CHAPTER 2: INTERNAL CONTROL AND AUDITING PROCEDURES

Return to CHAPTER 2: INTERNAL CONTROL AND AUDITING PROCEDURES

SUBSECTION 6.2.2.1
PROCEDURES FOR ALL FUNDS

6.2.2.1.1

Cash Receipts

Effective Date:

July 1, 1991

6.2.2.1.1.a

Division of duties in the handling of cash is one of the most effective ways to ensure control over this asset. No individual is to have complete control in the handling of cash. Specifically, there is to be a separation of duties in the actual handling of money, recording the transactions, and reconciling bank accounts. Employees handling cash are to be assigned duties that are complementary to or checked by another employee.

6.2.2.1.1.b

Incoming cash is to be made a matter of record as soon as possible.

6.2.2.1.1.c

Mail is to be opened by two persons. Remittances by mail are to be listed in duplicate at the time the mail is opened. The listing is to be prepared by a person other than the one opening the mail. One copy of the listing is to be forwarded to the cashier with the receipts. The other copy is to form the basis for accounting controls through ledger posting. The listing is to be periodically compared with the deposit by a third person.

6.2.2.1.1.d

Amounts of currency contained in each item of mail are to be verified. Documents enclosed with the currency received are to be machine date stamped or dated and initialed by the employee opening the mail.

6.2.2.1.1.e.

A secure area for the processing and safeguarding of cash received is to be provided. Access to the secured area is to be restricted to authorized personnel only. The secured area is to be locked when not occupied.

6.2.2.1.1.f

Cash is to be protected by the use of registers, safes, or locks, and kept in areas of limited access.

6.2.2.1.1.g

Collections made over the counter or in the field are to be documented by the issuance of sequentially pre-numbered official receipts or through cash registers or automated cashiering systems. All such receipts are to be strictly accounted for and the reason for any missing documents determined and documented. 'Redi-form' receipts are not to be used. Receipts are to indicate mode of payment, such as cash, check, etc. The total dollar amount recorded on cash receipt forms, by mode of payment, is to be balanced daily to total cash, checks, etc. collected.

6.2.2.1.1.h

The cash receiving function of an agency is to be centralized to the extent possible.

6.2.2.1.1.i

When cash is received in branch offices, it is to be transmitted to the central office through the banking system. Branch office personnel are to be restricted to making cash deposits and central office personnel are to make any cash withdrawals and reconcile bank accounts.

6.2.2.1.1.j

A balance and summary of all cash receipts is to be prepared daily. Any shortages or overages are to be carefully investigated and, to the extent possible, corrected.

6.2.2.1.1.k

Receipts are to be deposited intact on a daily basis. In the handling of cash and making of deposits, security procedures that will best safeguard the cash asset are to be followed.

6.2.2.1.1.l

Authenticated, duplicate deposit slips are to be retained and compared with amounts recorded in cash receipts records.

6.2.2.1.1.m

A person other than the cashier or receivable bookkeeper is to make the bank deposit.

6.2.2.1.1.n

Monies are to be picked up or delivered to appropriate authorities on a scheduled basis.

6.2.2.1.1.o

Adequate records are to be maintained to assure the correct handling and final disposition of items held in suspense. Suspense accounting is to be eliminated whenever possible by the direct deposit of the item to the correct fund and account. However, deposits are not to be delayed because the account distribution cannot be immediately determined.

6.2.2.1.1.p

Cash receipts retained on the premises overnight are to be minimized and locked up in a secure place, such as a safe.

6.2.2.1.1.q

Cashiers are to be prohibited from cashing personal checks or notes of personal indebtedness.

6.2.2.1.1.r

Written procedures on all cashiering and cash control procedures are to be maintained by each agency.

6.2.2.1.2

Petty Cash

Effective Date:

July 1, 1991

6.2.2.1.2.a

Petty cash accounts, other than change accounts, are to be established and maintained as bank checking accounts whenever possible. Only minimal amounts of petty cash are to be kept on hand.

6.2.2.1.2.b

Petty cash accounts are to be on an imprest basis.

6.2.2.1.2.c

Responsibility for a petty cash account is to be vested in only one person.

