Revised: 9/2011
CASH MANAGEMENT POLICIES AND PROCEDURES HANDBOOK
CHAPTER 8. INTERNAL CONTROLS FOR CASH MANAGEMENT
Section 1.0 General
This chapter examines the requirements, responsibilities, standards, and objectives for
internal controls. Implementing internal controls is important in the area of cash
management because of the diverse nature of the processes involved, i.e., billings,
collections, deposits, and disbursement processes, as well as the fragmented oversight
responsibilities generally associated with these processes. Some of the other major
factors, which impose a need for a consistent application of sound internal controls, are:
a. The prevalence of a high turnover rate of operating personnel and supervisors
in cash management functions;
b. The assignment of cash handling responsibilities to personnel with limited
fiscal experience or understanding;
c. The fragmentation of billing and cash handling functions which makes
monitoring the whole process difficult; and
d. The inherent risk of loss, or opportunity for personal gain, created by the
nature of cash transactions.
Section 2.0 Policy
It is the policy of the Department of Commerce to implement internal controls in the area
of cash management to minimize the cost of the use of money to the U.S. Government.
Organization unit's accounting and administrative controls must also provide reasonable
assurance that all Federal assets, including funds, are safeguarded against waste, loss,
unauthorized use, or misappropriation. While the need for internal controls may seem
burdensome or restrictive, their value should be obvious. It is the responsibility of
financial managers to interpret the value of internal controls for other managers and
employees. They should also assist in establishing internal controls that may need to be
tailored to specific situations.
However, the costs and benefits of proposed controls for unusual situations should be
carefully evaluated and the costs should not normally exceed the benefits likely to be
derived. On the other hand, such evaluations should not be mistakenly used as a
justification for relaxing controls, or accepting an increased risk of loss to the Federal
Government, based strictly on cost.