REG 06.15.01 – Effective Financial Controls at the County Level
Authority: Issued by the Chancellor. Changes or exceptions to administrative regulations issued by the Chancellor may only be made by the Chancellor.
History: First Issued: July 1998.
Contact Info: CALS Personnel Director (919-515-2708)
The following are requirements for adequate control of funds that are the direct responsibility of Extension.
1. REQUESTS AND OPPORTUNITIES FOR FUNDING
The County Director should be informed of all requests/opportunities for external funding. All applications for grants and contracts must be pre-approved by the County Extension Director and District Director using FORM 1 entitled “Processing Form for External Grants and Contracts by County Extension Agents”. For pre-approval, copies of the abstract, budget and processing form should also be sent to the District Director. District Directors should provide a copy of the proposals to the appropriate State Program Leader for informational purposes.
2. SYSTEMS TO MANAGE FUNDS
Extension Centers can use several methods or avenues for handling funds. Acceptable options for appropriate and adequate financial controls follow. Options A and B are the preferred options.
2.1. Funds administered through the University.
2.2. Funds administrated through county finance departments.
2.3. Extension employees appointed and trained as a deputy finance officer by the county and serving in this capacity.
2.4. Funds handled by non-university persons who are serving as an official board of directors such as county advisory councils, foundations or volunteer associations, school boards, and other non-profit organizations.
2.5. Approved procedures that meet the requirement of adequate internal controls listed below.
It is important that all options above meet the requirements for adequate internal control of funds.
3. PRINCIPLES OF CASH MANAGEMENT – INTERNAL CONTROL
Employees/persons who are authorized to handle/process cash or checks shall adhere to the following principles of cash management:
4. RECEIPTS AND DEPOSITS
All cash funds on-hand are kept at a minimum effective amount and subject to periodic audits (Appendix Q). Cash must be protected through the use of either bank facilities, vaults, or lock cash drawers and centralized to the maximum extent possible.
Cash receipts are controlled at the earliest possible point. Receipts are issued for all cash collections, check collections and other income related transactions (credit cards, etc). Receipt books must be pre-numbered and self-copying (e.g. carbon copy). An approved cash management officer should be appointed and be accountable for all issued numbered receipts. Unissued receipts forms must be kept under adequate control by the cash management officer. Incoming checks are restrictively endorsed immediately upon receipt (e.g. FOR DEPOSIT ONLY TO THE NAME/NUMBER OF THE AUTHORIZED ACCOUNT).
All cash receipts are deposited daily as required by G.S. 159-32 (Appendix Q). All deposits are made in a previously approved depository.
Someone other than the cash management officer who receives the funds must make the bank deposits. The cash management officer is not allowed to sign checks or reconcile the bank accounts and is not responsible for noncash accounting records such as accounts receivable or the general ledger.
Duplicate deposit tickets are prepared so that one copy can be validated by the bank and returned to compare with the receipt records. The bank deposit ticket can be attached to the appropriate final entry in the cash management officer’s receipt book for verification. If a county has sufficient staff, a third person should maintain account records.
5. EXPENDITURES AND DISBURSEMENTS
It is important that each county responsible for collecting and disbursing funds complete FORM 2 entitled “Annual Accounting for Funds at the County Level”. This form must be kept updated on an annual basis and is due to the District Extension Director by July 1. Additionally, any time during the year when a new account is established or added, notification shall be sent to the District Extension Director.
Pre-numbered checks are used for all disbursements. The supply of unused checks are adequately controlled and safeguarded. Payment of duplicate invoices or statements is prohibited. The practice of signing blank checks is prohibited. Making checks to the order of “Cash” or “Bearer” is prohibited. All voided checks must be accounted for and effectively canceled.
All checks require co-signatures. No individual can co-sign a check to themselves. Therefore, it is recommended that each county unit appoint a minimum of two staff or agents as having check signature authority. These individuals should provide one of the co-signatures. The second signature represents a final approval authority. The final authority approves expenditures and disbursements which must be established at a higher level than the level of the request (e.g. County Extension Director would sign for any staff member; County Finance would sign for County Extension Director, etc.).
6. FUND RAISING
Fund raising managed through county centers should provide adequate controls to insure that all solicited funds are accountable. When developing fund raising guidelines, it is beneficial to officially designate who can solicit funds for each event, who will be solicited to donate, and what the funds will be used for. For all donations, the principles of cash management must be followed.
7. AUDITING ACCOUNTS
There must be periodic reviews of all financial transactions as well as an independent review or audit annually. Audit should be performed by someone other than those handling or responsible for the funds. All financial records and supporting documentation of transactions must be retained in accordance with the appropriate deposition schedule(s) and open to review upon request.
