UAMS ADMINISTRATIVE GUIDE

NUMBER: 8.1.09
DATE: 01/01/05
REVISION: 04/14/03     

SECTION: FINANCE DEPARTMENT
AREA: GENERAL ACCOUNTING
SUBJECT: CHECKING ACCOUNTS

 

PURPOSE

Management of all depository checking accounts not set through traditional treasury channels of the University of Arkansas for Medical Sciences.

SCOPE

UAMS workforce

POLICY

  1. Only checking accounts established through the Treasurer’s Office and officially sanctioned by the Vice Chancellor of Finance are allowed.
  2. Absolutely no one may set up an account using UAMS’ tax ID.  If a checking account is needed for an extraordinary reason, the Vice Chancellor of Finance must approve it prior to being established. 
  3. If residents, faculty or others set up an account in their own name and with their own tax number for gratuitous purpose, that is a personal matter.  However, the name on the account must not contain UAMS, the University of Arkansas Medical Sciences, University of Arkansas Medical Center or any other UAMS Division, Department, or College name.
  4. Separate checking accounts in the University’s name if authorized for an extraordinary reason, must implement the following process self-evaluation process when the account is managed by the department
    1. Signature authority must be documented
    2. Deposit tickets should be kept for 7 years.
    3. Nature of receipts should be supported by documentation and identified in the checkbook or other summarization record, with a clear indication of source and purpose.
    4. Checks should be recorded in sequence in the checkbook or other journal.
    5. Nature of expenditures should be indicated  on check stubs
    6. Supporting documentation in the form of third party bills, receipts and memos should be kept for all expenditures, and appropriately marked to prevent reuse.
    7. Blank checks must be safeguarded.
    1. Cancelled checks and bank statements should be kept for 7 years.
    2. Independent reconciliation of the checking account must be performed monthly.  This entails researching and resolving all reconciling items, so that adjustments are recorded on a timely basis.
  1. No check made out to UAMS, UAMC, or any Division, Department, College, or other subsidiary may be put into a non-UAMS sanctioned account.  Putting a UAMS check into one of these accounts is a misappropriation of funds and may be grounds for termination of employment.  Managers are responsible for the acts of their staff.  It is not sufficient to say “the policy was on the Intranet, the staff should have known.”  Managers must ensure that controls are in place and that staff know the policies.
  2. Segregation of duties to safeguard checks:
    1. An individual not responsible for receipts, bookkeeping, preparing, or signing checks must reconcile the bank account monthly.  This should be done by receiving the bank statement unopened directly from the bank, examining each payment for alteration and comparing them to the list of checks issued.
    2. Deposit tickets should be handled in a like manner, comparing each deposit recorded to the entry by the bank. The reconciliation performed should be followed to the subsequent month to ensure that all reconciling items are resolved.  A reconciliation should be made to the records of the appropriate entity (UAMS, UAMC, or any Division, Department, College, or other subsidiary) whose account was used for reimbursement checks.
    3. Blank checks should be kept in a safe locked place so as to prevent their unauthorized use.  The individual responsible for check processing should not have custody of the signature stamp machine and blank checks.
    4. There should be no accessibility to posting functions for cash records or receipts by check signers.
  3. The accounting system should include a process by which:
    1. Validated deposit tickets are kept attached to any remittance advice, or receipt correspondence. 
    2. All checks should be listed in check number order with an indication of the date and type of expense to facilitate later reconciling and reporting. 
    3. The check listing should be compared to the cash book to ensure accuracy.
    4. An authorized individual should sign checks after a review of proper documentation supporting the expenditure (i.e. the Treasurer signs checks and mails them).   Two signatures should be used on large check amounts.  This amount is to be defined by the finance office individually for each account at the time that it is set up.
    1. There should be no signing of blank checks.
    2. Checks should never be made payable to cash.
    3. Disbursement amounts must be grouped into a specific expense classification.
    4. Support for checks must be canceled after payment.
    1. Voided checks must be mutilated, retained and accounted for by the system.
    2. Long outstanding checks must be tracked and reviewed for validity.
    3. Bank reconciliations are prepared by an individual independent of the cash disbursement recordkeeping function.   Reconciliation must account for inter-bank transfers.
    4. Physical control must be maintained over unused checks.
  1. For cash receipts into the checking account ensure that:
    1. A detail listing is maintained of all mailed receipts.
    2. Numbered cash receipt tickets are used.
    3. Endorsement of checks is restricted to authorized individuals.
    4. Postdated checks are tracked and reviewed carefully for validity.
    5. Cash custodians are bonded.
    6. Deposit slips are compared to the cash book for duplication.
    7. Deposit slips are available for comparison to the Accounts Receivable.
    8. There is a separation of duties between the cashier and accounting function  (e.g. the person opening the mail should send the remittance advice to accounting, and the checks to the cashier)
    9. There is a daily reconciliation of cash collections and of daily deposits.
  2. A current written list of all individuals with signing authority shall be filed with the office of Finance. 
  3. All cash accounts must be maintained with banks on a pre-approved primary bank list maintained with the Finance office, which shall maintain a centralized roster of all depository accounts that are not via treasury.
  4. When an account is closed:
    1. A reconciliation is performed to determine the remaining balance in the account and a check is made payable to the appropriate entity account (e.g. UAMS, UAMC, or any Division, Department, College, or other designated subsidiary).
    2. The deposit of the remaining funds should be with the Finance Office, 501-686-6800, in an appropriate account.
    3. The Finance Office, mail # 545, should be notified in writing that the account has been closed.  A copy of the final bank statement should be attached.
    4. Any unused numbered checks must be destroyed.