CASH HANDLING REQUIREMENTS
EFT/Direct Deposit Accounting Entries
- A small balance must be maintained in the non-treasury bank account to cover the cost of bank charges. One way to handle this would be to issue a check from the campus Revolving Fund (payable to the university) for deposit to the non-treasury EFT bank account. The entry in the EFT account in FAS would be a debit to Cash in Agency Bank Accounts and a credit to Uncleared Collections.
- When bank charges are incurred (as reflected on the monthly bank statement), they can be claim scheduled and charged to an appropriate account, as determined by the campus.
- When the Revolving Fund is replenished via the SCO payment resulting from the claim schedule process, another Revolving Fund check in the amount of the charges incurred can be written (made payable to the university) and deposited in the non-treasury EFT bank account.
- When cash is received by the non-treasury bank account from lender banks, an entry is made in FAS debiting Cash in Agency Bank Accounts and crediting Uncleared Collections.
- When cash is disbursed from the non-treasury EFT bank account via an ACH transfer for direct deposit to student bank accounts, an entry is made in FAS debiting Uncleared Collections and crediting Cash in Agency Bank Accounts.
- When cash is disbursed from the non-treasury EFT bank account via a check to the university for deposit to the campus treasury bank account (e.g. for the net amount of loan funds received and ACH transfers for direct deposit), an entry is made in FAS debiting Uncleared Collections and crediting Cash in Agency Bank Accounts.
- When the above check is deposited into the treasury bank account, the entry is a debit to Cash and a credit to the appropriate account or accounts. The gross amount of the loan funds will be credited to the appropriate student accounts. The gross amount of the ACH disbursement will be charged to the appropriate student accounts.
- All or a portion of the gross amount of the loan funds may be credited to a liability or clearing account in FAS.
- A portion of the loan funds may be credited directly to an appropriate receivable account, if charges have already been applied to student accounts.
- The FAS entries reflected above may be made monthly on a summary basis, if that is determined by the campus to be the most efficient and effective approach.
Go to Cash Receipt Policy Context
EFT/Direct Deposit Bank Reconciliation
The EFT bank reconciliation should be a relatively straightforward process, since all transactions flowing through the account, with the exception of bank charges, should be in and out transactions for equal amounts. The reconciliation process may be complicated to some extent if both EFT and direct deposit transactions are processed through the same non-treasury bank account, but there is no reason not to do this. The reconciliation will be between the balance per the bank statement and the balance on the campus books for Cash in Agency Bank Accounts. There will normally be no balance in Cash in the EFT account on FAS.
- The bank reconciliation should begin with the balance per the bank statement.
- Add: ACH batches that have not yet been recorded on the books
- Deduct: EFT deposits that have not yet been recorded on the books.
- The result should equal the balance in Cash in Agency Bank Accounts.
Go to Cash Receipt Policy Context
Cash Flow Considerations
Cash is received from banks for student loans throughout the quarter. This cash is transferred to the campus's treasury bank account (the general checking account) as it is received and credited to the account of the loan recipient (student). If charges have been applied, loan funds should be applied to any outstanding charges. If charges for the term have not yet been incurred or applied, loan funds may be credited to a liability or clearing account (e.g. in the non-appropriated General Fund sub-fund). After applying charges, the net balances on the student accounts should be disbursed to them (either by direct deposit or by check).
If some of the money is accounted for in the non-appropriated sub-fund of the General Fund, it may be necessary to estimate the amount available for either remittance or investment (this is important, since the average daily balance may be substantial - e.g. in excess of $1 million during some months).
An effort should be made to keep the balance in the non-treasury account at a minimum and to ensure that all cash transferred to the treasury account is promptly remitted or invested. Campuses should develop procedures for determination of the amount and frequency of remittance and investment transactions (e.g. remit or invest weekly, or whenever the balance reaches $25,000).
It may make sense to leave enough cash in the non-treasury bank account to minimize or eliminate bank charges. This should be evaluated based on the estimated amount of such charges relative to the estimated amount of interest that would be lost by maintaining a sufficient balance in the non-treasury account to avoid bank charges.
A non-treasury bank account is a bank account established by a campus outside of the State Treasurer's central treasury system. These accounts are used only to pass cash to and from the campus's treasury bank account. They are necessary because the treasury accounts cannot accept EFT transactions and cannot be used as a consolidating account for disbursements.
