Effective Financial Controls at the County Level
REG 06.15.1
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
1entitled "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 ù 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 ù 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.
APPENDIX Q
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.)