The following general procedures are to be used in conducting an audit. Additional procedures may be appropriate in certain circumstances.
7.1. Verification of Cash Balances:
7.1.1. Count all cash on hand. Follow-up on any I.O.U’s, cash advances or personal checks of the account custodian in the undeposited receipts or other funds, if established. Trace undeposited receipts into bank deposits and cash records.
7.1.2. Reconcile all bank accounts. Reconcile the bank statement at the end of the accounting period. Follow-up on any checks long outstanding and all other unusual reconciling items. Verify that there are two signatures on all checks. Review check endorsements for payee comparison and second endorsements. Investigate any checks made payable to “Cash” or “Bearer.” Account for checks (used and blank). If the monthly reconciliations are performed by the check signers, then they must be reviewed and approved by some other person whose duties do not include the handling of cash.
7.1.3. Obtain a bank statement directly from the bank for a period of not less than 10 days immediately following the reconciliation date for the end of the period. Determine that the “in transit or outstanding” reconciling items have been accepted by the bank. Any earlier reconciling items still outstanding as of this statement date should be given special attention to establish their validity. Investigate any checks made payable to “Cash” or “Bearer.”
7.2. Examination of Cash Transactions:
7.2.1. Review sources of income and prove addition of cash receipts record.
7.2.2. Reconcile total recorded cash received to total deposits shown by bank statements for related period.
7.2.3. Compare daily totals of cash received with daily deposits for evidence of withholding of receipts from deposit (select a representative period of time or a number of transactions if there is a large volume).
7.2.4. Examine vouchers, invoices, receipts or other data in support of all disbursements. Determine if the documents are original, adequately support the disbursements and note other features which may be required to make the data examined satisfactory authority for the disbursements. Determine if disbursements were authorized in a budget, minutes of the Governing Board or were compatible with the organizational mission or responsibilities as provided in the Charter and Bylaws.
7.2.5. Prove addition of cash disbursements record and trace to report/ledger.
7.2.6. Reconcile total of recorded disbursements to total debits shown by bank statements for the related period.
8. COUNTY STAFF RESPONSIBILITIES:
It is the responsibilities of every staff member to report the suspected misuse of funds to the District Extension Director.
REIMBURSEMENT POLICY AND PROCEDURES
FOR THE PROTECTION OF EMPLOYEES WITH THE NORTH CAROLINA COOPERATIVE EXTENSION SERVICE
1. Reimbursements will be processed according to existing Extension/County government policy and procedures.
2. Accuracy for the reimbursement data is the responsibility of the claimant. Original receipts must be provided for all reimbursements (unless otherwise exempted by another governing policy).
3. All approval for reimbursements requires a review at a level higher than the request being made; e.g., County Extension Director reviews the request for reimbursement for an agent or volunteer, etc.
All exceptions will be approved by the District Extension Director. In other words, no individual can approve any transaction for oneself.
4. All reimbursement requests must have appropriate documentation on file for a period of three years from date of transaction or until any audits in progress at that time are completed.
5. Any suspicion of misappropriated funds must be reported immediately to the District Extension Director.
6. Individuals will not receive duplicate reimbursement for the same expense. When submitting a request for reimbursement of official travel expenses to your county, special grant projects, or sources other than NCSU, you are to attach a copy of your official Travel Report for the period of time included in the request. However, if the Travel Report is not available at the time of the official travel request to the county, submit it at the end of the month. When the need arises for county faculty to make multiple trips to the same location on the same day, the multiple trips to the same location should be documented on the travel log. County faculty members should notify their supervisor of the need to make multiple trips to the same location.
General Statute 159-32. Daily Deposits
Except as otherwise provided by law, all taxes and other moneys collected or received by an officer or employee of a local government or public authority shall be deposited in accordance with this section. Each officer and employee of a local government or public authority whose duty it is to collect or receive any taxes or other moneys shall deposit his collections and receipts daily. If the governing board gives its approval, deposits shall be required only when the moneys on hand amount to as much as two hundred fifty dollars ($250.00), but in any event a deposit shall be made on the last business day of the month. All deposits shall be made with the finance officer or in an official depository. Deposits in an official depository shall be immediately reported to the finance officer by means of a duplicate deposit ticket. The finance officer may at any time audit the accounts of any officer or employee collecting or receiving taxes or other moneys, and may prescribe the form and detail of these accounts. The accounts of such an officer or employee shall be audited at least annually. (1927, c. 146, s. 19; 1929, c. 37; 1939, c. 134; 1955, cc. 698, 724; 1971, c. 780, s. 1; 1973, c. 474, s. 27.)