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HA Resolution 2019-004 Cash Mgmt Policy RESOLUTION NO. HA 2019 – 004 A RESOLUTION OF THE LA QUINTA HOUSING AUTHORITY ADOPTING A CASH MANAGEMENT POLICY WHEREAS, a cash management policy provides standard guidelines to City employees or other persons whose assigned duties involve handing cash for the proper and consistent procedures for receiving, processing, and handing cash; and WHEREAS, cash management policies provide transparency, accountability, and consistency; and WHEREAS, cash management policies enable the Finance Department and the City Manager to maintain a system of financial controls for the proper receipt, tracking, and reporting of city funds. NOW, THEREFORE, BE IT RESOLVED by the La Quinta Housing Authority of the City of La Quinta, California, as follows: SECTION 1. The Cash Management Policy attached hereto as Exhibit A, and incorporated herein by reference, shall govern cash handling practices in order to ensure proper and consistent procedures for receiving, processing and handling cash. SECTION 2. This Policy, as applicable, shall constitute the procedures and rules governing the collection of revenues pursuant to Chapter 3.10 of the La Quinta Municipal Code. SECTION 3. Severability. If any provision of this Resolution or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this Resolution which can be given effect without the invalid provision or application, and to this end the provisions of this Resolution are severable. The Authority hereby declares that it would have adopted this Resolution irrespective of the invalidity of any particular portion thereof. SECTION 4. This Resolution shall become effective upon its adoption. Resolution No. HA 2019 – 004 Cash Management Policy Adopted: October 15, 2019 Page 3 of 11 CASH MANAGEMENT POLICY 1. PURPOSE The purpose of this Cash Management Policy is to provide guidelines for standard citywide cash handling practices in order to ensure proper and consistent procedures for receiving, processing, and handling cash. 2. SCOPE This policy applies to all City Funds, employees, departments, volunteers, vendors, or other persons whose assigned duties involve handling City cash or funds must comply with the policies and procedures contained herein. Departments are responsible for ensuring that every employee, volunteer, vendor, or other person whose assigned duties involve handling City cash or funds adheres to this Policy. 3. GENERAL POLICY It is City of La Quinta’s (City) policy to protect the City’s assets, including cash, from theft, loss and misuse; and to ensure that the City receives, accurately records, and promptly deposits all cash and cash equivalents to which the City is entitled. Cash: may be comprised of, but not limited to coin, currency, checks, money orders, debit and credit card transactions, and electronic fund transfers. The City currently has designated revenue collection sites including: a. Finance Department b. The Hub c. Wellness Center d. Museum & Library e. SilverRock Golf Course f. Special Events - On an as needed basis, there may be situations requiring establishment of temporary receipting points, which collect cash on an ad- hoc basis (e.g. community festivals, golf tours). 4. MANAGEMENT OF CASH All City bank accounts shall be carried in the name of the City with additional secondary designations within the bank account name as to the purpose of the bank account, where appropriate (e.g. SilverRock Golf Resort, La Quinta Housing Authority). 5. CASH RECEIPTING Cash receipting, for the purpose of this policy, encompasses the following: a. Accounting for cash as it is received b. Pre-numbered consecutive receipts to be provided for cash received c. Adequate separation of duties (collection, depositing, and reconciling) d. Refunds, voids, and cash over/short transactions EXHIBIT A Resolution No. HA 2019 – 004 Cash Management Policy Adopted: October 15, 2019 Page 4 of 11 6. SEGREGATION OF DUTIES Collection of cash, deposit preparation, and reconciliation duties shall be performed by separate individuals, but at a minimum, reconciliation should be done by a separate person. The employee who physically collects the cash cannot be the same individual performing the reconciliation duties. In the event segregation of duties is not possible, the department shall work with the Finance Department to establish agreed upon internal control procedures. 7. FINANCE DEPARTMENT RESPONSIBILITY It is the responsibility of the Finance Department to track and ensure the timely deposit of City funds collected or generated at authorized locations and account for all funds submitted by all revenue collection sites. The Finance Department will assist and provide materials needed to departments and cashiers as follows: a. Provide cash handling training to City departments and employees. b. Perform cash deposit reconciliations between bank records and cash receipt vouchers that are input into the financial system. Any discrepancies resulting from errors by the bank or the City will be resolved by the Finance Department. c. Provide revenue collection sites with a change fund to allow cashiers to give change to customers. The Finance Department is responsible for establishing citywide practices, providing forms, and other actions necessary to implement the Cash Management Policy. 8. DEPARTMENT RESPONSIBILITY Cash handling involves special control measures that must be monitored continually by supervisory personnel within each department that maintains cash in order to detect any weaknesses. Department heads are responsible for conducting periodic reviews of their department cash handling activities to ensure these procedures are understood and followed consistently by staff. The responsibilities of City employees and their supervisors who are involved in the handling of cash on behalf of the City include: a. Cash receipting b. Distribution of petty cash c. Reconciling of cash receipts d. Depositing of cash e. Safeguarding of cash f. Reporting of cash transactions and variances 9. SAFEGUARDING OF CASH The City shall maintain, as deemed appropriate, physical security systems (i.e. safes, alarms, panic buttons, motion detectors, security cameras, etc.) to ensure the safety of personnel and funds in areas where cash is collected, reconciled, and stored. In Resolution No. HA 2019 – 004 Cash Management Policy Adopted: October 15, 2019 Page 5 of 11 addition, access to counter, cash handling, and storage areas will be restricted to authorized personnel. The safeguarding of cash relates to the processing, storing, and transporting of cash and to the safekeeping of keys and safe combinations. Each location maintains at least one safe that is used to hold cash, change boxes, point of sale cash drawers, bank deposits, and transaction records/receipts. Safes have adequate locking mechanisms and keys to change boxes are kept in locked cabinets. To ensure internal controls, access is limited to select personnel and combinations are updated regularly and never shared. The employee is responsible for verifying the cash drawer contains the designated starting balance prior to processing any payments. Verification of cash in drawer will take place in the area designated for balancing drawers. The employee is responsible for the contents, security, and keys for the cash drawer at all times. The employee must lock all cash and cash equivalents in a drawer or other secure location whenever leaving the workstation, including for break and lunch periods. The employee shall maintain adequate change in their drawers. Change can be requested through a supervisor or directly from the Finance Department. Cash funds must not be left unattended. Cash shall always be stored in a locked, secured location until it is deposited. Access to the secured area should be limited to authorized individuals only. 10. DEPOSITING OF FUNDS All cash collections are to be deposited. Collections may not be reserved for petty cash or used to pay department expenses. Deposits of cash on hand shall be made no less than weekly. In order to maintain an efficient cashiering service at the cash collection sites where the City accepts payments, the City’s policy regarding reasonable amounts and denominations of coinage the City will accept as a form of payment is: a. City personnel will not accept over $10.00 in unrolled coins or $20.00 in rolled coins in sleeves per payment. b. Customers will indicate their name and phone number on each roll in order to provide contact information in the event questions arise on the coin roll. Regular reconciliations are to be prepared at the departmental level to confirm that all receipts have been recorded in the point of sale system. A designated employee at the departmental level prepares deposits and a separate employee documents those reconciliations. The supervisor shall keep a log on overages/shortages by cashier. This log shall be reviewed to identify areas of improvement in cash handling procedures. On any overage/shortage the cashier shall prepare a written explanation as to what occurred and attach it to the reconciliation. The Finance Department shall ensure all transactions are properly recorded in the general ledger. Resolution No. HA 2019 – 004 Cash Management Policy Adopted: October 15, 2019 Page 6 of 11 11. PROCESSING INCOMING MAIL All correspondence shall be forwarded to the appropriate department to open incoming checks, sort, and enter them into the check log before forwarding to the appropriate staff member for processing. A reconciliation of the check log should be performed on a regular basis to ensure that all checks are being processed in the appropriate point of sale system, and accounted for in deposits. 12. REPORTABLE LOSSES Any instance of known or suspected loss or misappropriation of cash or checks shall be reported to the Finance Director, Department Director, and Human Resources immediately. In the event of a robbery or burglary, police authorities should be notified immediately along with Human Resources and the City Manager. 13. RETURNED CHECKS Upon receipt of a non-sufficient funds (NSF) check, the Finance Department will provide a copy of the returned check to the appropriate department and request the original transaction information to adjust the appropriate cash and revenue accounts to which the monies were originally recorded. If the check was applied to an accounts receivable invoice, a new invoice will be generated showing the amount unpaid. The Finance Department will promptly notify the payer via a letter after the NSF check is received. The payer has ten (10) business days after receipt of the letter to respond to the City. Payer must renegotiate the payment with cash, cashier’s check, money order, or credit/debit card. All checks returned by the bank for non-sufficient funds or other reasons may be subject to a returned check fee as adopted in the Citywide fee schedule. 14. REFUNDS, VOIDS, AND CASH DISCREPANCIES All refunds, voids, and cash discrepancies transactions are to be reviewed and authorized by the employee’s supervisor - cash discrepancies occur where the physical cash holdings differ to that specified by the cash receipting system. Refunds are typically not permitted to be processed at locations which take payments and handle cash. If a customer requires a refund, a request shall be submitted through the Finance Department. All refunds and voided transactions shall have the following supporting documentation: a. Transaction date b. Customer name, address, phone number, and signature c. Original customer receipt d. Reason for the refund or voided transaction e. Amount and form of payment f. Signature of cashier requesting the refund or void g. Signature of supervisor approving the transaction In the case of an overage or shortage, every effort should be made to locate amounts causing the out of balance condition regardless of the amount. The employee and supervisor must sign an over/short report with an indication of the reason, if known, Resolution No. HA 2019 – 004 Cash Management Policy Adopted: October 15, 2019 Page 7 of 11 for the difference. 