Systems and Procedures
A Division of The Office of Budget and Finance
A Division of The Office of Budget and Finance
Currency, coins, checks, money orders and traveler's checks (hereafter referred to as "cash receipts") are received regularly into the University financial systems from various sources. These receipts, when received by their department, must be deposited into University bank accounts approved by The Treasury Office, a division of the Office of Budget and Finance. Checks, money orders, and traveler's checks must be restrictively endorsed when received in accordance with Policy FN01 Cash Revenues before being deposited.
Policy FN01 Cash Revenues recognizes the documentation of a transaction as two (2) separate but related functions:
The primary reasons for this requirement are to capture information necessary for:
As long as the documentation of a transaction captures the information indicated in Policy FN01 Cash Revenues AND is protected so that it cannot be easily misplaced or modified without possible detection and it is readily retrievable, documentation may be hand-written, printed, or electronically or optically stored. This allows for the use of a wide variety of methods for recording a transaction including, but not limited to, cash registers, prenumbered receipt books, transaction logs, point-of-sale terminals, registration forms, and computer systems. See Procedure CR2032 Processing and Controlling Prenumbered Receipts for details regarding issuing prenumbered receipts.
It should be noted that the documentation used to meet this requirement of the University possessing a record of the transaction does not necessarily have to be the same media as the acknowledgment that is given to the person paying. For example, a Center for the Performing Arts transaction may be recorded on a computer system, but the person paying receives tickets as the acknowledgment of the transaction.
There are two major risks faced by the University when revenue is accepted and the record of the transaction is not properly recorded, controlled, and safeguarded:
It is in response to these two risks that Policy FN01 Cash Revenues calls for the control of transaction documentation. While it may not be cost-effective and possible to totally prevent misappropriation, controls should exist to make lost transaction records less likely, and if they occur, easier to detect. This was the premise behind the use of a prenumbered receipt. Since prenumbered receipts are to be issued in a consecutive manner, a missing receipt would be detectable as a missing number in the numeric series. Cash registers afford a similar control in that transactions are recorded in each point-of-sale (POS) system and can be accessed through the POS online portal.
It should be noted that Policy FN01 Cash Revenues indicates that a record of a transaction "must be generated by the individual initially accepting the revenue on behalf of the University." Once the revenue has been initially accepted by the University, no duplicate records of the transaction should be generated. For example, if a department has an office on one side of the campus that receives revenue and records transactions, then transfers the revenue to its business office at the end of the day for deposit, a University receipt must not also be issued by the business office to indicate acceptance of the revenue. This is merely a transfer of revenue within the University that should be documented by an Accountability Transfer Form or other suitable transfer log or document. There should be only one official receipt/record per transaction and the total of the recorded amounts of the transactions must be reconciled to the associated revenue collected and the related Cash Deposit Journal Entry.
Credit card transaction slips may be a suitable record of transaction if they meet the criteria delineated in Policy FN01 Cash Revenues. In operations where a cash register or other means of recording transactions are considered the primary means, credit card transaction slips become supporting documentation, and therefore are not in conflict with the "one record per transaction" rule. Each area should clearly establish what documentation will be considered the "record of transaction" and what will be deemed support.
Each Business Area Financial Officer has the responsibility for determining the adequacy of documentation and local procedures.
The primary reasons for this requirement are:
This requirement applies regardless of the form of payment. A canceled check by itself does not constitute a sufficient acknowledgment since it does not provide the required information specified by Policy FN01 Cash Revenues. Also, money orders and traveler's checks do not get returned to the person paying once they are canceled.
The concept of acknowledgment is broader than the definition of a receipt. In fact, a receipt is defined as "the written acknowledgment of payment received." Payments made in person will most commonly result in a cash register receipt or a prenumbered receipt being issued to the person paying. Acknowledgments to persons paying by mail may seem less obvious. For example, registration by mail for a University seminar should result in an enrollment confirmation being sent to the person paying. A mail order for something offered by the Alumni Association should result in a packing list/statement being sent along with the goods to the person paying; and payments to a student's account should be reflected in the next account statement. Therefore, documentation which may not normally be termed a "receipt" may nonetheless qualify as an acknowledgment.
Cash receipts in the form of checks, money orders, and traveler's checks must be restrictively endorsed immediately upon receipt to further limit the negotiability of the items. For efficiency, an endorsement stamp must be used. As specified in the "Check Endorsement" section of Policy FN01 Cash Revenues, all endorsements must comply with Federal Reserve established regulations for standardized check endorsements.
Endorsements must include the following:
Example of a stamp:
FOR DEPOSIT ONLY
THE PENNSYLVANIA STATE UNIVERSITY
Citizen Bank
000000-00000
BA 1234 PSU Access ID__________________
All endorsements must be made on the reverse side of the check, within 1/2 inch of the edge and on the same end of the check as the "Pay to the order of" which appears on the front side of the check.
Once properly endorsed, the checks, money orders, and traveler's checks will be deposited as discussed in "Depositing of Monies Received."
In accordance with University Policy FN01 Cash Revenues, all cash receipts that are received by any department or area of the University must:
A Cash Deposit Journal Entry must be prepared for all deposits, except (1) revenues received for Charge Sales involving the University Park (UP) Invoice (see "Processing Revenues From Charge Sales", below) and (2) those deposits directly affecting a student account receivable.
NOTE: For deposits directly affecting a student account receivable (both credit and noncredit activity), the entry to the student account via LionPATH is sufficient notification. Transactions entered in this manner simultaneously update the student's account and the appropriate general ledger accounts.
Monies must be deposited with appropriate authorized depositories in accordance with Policy FN01 Cash Revenues. At University Park, there are multiple designated depository banks for local deposits. The Treasury Office will designate one of these banks to each department as that department's depository.
Departments have three (3) options for depositing funds:
At non-University Park locations, deposits are made to the regular University depository approved by the Treasury Office for use at that location or appropriate arrangements are made with the Finance/Business Office to pick up/deliver deposits.
Due to volume and the timing of events, Intercollegiate Athletics has implemented Procedure IA2005 Food and Beverage Sales at Intercollegiate Athletics Facilities Events detailing University approved depositing procedures for their respective divisions.
At University Park, the Bursar will maintain a supply of deposit ticket books for University Park and forward the books to departments when requested. At non-University Park locations, a supply will be obtained from the designated local bank by the Financial Officer at that location.
Once obtained from the applicable source, Financial Officers will distribute deposit ticket books to those departments under their fiscal purview, thus maintaining the appropriate fiscal control over those departments making their own direct deposits.
Cash handling typically involves the following steps, in order of their occurrence:
In keeping with sound cash handling practices, adequate separation of duties must be observed. Ideally, steps 1-5 should be done by different individuals; however, manpower restraints may limit the extent of this separation. Nonetheless, to better ensure that adequate checks and balances are implemented, handling should be coordinated as such that no TWO successive cash handling steps are done by the same individual. In extreme cases when this arrangement cannot be followed, it is the responsibility of area management and/or the Financial Officer/designee to regularly monitor the process to minimize the potential for abuse.
In preparing a deposit for the bank, the individual must prepare a deposit ticket. The deposit ticket must be completed in full, with coins, cash and a summary of checks/money orders/traveler's checks being listed. See Check Deposits (below) for additional information pertaining to check deposits. The individual making the deposit must identify the department name on the deposit slip, as well as the bag number of the deposit bag being used (disposable plastic bag). The deposit ticket should indicate a department name so that the deposit ticket can be returned to the area making the deposit.
The cash receipts and completed deposit ticket will then be placed in a deposit bag for transporting to the appropriate depository as specified in "Transporting Revenues." More than one deposit may be included in a deposit bag, but each deposit (1) must be clearly identified (i.e., deposit ticket and related monies bound together) and (2) each must have a separate Cash Deposit Journal Entry. To receive the bank-validated deposit slip, when a deposit is transported to the bank via courier, a postage-paid, self-addressed University envelope is to be included in the deposit bank. The bank will mail the deposit slip(s) back to the individual using the provided envelope.
If the deposit is completed via courier service, the prepared deposit ticket is to be uploaded as supporting documentation to the Cash Deposit Journal Entry. If the deposit is taken directly to the bank the bank validated deposit slip is to be uploaded as supporting documentation to the Cash Deposit Journal Entry. The Cash Deposit Journal Entry must be processed on the date the bank deposit is made. This is to ensure that the journal entry matches the bank-validated date of deposit and amount.
