(A) Purpose. The purpose of the cash handling policy is to define the acceptable level of internal control for cash handling operations for all city departments to ensure clear and consistent practices within the city for the handling of cash. This policy is designed to avoid fraudulent activity in the handling of city cash.
(B) Scope. This policy applies to all city operating departments with employees, staff, volunteers, students, elected officials, contractors, consultants, boards, agencies, commissions, and business partners who accept cash on behalf of the city and whose financial transactions are captured within the city’s financial system.
(C) Definitions. For the purpose of this section, the following definitions shall apply unless the context clearly indicated or required a different meaning.
BONDING OF EMPLOYEES. Agreement under which a bonding or insurance company guarantees payment of a certain amount as damages in the event that one or more employees covered in the agreement cause financial loss to the city.
CASH. Coin, currency, checks, money orders, and credit/debit transactions.
CASHIER. Any employee who performs the function of receiving, transmitting, safeguarding, and/or depositing city cash. This includes the position of Billing Clerk and/or part-time clerk.
REFUND. Reimbursement to a customer or vendor for returned, cancelled, or unsatisfactory goods or services after the original purchase transaction is completed.
SEGREGATION OF DUTIES.
(a) No single person handles a transaction from beginning to end. If one person does perform two or more of these functions, there is no independent check for mistakes, and errors and/or irregularities are very likely to go undiscovered for long periods.
(b) If possible, different people within a cash handling operation should perform the following four basic functional categories:
1. Authorization or approval of transactions;
2. Recording of transactions;
3. Custody of funds; and
4. Monitoring to ensure compliance with internal control procedures.
(c) It is not always practical for the city to maintain strict SEGREGATION OF DUTIES due to limited staff size, but the following standards are aimed to control the risks associated with inabilities to segregate.
(D) Internal control standards for cash handling.
A procedure must be in place, which will ensure that all payments received are processed on a timely basis, and that any payment may be traced from initial receipt to bank reconciliation. Cash handling procedures should include the following internal controls:
(1) Maintain strict control over all receipt documentation;
(2) Use pre-numbered and sequentially numbered receipts either manual or point of sale generated, for all money received. Receipts must include a mode of payment information and identify the issuer. Spoiled receipts should be marked “VOID” and retained in the receipt book. On a quarterly basis; a Common Council member or Board of Public Works and Saftey member, whomever is available, will sign and verify that all receipts are intact and accountable for in each receipt book;
(3) All cash received must be accounted for in detail and reconciled to a corresponding bank deposit, cash register report or source journal;
(4) Cash received from any type of fundraising activity for any department must be turned over to the Clerk-Treasurer within 24 hours of the fundraising event. Cash shall be accompanied by a signed receipt with two separate signatures that verify the amount of cash presented to the Clerk-Treasurer for deposit. At no point shall a department hold cash in their office or personal possession from the fundraising event beyond the 24 hours preceding the fundraising event. The Clerk-Treasurer then has until the next business day to make the deposit;
(5) During non-business hours and business periods where access to cash is not required, all funds are required to be in a locked vault, safe, or other secure cabinet/drawer;
(6) Vault or safe combinations must be limited to the smallest number of individuals practicable, given the business needs of the work unit;
(7) Funds are to be deposited in the bank on a timely basis. Deposits picked up by bank courier car service will be recorded using a pick up log which documents the date, deposit bag number, deposit amount, initials of the city employee releasing the deposit, and initials of the bank courier service driver taking custody of the funds. The identification of the bank courier service driver should be compared against a list of authorized personnel before releasing the deposit;
(8) Each cashier is responsible to ensure that his or her cash drawer is locked when he or she leaves his or her station. No funds are to be left unattended and unsecured;
(9) Checks received through the mail or in person must be endorsed with the Department’s “For Deposit Only” stamp immediately upon receipt, or signed by the Clerk-Treasurer when applicable;
(10) Under no circumstances should cash disbursement be made from cash receipts, unless cash is being used in the change making process;
(11) Clerk-Treasurer will prepare a monthly bank reconciliation and have available at regular monthly council meetings. Bank reconciliation shall be recorded in any government accounting software that the city chooses and reconciled to bank statements on a monthly basis. The Common Council will perform review and sign off of the bank reconciliation. Any discrepancies between funds deposited and bank activity should be investigated and resolved with assistance from Common Council when necessary;
(12) All cash shortages and overages are recorded with the ability to ascertain individual accountability;
(13) (a) All refunds and voided transactions shall have the following supporting documentation:
1. Transaction date;
2. Customer or vendor name, address, phone number, and signature (if available);
3. Original customer receipt (when available);
4. Reason for the refund or voided transaction;
5. Amount and form of payment;
6. Signature of cashier issuing the refund or void; and
7. Signature of a Common Council member approving the transaction.
(b) The Common Council should investigate refunds and voided transactions for which no supporting documentation exists. Refunds should be returned using the same payment method as the original payment if possible.
(14) The cash float or cash change will be stored in a secure location with limited access at all times. Access to the cash float or cash will be limited to the Clerk-Treasurer. The Clerk-Treasurer will count the cash float or cash change at the start and end of his or her shift. A report of daily balancing will be presented at the end of every month to any available Common Council member for review and sign off.
(E) Compliance. Failure of employees to comply with this cash handling policy could result in disciplinary action.
(Ord. 14 2016, passed 12-27-2016) Penalty, see § 10.99