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Cash Management Policy #302

Policy #302 Approved: February 17, 2011
UNIVERSITY OF NORTH CAROLINA SCHOOL OF THE ARTS
Cash Management Policy
Policy #302
Source of Authority: N.C.G.S. §§ 147-86.10 & 147-86.11;
Statewide Cash Management Plan;
N.C.G.S. § 116-34(a);
UNC Code § 502(A)
Revision Authority: Chancellor (in conjuction with the Office of the State Controller)
History: First Issued: February 17, 2011
Related Policies: State Cash Management Statement of Policy, N.C.G.S. § 147-86.10;
Cash Management for the State, N.C.G.S. § 147-86.11;
Statewide Cash Management Plan;
Accounts Payable Policy #301;
Cashier Policy #303;
Improper Activities Reporting Policy #114
Responsible Offices: Financial Services Department
Controller
Effective Date: February 17, 2011
PDF: POLICY #302

I. Purpose

This policy effectuates North Carolina law, which requires that “all agencies, institutions . . . of the State . . . devise techniques and procedures for the receipt, deposit and disbursement of moneys coming into their control and custody which are designed to maximize interest-bearing investment of cash and to minimize idle and nonproductive cash balances.”

II. Scope

This policy applies to all monies coming into the custody or control of UNCSA.

III. Definitions

A. “Encumbrances” mean memorandum entries that reserve funds for some specific intended purpose.

IV. Policy

A. All monies will be locked in the vault at the end of each business day.

B. Deposits

1. Except as otherwise provided by law, all funds belonging to the State of North Carolina, and received by a UNCSA employee in the normal course of their employment shall be deposited with the State Treasurer pursuant to N.C.G.S. §§ 147-77 and 147-69.1.

2. Monies received by a UNCSA employee in trust for specific beneficiaries for which the employee-custodian has a duty to invest shall be deposited with the State Treasurer pursuant to N.C.G.S. § 147-69.3.

3. Monies received shall be deposited daily in the form and amounts received, except as otherwise provided by law.

4. The State Treasurer has approved an exemption to the daily deposit rule if receipts total less than $250.00 and deposits are made at least weekly.

5. If after thorough research, the University determines it is not entitled to an amount received and deposited on behalf of the University, that amount is refunded to the entity that originally remitted the payment. All research is documented and maintained in the Cashier’s office for review.

6. Returned Checks

a. The Cashier’s Office is responsible for receiving checks issued to UNCSA that are returned by the bank for insufficient funds

b. If the worthless check was for payment of tuition and fees, the amount of the check plus a $25.00 fee shall be placed on the student’s account. Students will not be allowed to register for classes, receive a diploma, or receive transcripts until the worthless check and fee have been paid.

c. For all other returned checks, the Cashier will send a letter to the owner of the check notifying that the check was returned for insufficient funds.

i. The person shall be required to bring in cash, a money order, or a cashier’s check in the amount of the check plus a $20.00 fee.

ii. If after two notifications, the person has not responded, all check cashing privileges will be suspended for that individual.

7. UNCSA will accept wire transfers deposited into the School’s Agency Fund checking account at Wachovia Bank (a checking account outside the State Treasurer).

8. Credit Cards & Electronic Payments

a. Electronic payments (credit cards and electronic fund transfers) will be accepted to the maximum extent possible and in a manner consistent with sound business practices, pursuant to N.C.G.S. § 147- 86.22.

b. The University utilizes the Master Settlement Agreement (MSA) for electronic payment processing and follows the electronic commerce policies and procedures which can be found athttp://www.osc.nc.gov/SECP/SECP_Policies.html

c. The University utilizes the Master Settlement Agreement (MSA) for electronic payment processing. The University follows the state electronic payment process policies and procedures which can be found at http://www.ncosc.net/Credit_Card/AuthorizationforACHTransactions.pdf .

d. Institutional trust funds may be used in regards to funding for electronic payment costs.