15. UNCLAIMED PROPERTY Finance may void and reissue old/stale dated checks in an effort to notify/pay vendors for City checks that remain outstanding prior to one year. Unclaimed property is considered unclaimed after a period of time that a check remains outstanding. The City shall follow Escheatment and Unclaimed Property Procedures established in the Accounts Receivables Write-Offs and Unclaimed Property Policy. 16. DISBURSEMENT OF CITY FUNDS Electronic distribution, such as wire transfers, of funds will be initiated by the Finance Department. Authority to transfer monies shall be properly documented and verified by the Finance Department. All wire transfer requests must provide the following: a. Wiring instructions from beneficiary b. Wire transfer of funds document(s) properly completed and signed by the employee requesting the wire transfer and the Department Director or designee. c. Backup documentation supporting the wire (invoice, purchase order number, memo, City Council approval if applicable, etc.) d. All wire transfers will require a dual-approval process whereby initiation and approval of the wire will be completed by separate members of the finance staff. 17. PETTY CASH FUNDS The Purchasing and Contracting Policy of the City will establish a maximum size for petty cash payments from the petty cash fund. Petty cash should be used as a convenient method to pay small claims and is not intended for larger or frequent payments, which should be paid through Accounts Payable. The petty cash fund must be kept in a safe or locked cabinet under the control of the responsible person within the department. The petty cash fund must at all times contain the authorized amount in cash and/or paid vouchers. The fund may not be used for personal loans, cashing checks, or for salaries. To replenish the petty cash fund, a Petty Cash Reimbursement Form must be completed. The form would show persons reimbursed, the amounts, and account numbers to be charged and signature of the cash disbursement. All receipts must be attached with approvals from the signing authority for the account charged. Funds received from any source must not be added to the petty cash fund, funds must be processed per the procedures for the revenue collection site. 18. RECONCILIATION Each business day, designated employee(s) shall ensure payments processed and payments received are reconciled. Management shall review and approve the overall daily cash receipt reconciliation to ensure all cash receipts are accounted for and match to the daily cash deposit, prior to submission to the Finance Department. Resolution No. HA 2019 – 004 Cash Management Policy Adopted: October 15, 2019 Page 8 of 11 19. AUDITS The Finance Department conducts random audits at least twice a year at every location which handles payments. The audits include verifying cash tills, change boxes, and petty cash balances to the amounts allocated and recorded by the Finance Department. 20. CASH HANDLING POLICY REVIEW The Finance Director shall review this Policy annually to ensure careful and responsible management over City resources and if applicable recommend any changes to the City Manager and City Council. 21. FEDERALLY FUNDED PROCUREMENTS The following section outlines the allowable costs for grants, contracts, and sub-awards at the City of La Quinta. The policy is justified by the requirement of the Code of Federal Regulations (CFR) Title 2 Grants and Agreements, Part 200 Uniform Administrative Requirements, Cost Principles and Audit Requirements for Federal Awards, commonly known as Uniform Grant Guidance (UGG). It provides the basic criteria to determine direct allowable and indirect allocable costs on federally funded programs regardless of the funding agency sponsoring the program. The City’s shall adhere to the UGG Administrative Requirements as updated. 200.305 Payment Generally, the City receives payments of federal award funds on a reimbursement basis. In some cases, the City may receive an advance of federal grant funds. a. Reimbursements  The City will request reimbursement for actual expenditures incurred under federal grants at least quarterly, or more often as deemed appropriate.  Reimbursement requests will be submitted with appropriate documentation and signed by the City’s designated representative. All reimbursements are based on actual disbursements, not on obligations.  The City will maintain supporting documentation of federal expenditures (invoices, payroll records, etc.) and will make such documentation available to awarding agencies upon request. b. Advances  When the City receives advance payments of federal grant funds, it must minimize the time elapsing between the transfer of funds from the United States Treasury or the pass-through entity and the disbursement of those funds on allowable costs of the applicable federal program. (2 CFR 200.305)  To the extent available, the City will disburse funds available from program income (including repayments to a revolving fund), rebates, refunds, contract settlements, audit recoveries, and interest earned on such funds before requesting additional cash payments. (2 CFR 200.305)  The City will maintain advance payments of federal awards in insured, interest-bearing accounts whenever not precluded by the Federal award Resolution No. HA 2019 – 004 Cash Management Policy Adopted: October 15, 2019 Page 9 of 11 grant guidance or whenever the exceptions per 2 CFR 200.305(8) do not apply. Interest amounts up to $500 per year