Maintained for Historical Purposes

This resource is being maintained for historical purposes only and is not currently applicable.

Obtaining, Managing, and Returning Title IV Funds

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)
advance payment
allowable charges
Automated FEDWIRE System
cash management
cash on hand
credit balance
current value of funds rate
delayed disbursement
direct deposit
early payment
electronic funds transfer (EFT)
enrollment period
excess cash
excess funds
Federal Reserve Bank (FRB)
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

- 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 of this book and Section 668.166 of the
December 1, 1994 Federal Register for excess cash tolerances.

Last Modified: 06/30/1995