e. Customer transaction disputes will be resolved by the University and the customer with the assistance of the respective transaction Merchant Card Services Provider (merchant card processor). The Provider may process the appropriate correcting transactions, is necessary, subsequent to the resolution of the dispute.

f. The University will comply with the Processor’s operating guide regarding the obtaining of an authorization approval code from the processor prior to the finalization of the transaction.

i. If approval is denied, the sale shall be terminated or the cardholder may purchase using an alternative method of payment (cash or check).

ii. Another form of identification may be asked for to prevent unauthorized card use.

iii. Charge backs will be handled on a case by case basis.

g. The University will comply with all NACHA Operating Rules when utilizing Electronic funds Transfer (EFT).

h. Any electronic payment program implemented by the University should not have any significant negative impact on the University’s current accounts receivable or cash management plan. The receiving of a payment electronically should not result in the availability of the funds being any longer that if the payment were to be received by check.

C. Billing

1. UNCSA must promptly bill, collect, and deposit monies due to it.

2. Unpaid Bills

a. The University of North Carolina School of the Arts follows the state accounts receivable management policies and procedures in accordance with G.S. 147-86.21, and is included as a part of the University’s cash management plan.

b. Student Billings

i. All student billings will be prepared and mailed at least 30 days prior to the start of a term.

ii. All students must register and pay in full prior to starting classes. Any exceptions must be approved by the Chief Academic Officer.

iii. Any miscellaneous charges incurred by students during a term (e.g. infirmary charges, room damage charges, etc.) will be billed and collected at the end of a term.

I) Returning students must pay all miscellaneous charges prior to registering for the next term’s classes.

II) Non-returning students must pay all charges upon receipt of a bill.

iv. Student payments will be deposited in accordance with this policy.

v. Student records will remain tagged until the financial obligation is satisfied.

I) Any current student who owes money to the University will not be allowed to register for classes until the debt is satisfied.

II) Former students who owe money to the University will not be allowed to receive a transcript until their debt has been paid.

3. Delinquent Accounts

a. An account shall be considered delinquent if it is at least 60 days in arrears and no arrangement has been made by the debtor to satisfy the obligation.

b. Uncollected accounts shall be turned over to the Attorney General’s Office for collection if they are at least 60 days old.

c. If it is determined within the first 60 days that an account can not be collected, the account shall be forwarded immediately to the Attorney General’s Office.

d. Further collection activity on these accounts will be at the direction of the Attorney General’s Office.

4. Doubtful Accounts

The University will establish an allowance for doubtful accounts to reflect the amount of receivables that are estimated to be uncollectible. The allowance account ensures that the receivables are not overstated for financial reporting purposes. The allowance for doubtful accounts is based on careful review of the Aged Receivables report of student accounts receivable and other receivables.

5. Uncollectible Accounts

When all collection procedures have been exhausted, including use of the Attorney General’s Office and the Setoff Debt Collection procedure, and balances remain outstanding, the University shall write these uncollectible accounts off the financial accounting records.

a. Accounts will be submitted to the Department of Revenue for setoff debt proceedings at least once prior to write off.

b. After write-off, these accounts shall continue to be submitted to the Department of Revenue for setoff debt proceedings.

c. Reasons for write-off will be documented.

i. Records of accounts written off of $25.00 or less shall be retained for 2 years.

ii. All other records shall be retained until the debt is collected or discharged.

d. Writing off accounts does not release debtors from their legal obligation to pay the debts.

e. The University will place holds on transcripts in an effort to collect these debts.

f. Interagency accounts cannot be written off. The University will notify the Office of the State Controller if an interagency debt cannot be collected.

g. Federally sponsored student loans will be written off and no longer considered a debt to the University when they are assigned to the U.S. Department of Education or other applicable federal agency.

D. Federal Funds

1. Federal funds received for major federal assistance programs that are governed by the Cash Management Improvement Act of 1990, must be drawn in accordance with the current State/Federal Agreement.

