Office of Origin: Finance
Responsibility: Director of Finance
Original Date Adopted: 4-15-25
Dates Reviewed: 4-15-25
Last Date Board Approved: 4-15-25

This cash handling policy governs the handling of cash and cash equivalents at Lake Michigan College (the College). Its purpose is to ensure cash is controlled and safeguarded.

Definitions and Responsibilities

Cash and Cash Equivalents

Cash includes physical currency (coins and paper money) and demand deposits (like checking accounts). Cash equivalents are items easily converted to cash or used like cash, including gift cards, prepaid debit cards, credit card receipts, and vouchers. Both individually and collectively these are referred to as “cash.”

Cash Handler

An individual responsible for cash drawer and conducting cash transactions such as collecting payments, issuing receipts, and maintaining accurate transaction records. Cash handlers ensure that all cash received aligns with transaction logs and are responsible for reporting any discrepancies.

Cash Custodian

A designated individual accountable for the safekeeping, storage, and security of cash assets. Cash custodians oversee secure cash storage, control access to cash safes, and manage cash transfers between departments or to banking institutions. Custodians are responsible for documenting with Finance a process that outlines how cash assets will be managed.  They should also periodically audit cash handling activities to ensure compliance with this process and policy.

Petty Cash Custodian

A specific type of cash custodian responsible for managing and distributing petty cash, ensuring that all transactions are documented, and reconciling petty cash balances regularly.

Responsibilities of Finance Department

The Director of Finance or designee will provide mandatory training for each Cash Handler and Custodian. After completing training on cash handling responsibilities, Cash Handlers and Custodians will sign this policy to acknowledge their understanding. The Finance Department will keep a signed copy, and Human Resources will place it in the individual’s personnel file.

General Cash Controls

• All cash must be securely locked in a box when not in use.
• Cash must not be used for personal expenses.
• Unauthorized cash handling or any suspicion of cash theft must be reported to Finance immediately.

Cash Handling – Cash Drawer

A Cash Drawer, typically holding $300 or less, is necessary for making change in sales operations (e.g., bar sales) and is used in conjunction with a cash register or approved receipt system.  Receipts should be issued for every transaction.

At the end of each sales day, the Cash Handler must reconcile the Cash Drawer:

• Unless other arrangements are made, in writing, with the Finance Department, 2 individuals must count the cash, with one being the Cash Handler.
• Both individuals must sign the count document.
• The cash amount must be reconciled with daily sales. Any difference is recorded as “Cash Short/Cash Over.”
• The Cash Custodian must initial and date the reconciliation.

Cash Short/Cash Over of more than $10 must be reported in writing to the Director of Finance.

Before or on the next business day, the Cash Handler or Cash Custodian must take the reconciliation and cash from sales to the Finance Department for deposit.

If a Cash Drawer is not used regularly, it must be counted at least monthly by the Cash Custodian, with counts documented and reported to the Director of Finance.

To increase, decrease, or close a Cash Drawer, contact the Director of Finance.

Cash Handling – Petty Cash Funds

A Petty Cash Fund is a secure cash store approved by the Director of Finance for infrequent expenses of $25 or less, usually totaling $100 or less.

To set up a Petty Cash Fund, obtain a voucher from the Director of Finance. Once approved, funds will be provided to the Petty Cash Custodian within 5 business days.

The Petty Cash Custodian may request replenishment with the Director of Finance's approval by presenting a reconciliation of cash, descriptions of expenditures with supporting receipts, and the remaining cash balance.

The Petty Cash Custodian must reconcile the Petty Cash Fund monthly, comparing the cash on hand plus receipts to the beginning balance.  Monthly reconciliation should be submitted to Finance for review.

To increase, decrease, or close a Petty Cash Fund, contact the Director of Finance.

Fiscal Year-End Procedures

All Petty Cash Funds must be reconciled by the Cash Supervisor at fiscal year-end, with documentation provided to the Director of Finance.

Consequences for Violations

Violations of this policy or poor cash handling protocols resulting in unaccounted cash may lead to disciplinary action, up to termination. Potential consequences include:

• Minor Errors: For discrepancies of less than $10, the employee should receive additional training.
• Repeated Minor Errors: Continued minor errors may result in a written warning and further training, documented in the employee's file.
• Moderate Violations: For moderate violations (e.g., improper record maintenance), consequences may include loss of cash handling privileges, suspension, and/or retraining.
• Serious Misconduct: Serious violations (e.g., theft, fraud, gross negligence) may result in immediate disciplinary action, including termination.

References: