Cash Management Presentation Georgia College and State University November 13, 2009

Michael Hill, Vice President for Internal Audit, Compliance and Risk Management Certified Public Accountant, Certified Fraud Examiner, and Certified Compliance and Ethics Professional. Began tenure at Medical College of Georgia – July Worked as Director of Internal Audit at Tennessee State University (Nashville, TN) for seven plus years. Prior to TSU, I was a State Auditor (Tennessee) for two years and a State Investigator for the State of Tennessee’s Comptroller’s Office for five and half years yrs professional auditing/investigative/compliance experience.

9.When the unit performs services or supplies products to an external entity, the BANNER process for entering accounts receivable should be followed. The Cashier’s Office is responsible for generating and mailing invoices. 10.Assist the Cashier’s Office as necessary with collection of receivables. 11.Ensure write-offs of uncollectible accounts are properly approved. 12.Reconcile revenue accounts at least monthly to ensure that deposited amounts were correctly posted. 13.Maintain proof of reconciliation for identified retention period.

questionnaire here.

****REMINDER**** CONTROLS ARE NO GOOD IF ALL WE DO IS PUSH PAPER.

WHY?? SOMETHING ELSE MAY HAPPEN THAT YOU DO NOT WANT!!!!!

CASE SCENARIO #1 The department manager, Mr. Jones, is responsible for: reconciling and preparing the daily deposit; collecting patient payments from the mail; distributing patient payments to the cashiers for posting; and writing off patient accounts. Additionally, the cashiers are not required to count their cash before giving it to Mr. Jones. Ms. Smith, the business manager, is responsible for verifying the deposit but does not verify that the amount of cash on the deposit sheet matches the activity report. What are the internal controls for detecting wrong doing? How is the department ensuring cash deposited is correct?

CASE SCENARIO RESULTS An inadequate segregation of duties existed by allowing Mr. Jones to have complete control over collection, distribution, reconciliation of deposits, and account write-offs. This inadequate segregation of duties allowed Mr. Jones to manipulate deposits as well as patient accounts. Additionally, the absence of compensating control (Ms. Smith’s failure to verify cash receipted in the system against deposit sheets) further facilitated the opportunity for fraud/theft. $40,000+ FRAUD AGAINST INSTITUTION.

CASE SCENARIO #2 Higher education institution had $50 petty cash/change fund at satellite campus. Temporarily raised limit at the beginning of fall and spring semesters to $500. Reduced fund after two week period back to original $50 level. The satellite office manager was responsible for issuing book refunds using the petty cash/change funds. Submitted vouchers supporting refunds. Vouchers listed students name and books returned. Main cashier office would then provide the satellite campus with the amount of funds being supported with vouchers.

CASE SCENARIO RESULTS Due to no one questioning why the satellite campus was refunding more money than was being receipted or in the petty cash/change fund (remember petty cash was reduced back to $50 after two weeks), or that the inventory was off, or that the student names on voucher were not enrolled students, this satellite office manager was able to commit an act of fraud that lasted approximately 15 months and netted this person an estimated $78,000. The satellite office manager’s salary was less than $25,000 per year at the time of this case.

Questions

Contact information: Medical College of Georgia Office of Institutional Audit and Compliance th Street HS-3135 Augusta, GA Michael W. Hill, CPA, CFE, CCEP Vice President for Internal Audit, Compliance, and Risk Management Office website: