PublicationDate: 7/1/95 ChapterNumber: 4 ChapterTitle: Obtaining, Managing, and Returning Title IV Funds SectionNumber: 1 SectionTitle: Overview of Cash Management PageNumbers: 85-86 ((Executive Summary)) Schools that participate in Title IV programs are responsible for establishing and maintaining an internal financial management system that effectively controls and accounts for federal funds received, payments made to students, and funds returned to ED. This chapter contains guidelines that schools must follow to ensure sound cash management practices. Much of the information in this chapter is based on new cash management regulations published December 1, 1994 that became effective July 1, 1995 (34 CFR 668, Subpart K). These regulations established, for the first time, uniform rules and procedures that a school must follow to request, maintain, disburse, and otherwise manage Title IV program funds. A copy of the Federal Register containing these regulations is included at the end of this chapter. ((Key Terms)) Accounts Receivable Management Group (ARMG) ACH/EFT advance payment allowable charges Automated FEDWIRE System cash management cash on hand credit balance current value of funds rate delayed disbursement delivery direct deposit disbursement early payment ED/PMS electronic funds transfer (EFT) enrolled enrollment period excess cash excess funds Federal Reserve Bank (FRB) FEDWIRE Financial Payments Group (FPG) Financial Services (FS) immediate need issuing checks master check National Finance Center (NFC) payment period peak enrollment period reimbursement payment UCC-1 statement 4.1 Overview of Cash Management ((Governing standards)) To ensure adequate cash management practices, a school must have in place a cash management system that adheres to federal regulations and other standards. A school's cash management practices are governed by: - generally accepted accounting principles (GAAP), - standards prescribed by the Office of Management and Budget (OMB), - U.S. Department of Treasury (Treasury) regulations, and - U.S. Department of Education (ED) regulations. (Specific information about OMB standards and Treasury regulations can be found in Chapter 5 of the Department of Education Payment Management System [ED/PMS] Recipient's Guide.) ((Minimum requirements)) At a minimum, a school should establish internal cash management standards and practices to ensure that: - the school official who authorizes requests for federal funds knows the school's available funds balance when making requests; - the cash balance maintained for all programs is the minimum needed to cover immediate disbursements; - the school's cash management system tracks drawdowns and disbursements of funds, showing that for every drawdown there is an equal disbursement (however, this is not necessarily the case for adjustments); and - the school's cash management system contains adequate controls so that the school does not spend more funds than it has authority to spend (except in limited circumstances, a school may not request or hold excess funds for future disbursements). See section 4.8.1.1 of this book and Section 668.166 of the December 1, 1994 Federal Register for excess cash tolerances. |