2. All federal fund draws should be timed so that the funds are on deposit with the State Treasurer no more than two business days prior to the disbursement.

E. Disbursements

1. Monies deposited with the State Treasurer remain on deposit with the State Treasurer until final disbursement to the ultimate payee.

2. As provided in Section 147-86.10, the order in which appropriations and other available resources are expended shall be subject to the provisions of the executive Budget Act, G.S. 143-27.

3. Payments & Reimbursements

a. State law requires that materials, goods, supplies, or services must be received before payment can be made.

b. Billings to the State for goods received or services rendered shall be paid neither early nor late but on the discount date or the due date to the extent practicable.

c. Federal and other reimbursements of expenditures paid from State funds shall be paid immediately to the source of the State funds.

d. Advance Payment

Advance payment cannot be made except on orders placed with governmental agencies, for travel registrations, and orders for subscriptions to publications where it is mandatory that payments accompany the order.

4. Accounts Payable is responsible for monitoring, controlling, and processing all expense transactions of the University. Accounts Payable will generate payment to vendors and individuals in response to the approved forms.

5. Encumbrances & Sufficiency of Funds

a. A requisition will not be completed if budgeted funds are insufficient.

b. A department will encumber funds with purchase requisitions that generate purchase orders. Direct pay requests and small purchase orders do not encumber funds.

c. Campus departments are responsible for monitoring budgets to make sure that funds exist before using direct pay requests and small purchase orders.

d. Departments are also responsible for monitoring the liquidation of encumbrances.

6. Invoices

a. The Accounts Payable office is responsible for answering inquiries from vendors regarding the status of unpaid invoices and for reviewing monthly statements received from vendors.

b. All vendor invoices should be mailed directly to Accounts Payable. If a department receives an invoice, it should be promptly forwarded to Accounts Payable.

c. If discounts are available for prompt payment of an invoice, receiving reports and payment must be made immediately after receipt of the goods or services to realize these discounts.

7. Check Registers

Check registers will be prepared monthly listing the date of the check, check number, payee, account designation, and amount.

8. Certificates of Participation & Bond Obligations

When the University has outstanding certificates of participation and/or bond obligations for capital improvements, payment of bond principal and interest will be made according to the schedule provided in the certificate of participation and/or bond agreement.

9. Disbursement Cycles

Disbursement cycles shall be established to the extent practicable so that the overall efficiency of the State’s warrant disbursement system is maximized while maintaining prompt payment of bills due.

10. Electronic Funds Transfer should be used for certain payments between State and local units, vendors and employees when it is determined to be mutually beneficial to both parties.

11. Procurement Cards

a. For University items purchased with the procurement VISA card (p-card), the monthly University bill is paid to the procurement card company without further documentation.

b. An electronic download of the billing file is fed to the accounting system to spread charges to their appropriate departmental accounts.

c. On a monthly basis, each department is required to send a signed reconciliation, inclusive of original receipts, to the Purchasing Office.

d. Random audits are performed on these reconciliations.

e. Credits and rebates are recouped in subsequent periods.

f. In emergencies situations, the procurement card will be used only by essential personnel to provide employees with food, lodging and other applicable subsistence.

12. Delegations of disbursing authority must be kept current. Regardless of whether changes have occurred since the last submission, “Delegation of Disbursing Authority” agreements must be submitted annually for OSC approval.

F. Any revisions to this policy or its associated procedures must be approved by the Office of the State Controller.

V. Revision History

A. February 17, 2011 – Adopted by Board of Trustees as part of UNCSA Policy Manual

VI. Approval

A. Carin Ioannou ________________________________

Chief Financial Officer

Date _______________

 

B. Linda Combs _____________________________________

State Controller

Date _______________


UNIVERSITY OF NORTH CAROLINA SCHOOL OF THE ARTS

Cash Management Procedures

Procedure #302

I. Receipts

A. Timing of Deposits

1. All monies received by 4:00 P.M. must be taken to the bank for deposit the next business day by no later than 11:00 a.m.

2. Funds received after 4:00 P.M. must be placed in the safe in the Cashier’s office during the evening hours and included in the next business day’s deposit.

B. Receipt of Monies (including Departmental Funds) Received by Mail or in Person

1. The cashier shall collect monies from all sources and prepare a cash receipt by entering the required data into an automated cashiering system.

a. Receipts will be generated with system assigned receipt numbers in numerically ascending order.

b. Data from the cashiering system will automatically feed and update the general and subsidiary ledgers, on a daily basis.

2. The cashier will prepare a cash report of the day’s activities, which will be reconciled to the cash receipts and cash drawer.

3. Using the cash report, a deposit (including required forms) for Budget Code 16092 and Budget Code 06092 will be completed for transmittal to Wachovia Bank and Trust Company, a cash concentration bank designated by the State Treasurer.

a. Deposits (including required forms) for UNCSA funds and funds for the Board of Trustees of the Endowment Fund of the University of North Carolina School of the Arts will be completed for transmittal to Wachovia Bank and Southern Community Bank, respectively.

b. All checks shall be properly endorsed before being deposited.

c. All foreign checks should be converted to U.S. dollars before being deposited.

d. UNCSA Campus Police will courier the deposits to the bank no later than 11:00 AM every business day to insure same day credit by the banks.

4. Each business day, employees in the Controller’s Office will review the cash report prepared by the cashier. An actual count of cash and checks will be done and verified to the deposit information and a certification of deposit will be prepared on the State’s Cash Management Control System.

5. Accounting personnel shall prepare cash receipt registers listing the date of activity, description, account designation and deposit amount that will be updated within 24 hours of deposit.

6. Accounting personnel shall also verify cash receipts processing and posting to subsidiary ledgers and bank accounts on a daily basis. The general ledger will be reconciled to the cash management control system monthly.

C. Intra-governmental Transfers

The University uses the intra-governmental transfer feature of the Office of State Controller’s (OSC) Cash Management Control System (CMCS) when receiving or making payments to other universities and state agencies. In addition, the University uses the Treasurer’s Core Banking System (Funds Transfer Feature), for both external and intra-governmental payments when remitting payments that meet the time-sensitive criteria established by the State Treasurer.

D. Wire Transfers

1. The person requesting to wire funds to UNCSA will be given the bank account number, routing and transit number, and the address of the bank, along with a contact name and telephone number at UNCSA.

2. A master receipt will be recorded in UNCSA’s Agency Funds (clearing account).

3. No later than the next business day, a check will be prepared on the clearing account and deposited into the account that should receive the funds.

E. Credit Cards

1. Various University departments receive credit cards payments in person, via the telephone, and via the Internet.

2. Each night data from the credit card terminals used at these locations will be transmitted to Wachovia Bank and then to the State Treasurer’s Office.

3. The areas accepting credit cards will print reports from the terminals showing that day’s activity.

a. These reports will be hand-carried or faxed to the Cashier’s Office each day and a certification of deposit shall be prepared on the State’s Cash Management Control System.

b. A master receipt shall be prepared in the cashiering system from this report.

4. If a discrepancy occurs between the amount certified and the amount transferred to the State Treasurer, every effort must be made to correct the error as soon as notification is received from the State Treasurer’s Office.

5. Currently the University is not imposing transaction fees on credit card sales.

6. The University will adhere to appropriate security and privacy requirements with reference to Merchant card services as follows:

a. adherence to all applicable merchant card associations’ operating rules (Visa, MasterCard, etc.);

b. participate in any security assessments and security scans required by the associations and/or OSC, in order to be and to remain compliant with Payment Card Industry Security Standards, and be responsible for any fines levied as the result of not being compliant;

c. utilize a third-party service provider that is compliant with Payment Card Industry Security Standards;

d. for point of sale transactions, adhere to the requirements of both applicable State law (N.C.G.S. § 14-113.24) and the Payment Card Industry Security Standards pertaining to the printing of account numbers and expiration dates of cards on the cardholder’s copy of the receipt;

i. While the statutory requirements and the industry standards differ, the requirements of both can be met by printing the last 4 digits.

ii. The merchant’s copy of the receipt must contain the full card number and expiration date.

iii. The merchant copy of the receipts must be kept in a secure place (locked cabinet with minimal access) for 18 months.

iv. Receipts should be destroyed, preferably by shredding, after 18 months.

e. maintain records of transactions for security and audit in accordance with the University’s retention schedule, but at a minimum of 18 months.

7. Confirmations of the transaction are generated at the time of order.

F. Dept Collection Procedures

1. Generally

a. The University will pursue all available collection methods including use of data files of the Division of Motor Vehicles (Driver License and Vehicle Registration Sections) for address information, Employment Security Commission for home and/or business addresses and wage and place of employment information, and Department of Revenue for address information.

b. The University will also use credit bureaus to report past-due accounts and collection agencies to assist in the collection of past-due accounts.

2. The University will run reports to determine the age of past due accounts.

a. Owners of accounts that are 1-30 days past due will be contacted by telephone and by letter informing them that the account is past due and requesting a date for payment.

b. A second letter will be mailed if the account is 31-60 days past due.

c. When the account becomes 61 days or more past due, the account will be turned over to the Attorney General’s Office for collection.

3. Charges

a. Interest shall be charged at the rate established pursuant to N.C.G.S. § 105-241.1(i) on a past due accounts receivable from the date it was due until it is paid. The current interest rate will be obtained from the Department of Revenue.

b. A late payment penalty fee of no more that 10% of the accounts receivable shall be charged on all past due accounts.

4. The University will utilize the North Carolina Setoff Debt Collection Act.

a. Debtors to the University with debts of $50.00 or greater and past due for 61 days or more shall be listed with the North Carolina Department of Revenue for potential set off against their North Carolina individual income tax refunds.

b. The Department of Revenue will place a hold on State income tax returns due debtors whose names have been submitted.

c. The Department of Revenue will notify the taxpayer that the University has a claim against the income tax refund.

d. The Debtor must contact the Controller (responsibility delegated to the Director of Student Accounts for delinquent student accounts and loans) for additional information and to contest the debt.

e. If the debt is not forgiven, the Department of Revenue will forward to the University a check in the amount of the debt owed less a collection fee.

f. The funds shall be distributed to the indebted University department. Student records will remain tagged until the financial obligation is satisfied.

G. Federal Funds Draws

1. Requests for payments for federally funded programs shall be made through the Grants Administration and Payment System (GAPS).

2. Federal guidelines require that cash on hand must not exceed immediate disbursement needs for each program; therefore the cash drawdown must be for funds needed over the next three business days.

3. The amount of funds to be drawn down will be determined by calculating the funds needed to pay for scholarships that have been applied to the student’s account and/or invoices received.

4. A payment request will be prepared on GAPS.

5. When the request has been validated, the funds shall be processed and transmitted to the Federal Reserve Bank for deposit into the state cash concentration account at Wachovia Bank and Trust.

6. This deposit will occur within one to two days of the request being made.

a. The University will verify that the transfer is complete by accessing Wachovia Connections online.

b. The deposit will be certified with the State Treasurer via the Cash Management Control System.

c. A master receipt shall be prepared in the University’s cashiering system.

d. No later than the second day after certification of the deposit, the federal funds will be disbursed to the student accounts and/or vendors.

i. For payments between budget codes, an electronic transfer shall be done using the Cash Management Control System.

ii. For payments to vendors, a check shall be prepared and mailed.

7. If refunds of expenditures occur from any Federal program, the next draw down will be reduced by the amount of the refund.

