1: Minimum requirements for cash receipts procedures

Effective: April 1, 2002
Revised: October 31, 2023
Approved by: Van Christensen
References:Utah Code 51-4-1

Purpose

This policy outlines the minimum requirements agencies must include in their written cash receipts handling procedures.

Agencies must write and maintain their own standard procedures that establish an effective system of internal control over the cash receipts handling process. These procedures ensure all cash receipts are properly received, safeguarded, deposited, and recorded in FINET. Good internal controls are intended to prevent and detect errors and increase public confidence in the collection of cash receipts.

Definitions

Cash receipt – Cash, checks, currency, credit card payments, electronic funds transfer (ACH or wire transfer), or any type of electronic payments received by an agency.

CR transaction – The name of the transaction type used in FINET to record cash receipts.

Depository bank account – A bank account approved, opened, and tracked by the Office of State Treasurer where agencies deposit money that is transferred to the main bank account of the state treasurer.

Policy

A – Standard procedures must include the following:

1 – Separation of duties

1a – One employee must not have sole control over all aspects of cash receipt handling. Multiple employees are necessary to prevent fraud, errors, and misappropriation of funds.

1b – Different employees must perform the following duties:

Handling cash receipts, including having access to safes, lock boxes, and cash registers.
Approving cash receipt related transactions, such as refunds or discounts.
Recording transactions in FINET.
Approving transactions in FINET, including receivable write-offs.
Reconciling cash receipts with bank deposits, FINET, or other financial records.

1c – Cash receipt functions should be separate from cash disbursement functions.

2 – Proper cash receipt control

2a – Cash receipts received in person must be properly controlled through the use of a cash register, receipt system, or pre-numbered receipts. Cash receipts received through the mail must be opened and recorded in a mail log by two employees.

3 – Safeguarding of cash receipts

3a – Deposit cash receipts in the bank daily whenever possible. If daily is not possible, deposit cash receipts no later than 3 banking days unless the agency has a written variance from the state treasurer, as required by Utah Code 51-4-1.

3b – Restrictively endorse all checks immediately upon receipt, for example “for deposit only,” on the back of a check.

3c – Store cash and checks in a secure location with access limited to a necessary number of employees.

4 – Reconciliations

4a – Reconcile total cash receipts per the control method in 4b to the bank statement by amount and date.

4b – Reconcile the depository bank account to FINET.

5 – Correct FINET coding blocks

5a – Use the correct FINET coding block or receivable (RE) reference on CR transactions.

6 – Timely recording of deposits in FINET

6a – Whenever possible, record CR transactions in FINET the same day deposits are made. If the same day is not possible, record CR transactions no later than 3 business days after deposits are made.

6b – For reconciliation purposes, CR transactions should be entered in FINET within the same fiscal month of deposits.

7 – Documentation

7a – All supporting documentation for CR transactions must be attached to the transaction in FINET or stored at the agency’s physical location. These documents must be retained for a minimum of 7 years in accordance with state government accounts payable and receivable records or longer if required by agency retention schedules as arranged with state archives. FINET retains records for 10 years.

8 – Review of returned funds

8a – Agencies must review the depository bank account statements for any returned funds.

8b – Returned funds include non-sufficient funds checks (NSF checks), stop payments, disputed payments, and credit card chargebacks.

9 – Correct year-end recording in FINET

9a – Cash receipts received on or before the last day of the fiscal year must be recorded as an old year CR transaction, regardless of when it is deposited. This includes cash receipts received at agency main offices, satellite offices, by agency personnel out in the field, or by the state treasurer.

9b – Cash receipts received after the last day of the fiscal year must be recorded as a new year CR transaction.

9c – A FINET year-end accrual (JVYE transaction) may be required to ensure that revenue and refunds of expenditures are recorded in the correct fiscal year.