There are several variations of check deposits. They include:
Checks drawn on U.S. banks may be deposited at any University-designated bank. See "Cash Deposits" for deposits being taken directly to the bank or for deposits sent via courier. Any checks drawn on non-U.S. banks (foreign currency) must be removed from the deposit and deposited separately (see the non-U.S. bank section below).
To participate in the Remote Deposit program, please contact the Treasury Office by emailing TreasuryGroup and include establishing remote deposit in the subject line of the email.
Only checks drawn on U.S. banks may be submitted using the Remote Deposit capture process. When preparing the checks for deposit, any checks drawn on non-U.S. banks must be removed from the batch and processed according to the instructions in the Checks Drawn on non-U.S. Banks section.
To capture deposits, each check must be run through the scanner, in batches, to capture the front and back of the check. When submitted, the image of each check is stored electronically by the bank. Through the depository bank website, a virtual deposit ticket is created with count (optional) and the total amount of the checks/money orders/traveler's checks otherwise known as "Declared Amount."
Once complete, review the summary of scanned items. If there are any errors, the deposit cannot be completed until they are corrected. Once error(s) are corrected compare and confirm the Entered Amount ($) is equal to the Declared Amount. Electronically submit the deposit and a deposit number will be assigned. The remote deposit confirmation is to be uploaded as supporting documentation to the Cash Deposit Journal Entry.
Store remittance materials in a secure location (for example, a locked room, safe or lock-box, or a locked desk drawer) for a minimum of 14 days after the deposit is captured. After the 14-day retention period, materials must be destroyed via on-site paper shredder or stored in a secure trash bin until destroyed via on-site paper. Business areas may establish stricter retention requirements based on business area needs.
After the remote deposit is complete, please proceed to the Preparing the Cash Deposit Journal Entry.
Checks which are payable in foreign currency require special consideration and may not be deposited in the same manner as checks drawn on U.S. Banks. Such checks must be converted from foreign currency to U.S. Dollars.
The business area receiving the foreign check must prepare a deposit with the foreign check being the only check included on the deposit slip. If there are multiple checks from the same company, written on the same bank account, these may be included on a single deposit slip. An email needs to be sent to Financial Reporting which includes the date of the deposit, the name of bank where the foreign check was deposited, and the amount of the deposit. Include Foreign check conversion in the subject line of the email. Once the banking institution converts the check to U.S. dollars. Financial Reporting will be able to access the information online at the bank's website. Financial Reporting will monitor the website for the conversion to take place and then advise the department of the U.S. Dollar (USD) amount and date the check is credited to the bank account.
Upon notification by Financial Reporting, the original business area must process a Cash Deposit Journal Entry for the identified dollar amount (net of any fees) per the SIMBA: Create a Journal Entry for Incoming Funds article. If the fees for converting a foreign check are not deducted from the converted proceeds of the check, the service fees become the responsibility of the Business Area and will be posted to general ledger account 52571040, cost center 5211310001 via a Journal Entry prepared by the Financial Reporting department.
The area receiving the foreign check must forward the check within 24 hours to that location's Financial Officer. Prior to turning the check over to the Financial Officer, the department will prepare a memo requesting conversion, along with the specific account and general ledger to which the converted check should be credited. Copies of both the memo and the foreign check will be held, pending conversion and notification of settlement by the Financial Officer.
Upon receipt of the memo and foreign check, the Financial Officer will have the check converted through that location's designated depository bank. Once converted, the Financial Officer will notify the department of the amount (net of any fees), and to which cost collector the fees should be charged.
Upon notification by the Financial Officer, the original department processes a Cash Deposit Journal Entry per the instructions in the SIMBA: Create a Journal Entry for Incoming Funds KB article.
Student accounts paid with foreign checks must wait to post the payment amount until the Bank completes the conversion to U.S. dollars. Any amount over or under the student's obligation will appear as a debit or a credit to the student's account.
In all other cases, if the fees for converting a foreign check are not deducted from the converted proceeds of the check, the service fees will be posted to general ledger account 52571040, cost center 5211310001 via a Journal Entry prepared by the Financial Reporting department.
In addition to preparing the bank deposit slip, a Cash Deposit Journal Entry must also be prepared for each deposit. See SIMBA: Create a Journal Entry for Incoming Funds for instruction on completing the transaction in SIMBA.
The Cash Deposit Journal Entry should be entered in SIMBA on the same date the deposit is made at the bank. The debit and the credit for this transaction should be recorded to the respective Business Area number, not a central business area number. See SIMBA: Create a Journal Entry for Incoming Funds for instructions on the required supporting documentation to be attached to the journal entry document. The original validated bank deposit slip is to be retained by the Business Area from the end of the fiscal year in which it is recorded plus 1 year.
Recording the Cash Deposit Journal Entry on the date of deposit allows Financial Reporting to easily reconcile the transactions on the associated bank statement.
See the SIMBA: Cash Deposits Workflow for information pertaining to the SIMBA workflow for Cash Deposits.
See Procedure FN2066 Accounts Receivable for complete details on Invoice Processing
Once properly prepared, deposits will be transported as documented in Procedure CR2004 Accountability for Transfer of Items of Value (Except Equipment). Under no circumstances may cash be transported for deposit via interoffice or U.S. Mail. The Accountability Transfer Form must be completed to initiate the transfer.
The Monthly Budget Report, and/or SIMBA System reports must be checked each month by the authorized department representative to verify that all deposits made to authorized depositories have been properly recorded.
For LionPATH deposits, the Bursar and authorized department representatives (as applicable) will use the daily transaction Activity Report for verifying and reconciling such deposit activity.
The resolution of returned checks is the responsibility of the department originally receiving the check. Refer to the procedure titled FN2002 Processing Returned Checks (formerly CR2002).
Violation of a financial policy and/or procedure should be reported to your supervisor, unit manager, your Human Resources representative, and/or office responsible for the policy and/or procedure. Where those resources are inadequate, you may choose to make an anonymous report through the Penn State University hotline by calling 1-800-560-1637.
The Financial Officer is responsible for ensuring that procedures pertaining to the accountability and safeguarding of all cash receipts, cash funds, and other assets are established and followed in accordance with approved University policies and procedures. Regular audits relating to advances, cash, travel, equipment accountability, and other expenditures provide a means to protect University assets. The Financial Officer is responsible for working with Internal Audit when audits are being performed in the administrative area. Audits relating to sponsored activities or other audits performed by external auditors may also be performed. The Financial Officer would also be responsible for collaborating with the external auditor and/or a central university officer related to these procedures.
University Records must be retained and managed in accordance with Policy AD35 University Archives and Records Management and the University's Records Retention Schedules that have been approved by the Records Management Advisory Committee (RMAC), the Office of General Counsel, and Senior Vice President and Chief of Staff. These Records Retention Schedules are derived from - or based upon - federal, state, and local statutes or regulations (i.e., Federal Acquisition Regulations, the OMB Uniform Guidance, Internal Revenue Service, and other regulations governing the auditability and retention of financial records), University Policy, industry standards, and business needs. All University Records must be maintained in such a manner to provide ease of access, establish a suitable audit trail for all transactions, and to be reviewed prior to disposition.
University Records and Transitory/Disposable Records are defined below. See Policy AD35, Definition of Terms for additional information.
Upon completion of the retention period, University Records must be disposed of via secure destruction or transfer to University Archives, unless an exception to the disposition process set forth below applies. In many cases, retention periods and disposition methods may be generally determined by comparing the type of record (i.e., reports, correspondence, etc.) to similar records series with known retention periods listed on the Records Retention Schedule. If the disposition method for University Records states "Review by Archives" on the Records Retention Schedule, the Unit responsible for those records should consult the University Archivist for a final determination of disposition. For University Records that must be securely destroyed, units may arrange for shredding services by either contacting the Blue/White Shredding Program or the Inactive Records Center (IRC).
Exceptions to the practice are as follows:
To safeguard the privacy of individuals, records that contain Personally Identifiable Information (PII), as defined in University Policy, AD53 Privacy Policy, or student records, as defined in University Policy, AD11 Confidentiality of Student Records, must be securely destroyed beyond recovery. For additional information regarding privacy and the protection of an individual's personal information, see Policy AD53 Privacy Policy.
Additional questions may be directed to the Office of Records Management.
There are no exhibits associated with this document.
For questions or additional information, please contact the Controller, a division of the Office of Budget and Finance.
To request changes to this procedure, please contact the Office of Systems & Procedures by submitting a GURU Technical Support Request form.
11/21/2023