Cash Mgt Policy (1)

8/6/2019 Cash Mgt Policy (1)

1/7

Riphah International University

Cash Management Policy

Group Members:

Zain Ali Shah

WaleedJanjua

FaizanYaseen


2/7

What is Cash management policy:

Cash management policies are strategies that make it possible to effectively control the processof collecting, disbursing and investing cash. Developing a specific cashmanagementpolicy is

very important to just about any type of business or organization, as well as to the process ofeffectively managing a household budget. For this reason, writing a policy that speaks to the

needs of the company or other organization is extremely important if the business is to meet itsgoals. As part of the preparation of the policy, it is important to establish guidelines that govern

how money is spent, how it is saved, and how it is invested.

One of the first steps in developing a workable cashmanagementpolicy is to set up specificprocedures for managing funds as they are collected. For businesses, this means having a process

for receiving payments, posting them to the accounts receivables of the business and making surethose funds are deposited into the appropriate company bank account. The policy will often

include instructions for posting and recording the collected revenue within a timely manner,

allowing the business to make use of those funds for paying its own bills on time, and avoidingthe possibility of late fees and penalties.

After the funds are properly recorded, the cashmanagementpolicy will usually address theprocedures for allocating funds for specific purposes. Within the context of those allocations,specific checks and balances must be put into place that help to control how those funds are

spent over the course of the budget period. For example, if an annual budget allocates a fixedamount of funds for the purchase of potato chips, the policy may be to allow for the purchase of

only a certain amount of chips per calendar month. Doing so helps to prevent exhausting all thefunds allocated to the line item at one time, ensuring that there is some benefit throughout the

budget period.

A cashmanagementpolicy not only addresses how and when money is spent, but also how andwhen money is saved. Typically, this means identifying a percentage of the total income received

during a specific period and allocating it to savings or some type of investment endeavors. Thegoal here is to consistently put aside cash in some sort of interest-bearing venture, an activity that

over time helps to build cash reserves for use during emergencies. By building this componentinto the overall cashmanagementpolicy, a company or household can save at least a little money,

and strengthen its financial stability.


3/7

Cash Management Policies:

a. The time-value-of-money shall be recognized as a part of each cash management decision.b. Cash related transactions shall occur only after the approval of an individual with delegated

authority to make approvals.c. Cash related transactions shall be fully documented so that an undisputable audit trail exists. d.

Cash related transactions shall be recorded promptly during each step of the cashhandlingfunction.

e. Serially numbered forms shall be used to document cash related transactions to enhancereconciliation and accountability.

f. Documents used in cash related transactions shall be safeguarded against re-use, tampering, orunauthorized disposal.

g. Provisions shall be made for the regular review and comparison of transaction documentationto detect errors and duplicate payments.

h. The approval of adjustments to cash related transactions shall be administratively controlled.

i. Supervision of cash management activities shall be strictly and continually administered. j. Cash related duties, such as maintenance of accounts receivable, cashiering, accounting,disbursing, and collecting funds shall be segregated.

k. Cash related accounts shall be frequently reviewed and reconciled with subsidiary records.l. The accessibility to funds and fund records shall be restricted and administratively controlled.

m. Only properly designated employees shall handle imp rest funds, disbursement certifications,and collection duties.

n. Employees assigned cash related duties shall be trained and must accept their responsibilities.o. Unnecessary clerical routines and handling of cash or cash related documentation shall be

eliminated to lessen the risk of loss and exposure to errors.p. Electronic funds transfer and direct deposit shall be used where feasible and advantageous.

q. Computer edit programs shall be used to the maximum extent possible to disclose or reducethe incidence of error in cash related transactions.

r. Cash derived from collections and cash used for disbursements shall not be commingled.s. Cash transactions shall not be used to substitute, or circumvent, prescribedprocurement

approvals and procedures.t. Checks received in collections shall be endorsed upon receipt and collections shall be

safeguarded until deposit is accomplished.u. Deposits shall be processed within prescribed intervals and reconciled against records of funds

received.v. Prompt responses shall be made to reviews performed by the Office of Inspector General and

the Government Accountability Office on cash management activities to correct citeddeficiencies.

w. Cash disbursement transactions shall be processed promptly, and cash shall be reconcileddaily.

x. Cash held outside the Treasury shall be maintained at the minimum amount needed to covercurrent transactions.

y. Credit shall be extended only when authorized by a designated official who is aware of theDepartment's debt management policies.

z. Approved price lists shall be published to ensure a control over income for goods and services.


4/7

Petty cash:

POLICY

1. The Office of the Treasurer in consultation with the Cashiers Office is responsible forapproving and controlling all petty cash funds.

