HomeMy WebLinkAboutAgenda Report - May 17, 2023 C-15CITY OF
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CALIFORNIA
AGENDA ITEM C*01!5
COUNCIL COMMUNICATION
AGENDA TITLE: Adopt Resolution Authorizing City Manager to Implement a Citywide Cash Handling
Policy
MEETING DATE: May 17, 2023
PREPARED BY: Revenue Manager
RECOMMENDED ACTION: Adopt resolution authorizing City Manager to implement a Citywide Cash
Handling Policy
BACKGROUND INFORMATION: The Revenue Division manages the City's cash handling and safety of all
money received. There has been no formal cash handling policy, and this
causes inconsistency in cash handling practices and the safekeeping of
money throughout the departments. Currently, the Revenue Division has to recount money that a department
has processed. This can lead to issues because too many people are handling the money instead of being
handled by a solitary person.
A formal cash handling policy in the City will give all departments consistency, best practices, controlled
safekeeping, training, and accountability. The Revenue Division will train all staff regarding cash handling and
counting and reconciling cash drawers before the execution of the policy. Each department will be given the
tools to perform the duties to ensure the proper handling, safekeeping of monies, and balance of a drawer.
Training to balance and reconcile a drawer correctly will eliminate the need for a second person in the
Revenue Division to handle the money already processed by the initial department. In addition, this policy will
help keep and maintain accurate records between cash drawers and the general ledger.
The Revenue Division has created cash -handling training for each new hire and all employees to repeat every
two years. Audits will be performed randomly on cash drawers to maintain the balanced integrity of the cash
drawers and cash handling practices. Safes will be bought for each department that does not currently have
one that bolts to a wall or ground to store checks and cash safely.
Therefore, staff proposes implementing an Administrative Policy and Procedure titled Cash Handling Policy
and provide the information needed to safely keep and handle money for the City. The policy was omitted from
the original packet on the April 19, 2023 council meeting.
FISCAL IMPACT: Purchase of Safes - $5,000
FUNDING AVAILABLE: 10020203.72359
OoAiemr XIg&j
Andrew Keys
Deputy City Manager/Internal Services Director
Stephen Schwabauer, City Manager
CITY OFhODI
ADMINISTRATIVE POLICY AND PROCEDURE MANUAL
' - -
SUBJECT, Cash C88h Hamdling Policy
DATE ISSUED: May 17.2023
DATE REVISED-.
Contents
SECTION 1:
General Statement ...................................................................................................................
Z
Section2:
Definitions ................................................................
............................................................ 2
Section 3:
Responsibilities and Controls .................... ..............................
........ .................................... 2
Section 4:
Internal Control ofCash .........................................................................................................
3
Section 5:
Training ofEmployees Authorized tmCollect Cash .............................................................
.... 4
Section 6:
Approval Cash Collection Sites ................................................................................................
.5
Section 7:
Cash Drawers and Safes ... .......................... ................................................
.......................... S
Section 8:
Processing Incoming Mail ..................................................................................
,.......... `........ 6
Section 9:
Payment Drop Box Collections ...................................
....... ....... ............................................ 6
Section10:
Receipts .....................................................................................................
.............................. 7
Section11:
Cash Reconciliations .................................................................................
.............................. 7
Section 12:
Over/Short Procedures ............ ......................................
........................................................ O
Section13:
Bank Deposits .........................................................................................................................
8
Section 14:
Armored Vehicle Pick Upand Transfer ofCash .................
................................... ................ 9
Section IS:
Prohibited Transactions -------------------.—.~----~—.------.y
Section 16:
Counterfeit Currency ............................................................................................................
1O
Section 17:
Employee Background Checks .................................
..................... ...................................... 1Q
Section 18:
Authority toEstablish Bank Accounts ............... .......................................
........................ 10
Updated — 05/17/2023
SECTION 1: GENERAL STATEMENT
The purpose of this policy is to provide guidelines for City employees who handle cash in the course and
scope of their job duties, including cash received by a City department for payment of a City debt,
deposit, tax, or fee for service. This policy provides information and direction on how and when to
collect and secure cash. All cash collection processes shall be performed within the delegated scope of
authority and in compliance with all Federal and State law, City of Lodi Municipal Code, City policies and
procedures, and generally accepted accounting principles. All documentation shall be maintained in
accordance with the City's policy on record retention and storage. The Revenue Manager shall be the
point of contact for questions concerning this policy.
Section 2: Definitions
Cash: Currency, coin, checks, money orders, credit card payments, debit card
payments, other electronic payment media, and all other negotiable
instruments payable to the City.
Reconciliation: A procedure for confirming the reliability of the City's accounting records by
regularly comparing balances of transactions to general ledger transactions. An
account reconciliation may be prepared on a daily, monthly or annual basis.
Overages/Shortages: A cash overage or cash shortage occurs when the cash received is more than the
amount recorded by the cash register receipts ("over") or less than the amount
recorded by the cash register receipts ("short").
Significant Loss: A cash shortage or loss over $1,000.
Dual custody: Two or more unrelated individuals are present whenever cash is being handled.
Section 3: Responsibilities and Controls
1. The City Council is responsible for approving the City's Administrative Policies, including the cash
handling policy. The City Manager is responsible for the overall administration of cash
collections for the City of Lodi and implementation of this policy. The City Manager will report
any significant loss of cash to the City Council via written communication.
2. The Internal Services Director (ISD) is responsible for establishing Citywide practices, forms, and
other actions necessary to implement the cash handling policy. The Revenue Manager (RM) is
authorized and directed to implement the following tasks with approval by the ISD:
a) Develop and implement methods of documenting all cash transactions.
b) Report any theft of cash or failure to consistently follow the cash handling policy to the RM
and ISD.
Updated — 05/17/2023 2
c) Review Departmental cash records, including overages or shortages.
d) Provide cash handling training to City departments and City employees.
e) Review and approve Department level practices and procedures in the handling of cash, and
assist City departments in implementing proper cash handling procedures.
f) Conduct random and periodic internal control check audits on cash handling procedures and
ensure compliance with this cash handling policy.
g) Establish additional procedures that are consistent with this cash handling policy, to
implement procedures for collecting, recording, transporting, and depositing cash.
3. Department Heads are responsible for implementing this policy within their department and to
ensure employees adhere to this policy. Department Heads are authorized and directed to
implement the following tasks:
a) Implement additional department level procedures and actions that are consistent with this
policy and subsequent procedures issued by the City Manager and/or ISD. All department
level procedures must be reviewed and approved by ISD and RM prior to implementation.
b) Ensure employees who are assigned cash handling duties have attended mandatory cash
handling training and adhere to this policy and other department procedures.
c) Collaborate with the RM to establish and maintain a system of procedures, documentation
and reporting on the collection and processing of cash.
d) Report any theft of cash to the RM, ISD, and or/City Manager, and City Council.
e) Allow the RM or designee to make on-site reviews and observe the collection and
processing of cash, and to review departmental collection records.
4. City employees are responsible for understanding and implementing this cash handling policy.
a) Employees who have been trained may collect and process cash on a regular basis in the
scope and course of their employment with the City.
b) Employees who violate the cash handling policy may be subject to disciplinary action, up to
and including termination of employment.
Section 4: Internal Control of Cash
1. All funds received shall be accepted through the City's Enterprise Resource Planning (ERP)
system, Tyler Munis/Tyler Cashiering, or any future system implemented within the City. To
promote proficiencies for cash handling and provide detailed reports for reconciliation; the Tyler
Updated — 05/17/2023
Munis System will accept, record and deposit funds received daily. When use of the
Tyler/Munis system is not possible, then the department must establish a procedure that
contains the elements of this policy. If the department is using a software program or system to
receive payments, other than Tyler, balances in both systems must be in agreement with the
General Ledger. The procedure must be approved in advance by the RM and ISD.
2. Separation of duties must be established for depositing, recording, and reconciling functions.
The responsibilities for related activities should be assigned to different individuals and the
responsibility for record keeping for funds should be separate from the physical custody of
those funds. Related activities should be assigned to separate individuals to reduce the potential
for errors or irregularities.
3. Cash receipts and account receivable transactions shall be processed daily to ensure accurate
recording of transactions. Funds received shall be recorded in the same accounting period.
4. Funds shall be deposited daily to prevent the accumulation of excess amounts of idle cash and
to reduce the exposure to theft or loss of funds. Alternate bank deposit schedules must be
approved in advance by the RM and ISD. Consideration of alternative schedules will be based
on transaction volume, dollar amount, and physical security of cash.
5. It is recommended that City departments establish daily and monthly procedures for
department reconciliation to ensure accuracy of all accounting records. Timely reconciliation to
the general ledger, other supporting accounting ledgers, and the bank must occur to detect
errors, fraud or misuse.
6. The establishment of written internal cash controls by departments shall be reviewed
periodically by the RM. If the RM identifies non-compliance with internal control directives, the
ISD shall be notified immediately.
Section 5: Training of Employees Authorized to Collect Cash
The RM shall provide periodic training and/or recommend or require training opportunities, for all
employees who are authorized to collect cash, supervisor cash collectors, and Department
Heads/Division Managers overseeing cash handling functions, and any new employee in one of these
roles.
1. Each department will notify the Finance Department of new employees who will need to
complete cash handling training.
2. Any newly hired employee that will be handling money in the course and scope of their job will
be required to complete cash handling training within 60 days of date of hire.
3. Cash handling training must be completed every 2 years.
Updated — 05/17/2023 4
Section 6: Approval Cash Collection Sites
The following City locations are approved for cash collection and cash balance retention (start-up cash)
of the stated amount, in a secure location using physical security measures approved by the RM and ISD.
This list may be updated from time to time for operational efficiencies or other business reasons, with
the approval of the RM.
Location
City Hall - Finance Department
Police
Parks and Recreation —Administration
Animal Services
Library
Hutchins Street Square
Hutchins Street Square — Pool
Enze Pool
Lodi Lake Beach
Lodi Lake Gate
Transit
Public Works
Community Development
Administration
Section 7: Cash Drawers and Safes
Cash Balance
$1,600 — 9 drawers with $100/Safe Amount
$700
$200
$250
$50
$100
$500
$50
$100
$200
$200
$100
No cash drawer
No cash drawer
No cash drawer
1. There should be an equivalent number of cash drawers or cash registers as there are employees
who collect cash at each City location. Except as otherwise approved by the RM and ISD, all
locations that receive cash should have a minimum of two cashier drawers.
a) If unable to have more than one cash drawer due to work environment restrictions, a memo
must be provided and signed off by the RM and ISD that states why the exception is needed.
2. Each drawer should be accessible by only one cashier until changeover or close.
3. The cashier must count and record their own cash drawer, including all funds received at
opening, changeover, and close.
a) If a changeover process is being utilized, due to work environment or other restriction, a
memo must be submitted and signed off by the RM and ISD that explains why the exception
is needed.
4. Cash must be physically protected during business hours through the use of a lockable cash
drawer. Cash drawers must be locked whenever left unattended. Keys to cash drawers should
be kept in a secure location, accessible only by employees authorized to collect cash and their
Updated — 05/17/2023 5
immediate supervisor(s). A written record of employees having keys should be maintained by
the department and a copy sent to the RM and ISD.
a) The record of keys issued shall be updated when there are changes in the issuance of keys.
5. The cash balance/start-up funds should be segregated from cash collected, and a deposit
prepared, at a predetermine time each day.
6. Completed deposits shall be secured in a safe until delivery to the Finance Department.
7. At the end of the business day, all cash drawers should be placed in a secure safe.
8. A supervisor shall conduct periodic audits to verify start-up drawers and verify activity
throughout the day.
9. Cash maintained on City premises after business hours must be held in a safe that is secured to
the building or wall, or as otherwise approved by the RM and ISD. Under no circumstance shall
cash or checks be retained in any location other than the safe. A drop -safe is required for any
cash that is held overnight for pick up by an armored car service. Locations where an armored
car pick up is not provided, a deposit should not be held in safe longer than 1 business day
(unless otherwise approved in writing by RM).
10. Two City employees must jointly open and close a safe (dual custody).
a) If unable to have dual custody due to work environment restrictions, a memo must be
provided and signed off by the RM and FSM stating why the exception is needed.
Section 8: Processing Incoming Mail
All requests for payment shall be made payable to the City of Lodi, Attention Finance Division,
located at 310 W. Elm St., Lodi, CA. A copy of all invoices shall be entered into the City ERP
system, Tyler Munis.
Interoffice mailing of checks is strictly prohibited. Checks shall be treated as cash and not sent
through the interoffice mail system. If a department receives a check they shall hand deliver the
check to the appropriate department.
Section 9: Payment Drop Box Collections
1. As of the date of this policy, two drop box sites are approved:
a) Finance Department parking lot; and
b) Finance Department Lobby
2. Authority to establish additional drop boxes may be granted by the City Manager.
Updated — 05/17/2023
Two City employees must jointly open the drop box and collect mail from drop boxes. There are
no exceptions to this two person rule.
Section 10: Receipts
1. All cash collections must be recorded at the time of receipt by means of cash register tapes and
receipts. Paper receipts must be pre-printed and have sequential numbering; dual numbered
ticket rolls; or other forms of receipts as approved by the RM and ISD. Electronic receipts must
be generated with sequential numbering.
2. Receipts shall be issued in numerical sequence.
3. For admissions where a cash register or cash receipt book is not available, a double -numbered
ticketing system must be implemented. The tickets must be retained and used to reconcile cash
against the number of tickets sold.
4. The customer is to be offered a receipt for all transactions.
5. Voided receipts must be signed and approved by a supervisor.
Section 11: Cash Reconciliations
1. Cash collected in each cash register shall be counted daily by the cashier transacting in that
drawer and balanced to the amount recorded on the cash register tape, batch, handwritten
receipts or other approved forms of receipts. This activity should take place out of public view.
2. The cashier shall enter the amount of the cash receipts and the cash collected on a cash
reconciliation form approved by the RM and ISD and sign the form.
A second employee must compare and count the cash collected to the amount recorded on the
cash register tape, batch, handwritten receipts or other approved forms of receipts, and
countersign the cash reconciliation form. A copy of the cash reconciliation form shall be in the
daily work and a copy maintained by the originating department to compare against actual
deposits made.
a) Secondary employee is to count cash that is to be deposited into bank account and verify all
information is accurate and correct. After verification process is completed secondary
employee is to sign the reconciliation form and seal deposit bag while in the presence of the
employee who collected the monies.
4. The RM shall cause a monthly reconciliation of all department daily cash reconciliations to be
completed no later than 30 days after month end.
Updated — 05/17/2023
Section 12: Over/Short Procedures
1. A cash overage or cash shortage occurs when the cash received is more than the amount
recorded by the cash register receipts ("Over") or less than the amount recorded by the cash
register receipts ("Short").
2. An Over/Short must be documented in Munis through an entry. Any cash register for which the
cash collected is not equal to the amount recorded by the cash receipts or other accepted form
of receipts must be reported (i.e., an out -of -balance cash register) to the department head and
RM.
Documentation of an Over/Short must be approved by a supervisor.
If the Over/Short amount exceeds $20, documentation must be approved by the
Department Head and forwarded to the RM.
If the Over/Short amount exceeds $200, the documentation must be signed by the
Department Head and forwarded to the RM, ISM, and the City Manager.
d. Over/Short amounts that exceed $1,000 shall be reported to City Council, in addition to the
RM, ISM, and the City Manager.
3. A signature on the documentation referenced in this section does not constitute approval of the
Over/Short; however, it acknowledges that an employee experienced an Over/Short.
4. If there appears to be a pattern of Over/Short occurrences (regardless of the amount) or any
other improprieties relating to cash handling activities, the information must be reported
immediately to the Department Head and forwarded to the RM.
S. Employee performance evaluations may include Over/Short occurrences, based on the
frequency and/or magnitude of the Over/Short. Disciplinary action, up to and including
termination from employment, may occur from a single occurrence or a series of Over/Short
occurrences, depending on the circumstances surrounding one or more occurrences and the
employee's MOU.
Section 13: Bank Deposits
Cash collected during a business day is required to be delivered daily to the Finance Division or
may be deposited into a drop safe to be collected by armored car service the following business
day. A deposit should not be held in the drop safe longer than 1 business day (unless otherwise
approved in writing by RM). Daily delivery of deposit is required unless the amount accumulated
is less than one hundred dollars ($100). For collection sites accumulating less than one hundred
dollars ($100), cash must be deposited daily, unless prior written approval from the RM. All
transporting of cash from a collection site shall be done by two employees, unless approved in
writing by the RM and ISD.
2. Cash collected on weekends or holidays must be deposited daily into a drop safe, unless the
amount accumulated is less than one hundred dollars ($100), in which case the cash must be
securely maintained in a manner approved in writing by the RM and ISD.
Updated — 05/17/2023 8
3. A deposit slip issued by the City -approved bank depository must be filled out for each deposit.
4. The total cash amount recorded on the deposit slip must equal the total cash recorded on the
cash reconciliation form.
5. The deposit slip and cash should be placed and sealed in a deposit bag issued by the City
approved depository bank, which at the time of approval of this policy is F&M Bank.
6. The deposit bag "tear slip", copy of the deposit slip, cash reconciliation form, and cash
receipt/tape or other receipts must be submitted to the Finance Division no later than the next
business day. All items shall be in a separate envelope, not in the sealed deposit bag. The RM
will cause a weekly summary of deposit amounts to be forwarded to each department. Each
department should reconcile the cash reconciliation form deposit amounts recorded in the
report provided by the RM.
7. Varied routines for cash transportation are necessary to maintain employee safety. Department
Heads are to ensure transportation of cash by City employees does not conform to any regular
time schedule. If the Department Head or an employee has concerns about employee safety
during cash transport the Police Department should be contacted for an escort to the Finance
Division or the depository bank.
Section 14: Armored Vehicle Pick Up and Transfer of Cash
1. Armored vehicle transportation of currency and coin shall be used for all sites where average
daily cash collection exceeds one -thousand dollars ($1,000). Weekly armored car collections will
be scheduled for all other sites regardless of cash on hand.
Sites that use armored transportation must also use a drop -safe with one compartment that is
accessible by dual keys maintained by an armored car driver and a site supervisor. Site
supervisor keys are to be maintained in a secure, locked drawer.
3. Armored car personnel must sign a receipt before transferring cash from a City site. A log must
be maintained by the department with the time, amount, and supervisor signature for all
armored car pick-ups.
Section 15: Prohibited Transactions
1. Cash collected at City sites may not be used to pay vendors, employees, instructors, umpires,
referees, contractors, reimbursements, or other expenses of any kind. Claim vouchers,
tiMesheets, or petty cash must be used for all such payments.
Cash collected at City sites may not be used for refunds of any kind. Claim vouchers must be
used to authorize and process refund payments.
City staff is not authorized to cash personal or business checks, payroll checks, money orders, or
any other similar instruments with cash collected at a City site.
Updated — 05/17/2023 9
4. Loans or borrowing from cash collected at City sites is prohibited.
5. Instructors who conduct classes through City programs are not authorized to accept payments
directly from those enrolled. Payment for class enrollment must be made through the mail,
online, or directly to the Department responsible for the City program.
Section 16: Counterfeit Currency
1. Cashiers should be aware of indicators of counterfeit currency. Counterfeit bill detector pens
will be provided to the department by the RM to reduce the risk of accepting a counterfeit bill.
The RM shall provide counterfeit currency identification training to all cash handling staff and
make this training available to cash handling departments.
Section 17: Employee Background Checks
1. The Police Department will conduct a background check prior to hiring an employee who will
routinely collect cash.
2. The City will conduct a credit check prior to hiring an employee who will routinely collect cash.
a. All employees that handle one -thousand dollars ($1,000) or more based on the average
daily cash collections per day of activity are required to take a minimum of one week
vacation (5 consecutive working days) during each year. During vacation periods, the
supervisor shall conduct a careful review of cash collections, comparing amounts to
other periods.
Section 18: Authority to Establish Bank Accounts
1. Authority to establish a bank account, checking account, or other cash accounts at a banking
depository may only be granted by the City Council, City Manager and Internal Services Director
(ISD).
Approved as to Form:
KATIE ❑. LUCCHESI
Deputy City Attomey
Updated — 05/17/2023 10
RESOLUTION NO. 2023-97
A RESOLUTION OF THE LODI CITY COUNCIL AUTHORIZING THE
CITY MANAGER TO IMPLEMENT A CITYWIDE CASH HANDLING POLICY
WHEREAS, the Revenue Division currently manages the City's cash handling and safety
of all money received; and
WHEREAS, there currently is not a formal cash handling policy to avoid inconsistency in
cash handling practices and the safekeeping of all money throughout the departments within the
City; and
WHEREAS, currently the Revenue Division has to recount money processed by the
departments; and
WHEREAS, a formal cash handling policy in the City will provide departments with
consistency, best practices, controlled safekeeping, training and accountability. Additionally, the
policy will help keep and maintain accurate records between cash drawer and the general ledger;
and
WHEREAS, staff recommends that the City Council approve the Citywide Cash Handling
Policy to control the management of money and its safekeeping.
NOW, THEREFORE, BE IT RESOLVED that the Lodi City Council does hereby authorize
the City Manager to approve a Citywide Cash Handling Policy; and
BE IT FURTHER RESOLVED, pursuant to Section 6.3q of the City Council Protocol
Manual (adopted 11/6/19, Resolution No. 2019-223), the City Attorney is hereby authorized to
make minor revisions to the above -referenced document(s) that do not alter the compensation or
term, and make clerical corrections as necessary.
Date: May 17, 2023
I hereby certify that Resolution No. 2023-97 was passed and adopted by the Lodi City
Council in a regular meeting held May 17, 2023, by the following vote:
AYES: COUNCIL MEMBERS — Bregman, Craig, Nakanishi, Yepez, and
Mayor Hothi
NOES: COUNCIL MEMBERS — None
ABSENT: COUNCIL MEMBERS — None
ABSTAIN COUNCIL MEMBERS — None
4--a,77�� W% ai? "t
PAMELA M. FARRIS
Assistant City Clerk
2023-97