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Internal Control over the Handling of Cash (cash and checks)
Received at Departments

Guidance for Cash Handling

Internal control with respect to cash ensures that cash is not vulnerable to theft at any point in the handling chain from receipt to deposit in the bank, and that it is properly recorded in the accounting system. It is vital and it is mandatory that each department follow the guidance of the cash handling policy to ensure the following:

  1. Access to cash is limited to those formally authorized to participate in the cash handling process.
    Auditors and other outside personnel must have written management authorization to access cash.


  2. Cash is at all times kept in a safeguarded location. When cash is out of the immediate control of a cashier, it should be kept under lock and key.


  3. Cash operations must be subject to daily supervisory review.


  4. All cash must be completely and accurately recorded in the financial records.


  5. Cash handling functions are performed by more than one individual, so that one person alone does not handle cash before it has been accounted for.

Mail Receipts

Two persons should open the mail and prepare the log of cash receipts (example at link). One person opens the mail and restrictively endorses all checks; the second person prepares a log (initialed by both) of the checks received, and prepares the bank deposit. A third (supervisory) person reconciles the log to the amounts of the deposit and later to the bank statement and Budget Activity Report (BAR).

Cash and checks collected in the office, over the counters (cashiers), or in the field

These are documented by the issuance of sequentially pre-numbered official receipts or through cash registers or automated cashiering systems. For these funds as well, the amounts of the daily deposit are reconciled to the bank statement and BAR.

Each cashier has his/her own locking drawer assigned, and funds are accounted for / balanced out before and after each shift or day.
Any shortages or overages are carefully investigated and corrected on a daily basis, and any voids or adjustments of cash receipts transactions must be reviewed and approved by supervisor.

Timeline for deposit

For all funds received, State regulations require that departments deposit cash/checks by the end of the next business day unless the cumulative collected amount is less than $500.00. Accumulations of cash/checks under $500.00 must be deposited at least weekly.

Additional Resources

Below are links to both the UW and State of Washington Cash Handling procedures:

UW: www.washington.edu/admin/finmgmt/sfs/cash/cashhandling.html

State: www.ofm.wa.gov/resources/internal_control/ICAct.htm