may be retained by the City for administrative expense. Any additional interest earned on Federal advance payments deposited in interest-bearing accounts must be remitted annually to the Department of Health and Human Services Payment Management System (PMS) through an electronic medium using either Automated Clearing House (ACH) network or a Fedwire Funds Service payment. [2 CFR 200.305(9)] Allowable Costs 2 CFR, part 200, subpart E, Cost Principles identifies direct and indirect costs that can be charged to federal awards; it also identifies those costs that cannot be charged to grant agreements and that are considered unallowable expenses. The City adopts the five tests provided by this regulation to determine the allowability of costs applied to federally funded services: a. Reasonability: For a cost to be considered reasonable, it must be necessary for fulfillment of the grant objective; acquired by means consistent with federal and state laws and regulations, and consistent with City policies and practices. b. Allocability: A cost is allocable to a program if the goods/services involved are charged in accordance with the relative benefits received by that program. To be considered allocable, a cost must be incurred solely to advance the work under the sponsored program or benefit both the sponsored program and other programs of the City in proportions that can be approximated through use of the City cost allocation methods not to exceed the limit imposed by the grant agreements. c. Consistency: Similar costs are treated as direct or Facilities and Administration (F & A) costs when incurred in like circumstances. Costs that are generally charged as direct cost to a sponsored program should not be included as F&A costs on other projects when incurred for the same purposes. Where the City treats a particular type of cost as a direct cost of sponsored programs, all costs incurred for the same purpose in like circumstances shall be treated as direct costs of all other activities of the City. d. Limitation: Cost must conform to any limitations or exclusions in the sponsored agreement. e. Documentation: Cost must be adequately documented. Expenditures must be aligned with approved budgeted items. Any deviation from the approved award budget will require prior approval from the awarding agency. Allowability of costs will be determined prior to obligating and spending federal funds on a proposed good or service. State and City rules or policy must also be considered. Whichever allowability requirements are stricter will govern whether a cost is allowable. Resolution No. HA 2019 – 004 Cash Management Policy Adopted: October 15, 2019 Page 10 of 11 a. Except where otherwise authorized by statute, costs must meet the following general criteria in order to be allowable under Federal awards per 2 CFR 200.403:  Be necessary and reasonable for the performance of the Federal award and be allocable thereto under these principles.  Conform to any limitations or exclusions set forth in these principles or in the Federal award as to types or amount of cost items.  Be consistent with policies and procedures that apply uniformly to both federally financed and other activities of the City.  Be accorded consistent treatment. A cost may not be assigned to a Federal award as a direct cost if any other cost incurred for the same purpose in like circumstances has been allocated to the Federal award as an indirect cost.  Not be included as a cost or used to meet cost sharing or matching requirements of any other federally financed program in either the current or a prior period. Also, reference § 200.306, Cost sharing or matching, paragraph (b).  Be adequately documented. Also, reference §§ 200.300, Statutory and national policy requirements, through 200.309, Period of performance, of 200 CFR Part 200. Direct Costs Direct costs are those costs that can be identified specifically with a particular award, costs that can be directly assigned to an activity with a high degree of accuracy will be directly imputed to that activity. Identification with the grant rather than the nature of the goods and services involved is the determining factor in distinguishing direct from indirect F&A costs of grant agreements. Examples of some of the costs charged directly include: a. Personnel salaries/fringe benefits b. Capital expenditures c. Software d. Consultants e. Equipment f. Materials and supplies Facilities and Administrative Costs (Indirect/Overhead Costs) Costs incurred for common or joint objectives that cannot be identified specifically with a sponsored program are treated as indirect costs. Examples of indirect costs include: a. Utilities b. Maintenance and operation c. Building and equipment expenses d. Administrative costs Most grant agreements include a percentage of the direct cost to cover these charges known as the Facilities and Administrative Cost Rate (F&A), refer to individual grant Resolution No. HA 2019 – 004 Cash Management Policy Adopted: October 15, 2019 Page 11 of 11 agreement guideline for indirect cost rate. Federal regulations limit instances where administrative costs can be charged directly to grants and contracts. An exception may be made if there is extensive use of such expenses, the expenses have been properly justified/documented in the grant/contract proposal, and they have been approved as a direct cost by the appropriate federal agency. Examples below list the types of expenses that are generally not allowable as a direct cost: a. Administrative and clerical salaries and wages b. Printing and copying costs c. Office supplies d. Postage and mail e. Telephone and internet 22. POLICY REVIEW The Finance Director for the City/Housing Authority and administrators of federal funds shall review this Policy annually and recommend any changes to the City Manager/Executive Director and City Council/Housing Authority.