2. The Finance officers are responsible for approving and embossing all changes to petty cashfunds and establishment of petty cash funds.

3. The individual with appropriate authorization via his/her transaction authorization card isresponsible for ensuring that all expenditures from petty cash are in compliance with

company petty cash policy.

4. Human Subject fees of 10,000 rupees or less per subject may be made from the departmentalpetty cash funds.

5. A custodian can only be responsible for one petty cash fund.6. The custodian cannot approve and emboss changes to petty cash, establishing of petty cash

fund or replenishment of the fund.

10. All petty cash expenditures must be supported by a petty cash voucher slip and a receipt. The

petty cash voucher slip must be approved by the custodian and signed by the recipient of the

cash. The voucher slip and receipt must be submitted along with the request to replenish thefund.

11. Reimbursement of entertainment expenses of 5000 rupees or less may be made from the

departmental petty cash funds.

12. The responsible department must notify the Office of the Treasurer when there is a change to

the petty cash fund.

13. The amount of the fund should be limited to the total of two weeks expenditures.

14.All petty cash funds must be replenished at least on a monthly basis and original receipts andvoucher slips must accompany all reimbursement requests.

15. Petty cash may not be used for the following:a. purchase of supplies in excess of 5000 rupees.


5/7

Cash in hand:

PURPOSE

To establish sound cash management practices and safeguards cash receipts against theft or loss.

POLICY

1. All cash and checks received must be deposited with the Cashiers Office on the day ofreceipt. Cash or checks received over the weekend must be retained in a secured location and

deposited the next business day.

2. Cash Depositors must hand deliver the deposit to the Cashiers Office and must wait for areceipt from the cashier.

3. Depositors cannot exchange cash deposits with a personal check.4. Deposits that include 2000 rupees or more in coin must be on a separate deposit and must not

have any other currency (cash/checks) included on the deposit.

5. Depositors making a cash deposit will not receive cash back from a deposit.6. Depositors must endorse checks immediately with their department endorsement stamp.7. Depositors must include an adding machine tape.8. Depositors must limit their deposit to 100 checks per deposit.9. Deposits that include a foreign check must be prepared on a separate deposit and must not

have any other payments included on the deposit.

10.Depositors must ensure that checks are prepared accurately. This includes:a. checks are signed

b. check dates are not post datedc. numeric amount and the written amount are consistent.

11.The Cashiers Office will give credit for the written amount of the check .

12. Departments will be charged a returned check fee for any check that is returned unpaid forany reason.

13. Depositors must notify the Cashiers Office if they do not receive an electronic receipt within

two business days.

11.15. It is the responsibility of the Financial Administrator to reconcile deposit accounts on amonthly basis, consistent with financial


6/7

Cash at bank:

PURPOSE

The Treasurer may authorize the use of separate bank accounts by certain departments whenoperational constraints warrant this action.

POLICY

1. The Office of the Treasurer is responsible for establishing, administering and closing all bankaccounts of the Company.

2. All checks must have two authorized signatures, unless otherwise arranged with the Office ofthe Treasurer.

3.

All authorized signatories must be approved by the Office of the Treasurer.

4. The Business Officer of the company or administrative area is responsible for approving allrequests for separate bank accounts and assigning custodians for such accounts.

5. Separately administered bank accounts are to be used only for their intended purpose and arenot to be used as a depository for cash receipts or as a check cashing fund except asotherwise approved by the Office of the Treasurer.

6. All separately administered bank accounts must be replenished at least monthly and originalreceipts must accompany all reimbursement requests.

7. The custodian of the fund is responsible for (a) the funds safeguarding and security, and (b)the monthly reconciliation between the accounting system and the bank statement.8. The monthly bank reconciliation must be submitted to the Office of the Treasurer for review

and approval.

9.Each check written in the amount of 5000000 rupees or more must have two signatures, one ofwhich must be the Vice President for Finance and Treasurer, Associate Treasurer or Executive

Director of Risk Management.

12. The Office of the Treasurer will sign and tickmark its review of the reconciliation.13.All reconciliations are due to the Office of the Treasurer by the 15th working day of themonth.

14.The Assistant Cash Manager will notify the Custodian in writing if the reconciliation is notreceived in a timely matter. If no response and/or reconciliation is received within 5 business

days, the Associate Treasurer will notify the custodian in writing of the outstanding request. Allrequests for reconciliation that are not received within 15 business days of their due date will be

reported as delinquent to the Vice President for Finance and Treasurer and the actions to closethe account will be taken.


7/7

15Any accounts that remained unreconciled for more than one reporting period will be closed bythe Officer of the Treasurer.