A well-designed system for handling cash is built on four cornerstones: Well-Designed Internal Controls, Detailed Procedures Manual, Training, & Oversight.
This article was initially published on the TASBO Focus Blog in August 2019
From the football concession stand to the kindergarten teacher collecting field trip money, cash can be a controller’s nightmare. But it doesn’t have to be. Some thoughtful planning and a little bit of employee and volunteer training can go a long way to keeping your district out of trouble — and out of the news.
A well-designed system for handling cash is built on four cornerstones:
Well-Designed Internal Controls
As a relatively high-risk activity, cash handling needs particularly robust internal controls. It should also be a high priority in your annual internal audit rotation.
Of course, the primary internal control for cash handling is segregation of duties. Even your PTAs require these basic procedures, such as requiring two signatures to verify cash counts. Make sure that the person collecting cash is not the same person who deposits and records it. A separate person should then be responsible for reconciliation.
Make sure you’ve also set up system controls:
- Restrict access to cash entries and reconciliation within the financial reporting system
- Restrict who is allowed to void a cash receipt or deposit slip
Detailed procedures manual
Documenting all of your processes, procedures and controls makes it easier to train cash handlers and enforce consistency across all campuses and activities. If you allow non-employees to handle cash, then design this section of your manual so it stands alone and you can distribute it to parents and volunteers. The documentation should describe processes for:
- Collecting cash, checks and credit card information
- Recognizing counterfeit currency
- Detecting check fraud
- Processing credit/debit cards
- Opening, maintaining and closing a cash workstation
- Balancing and safeguarding cash workstations
- Making daily deposits
- Handling discrepancies
- Safeguarding funds until they can be deposited with the bank
- Making bank deposits
- Requirements for delivery services, couriers, security guards and others who may need to carry or deliver cash
- Responding to emergencies or unexpected circumstances
Once this manual has been created, someone should be responsible for reviewing and updating it at least annually, so that the documentation matches evolving practices. An administrator should also review and approve the processes each year.
Use your procedures manual as a tool for designing appropriate training. Employees with cash-handling responsibilities should receive detailed training during the onboarding process. Both volunteers and employees should attend annual training to ensure they understand current procedures, requirements and expectations.
These training sessions should cover both routine processes and emergency procedures. What should an employee do if a cash box goes missing? Who is the appropriate district leader to contact with questions or concerns?
Most cash-handling occurs at individual campuses and events, which makes central administration oversight particularly important. These are some essential tools your district can use to ensure that procedures are being followed and reduce the risk of fraud or theft:
- Surprise cash counts
- Management review of reconciliations
- Annual review and approval of cash-handling policies
Asserting Cash Controls
As long as Texas high schools have football on Friday nights, Texas school districts will have to manage cash-based functions. No single internal control can provide absolute security, but implementing a comprehensive, four-step program like this one gives your district the best chance of preventing miscounts, errors, theft or fraud in activities that require cash handling.