H. In addition to adhering to these guidelines, the University employs proven techniques, which improve cash handling, to include:

1. receipting federal grant payments by wire transfers when possible;

2. reassignment of personnel, or the hiring of temporary personnel, when this proves cost effective, to accelerate the processing of remittances during peak periods;

3. depositing of funds with cash concentration banks designated by the State Treasurer;

4. Establishing billing schedules which are both efficient and lead to earlier receipt of monies due to the State; and

5. timing deposits in order to receive current day credit in accordance with schedules available from the State Treasurer.

II. Disbursements

A. Accounts Payable will generate payment to vendors and individuals in response to the following approved documents.

1. Regular Purchase Orders

The vendor invoice must agree with the corresponding purchase order by line item description, quantity, unit price, and terms of sale before payment is made. Vendor invoices will not be paid without an authorized receiving report indicating receipt of the items on the invoice.

2. Direct Pay Requests

The Direct Pay request form must be sent directly to Accounts Payable with proper documentation and approvals.

3. Small Purchase Orders

The purchasing department will return the invoice and a copy of the small purchase order to Accounts Payable for payment within 24 hours of purchasing the goods or services.

4. Utilities & Telephone Bills

These charges will be paid upon receipt of invoices from the vendor.

5. Petty Cash

Payments are made to reimburse employees upon submission to the Cashier’s Office of properly executed Petty Cash Reimbursement forms with supporting receipts. Departments having petty cash accounts must submit completed Petty Cash Reconciliation forms, along with copies of supporting receipts, to Accounts Payable for reimbursement.

B. If advance payment is required to complete a transaction, the purchase order or direct pay request must be accompanied by either an invoice or an order form from the vendor.

C. Check Registers

1. Check registers can be prepared any time during the month.

2. All bank accounts will be reconciled to the general ledger at the end of each month.

a. Discrepancies found in disbursing accounts held with the State Treasurer will be noted and returned to the State Treasurer’s office for review and action by the deadline established by that office.

b. Discrepancies found in checking accounts outside the State Treasurer will be resolved with the bank involved in a timely manner.

D. Warrant Releases

In order to avoid disbursing account overdrafts, warrants will not be released before adequate funds have been requisitioned by the University and approved and deposited to the applicable disbursing account by the Office of the State Controller.

1. After completion of the check preparation cycle, disbursement reports, by bank account, will be given to the Disbursement’s Office.

a. These reports will list the payee, amount, check number, and account designation and a total amount of checks to be disbursed.

b. If a report indicates that disbursements are to be made from appropriated funds (including capital improvement funds), a requisition for funds will be done on the Cash Management Control System. Every effort will be made to enter this requisition so that funds can be approved and deposited into the disbursing account that day. However, checks will not be released until the approval and deposit have been made.

c. For disbursements being made from other checking accounts, a review of the bank balances for available funds will be made prior to releasing the checks.

2. All checks will be reviewed for accuracy (vendor name, address, amount, and account designation) by the Accounts Payable Supervisor or accounting personnel who have not had direct input in the Accounts Payable process prior to releasing the checks.

3. Check Distribution

a. Checks will normally be distributed according to the terms on the invoice or as soon as possible if no terms are given.

b. Checks will be sent to the payee at the address indicated on the requesting document. If the check is to be delivered to someone other than the payee, special instructions should be attached to the requesting document.

c. No checks will be released until sufficient funds are available.

d. All checks must be sent to the Positive Pay Program before being released.

E. Electronic Funds Transfers

1. Electronic funds transfers using the Cash Management Control System may be made for payments to State agencies for workers compensation claim paid, workers compensation administration fees, various benefits, and other such expenditures.

2. Electronic funds transfers are also done when transferring funds between budget codes held by the University.

III. Approval

A. Carin Ioannou _______________________

Chief Financial Officer

Date _______________ 

B. Linda Combs ___________________________

State Controller

Date _______________