6.2.2.1.2.d

All disbursements from petty cash accounts are to be supported by original (no photocopies) receipts or vouchers bearing the signature of the payee.

6.2.2.1.2.e

Petty cash checking accounts are to be reconciled monthly by a person other than the custodian.

6.2.2.1.2.f

Surprise counts of petty cash are to be made periodically by a person other than the custodian.

6.2.2.1.2.g

If a postage meter is used:

The postage meter book is to be properly maintained.

Purchases of postage are to be made only by check.

Purchases of postage which were credited to a meter are to be regularly confirmed with the Post Office.

Purchases of postage are to be compared periodically with usage.

6.2.2.1.2.h

If a postage meter is not used, proper control is to be exercised over postage stamps.

6.2.2.1.3

Disbursements--General

Effective Date:

July 1, 1991

6.2.2.1.3.a

The responsibility for disbursement procedures is to be clearly documented and assigned to specific personnel of the agency.

6.2.2.1.3.b

Disbursements are to be handled in such a manner as to ensure that the proper funds and accounts are charged; that the disbursement is used only for authorized purposes; and that laws, rules, and regulations governing the disbursement are followed.

6.2.2.1.3.c

Controls are to be established to assure that all payments are made on a timely basis and in accordance with all purchase orders and contracts.

6.2.2.1.3.d

Controls are to be established to ensure that duplicate payments are not made.

6.2.2.1.3.e

Original invoices (no photocopies) totaling the amount of the disbursement are to be attached to each voucher before payment.

6.2.2.1.3.f

Employee duties in the handling of disbursements are to be separated to the extent possible with regard to:

The initiation of purchase requisitions and field orders.

The approval of vouchers, invoices, and warrant registers.

The preparation of warrants/checks.

The mailing of warrants/checks.

The recording of disbursements. To the extent possible, employee duties in this area are to be complementary to or checked by another employee.

6.2.2.1.3.g

Each cash disbursement is to be properly vouchered and approved by the proper authorities of the agency before the actual disbursement occurs. This will ensure the proper and regular review of all disbursements.

6.2.2.1.3.h

Disbursements are to be made by warrant/check or journal voucher. Where payments are made by check, additional control is to be provided by counter signatures.

6.2.2.1.3.i

Blank warrants/checks are to be kept in locked storage under the control of a designated, responsible employee. Access to blank warrants/checks is to be limited to this employee and a designated alternate. When blank warrants/checks are received; the date, quantity, and inclusive serial numbers are to be recorded and added to the total balance on hand.

6.2.2.1.3.j

When warrants/checks are required from the locked storage, a requisition form is to be completed by the individual requesting the warrants/checks. The custodian of the warrants/checks is to record the date, quantity issued, inclusive serial numbers, and the new balance on hand on the control form.

6.2.2.1.3.k

A separate record is to be maintained for each warrant/check series issued or voided. For "X" warrants, the record is to include the purpose of issue, agency concerned, date, serial number of warrant replaced by the "X" warrant, and initials of person issuing the "X" warrant. The record for voided warrants is to include the date voided, inclusive serial numbers (if more than one warrant in a series is voided), quantity voided, reason for voiding, and initials of individual taking action.

6.2.2.1.3.1

A physical inventory of the entire stock of blank warrants/checks is to be taken on a monthly basis by the custodian and a responsible supervisor. The quantity and inclusive serial numbers of all warrants/checks on hand at the beginning of the period, and receipts, issues, voids, and warrants/checks on hand at the end of the period are to be recorded on an appropriate form. Separate forms are to be completed for each warrant/check series, and furnished to a designated supervisor by the warrant custodian. If the physical inventory agrees with the book inventory, certification of this fact, signed by the custodian and supervisor who assisted in the taking of the physical inventory, will accompany the forms. Any variance between the book or computed quantity of blank warrants/checks and the actual quantity determined by the physical inventory is to be reported to the designated supervisor immediately.

6.2.2.1.4

Disbursements--Travel

Effective Date:

July 1, 1991

6.2.2.1.4.a

Written procedures are to be established consistent with state of Washington Travel and Transportation Regulations.

6.2.2.1.4.b

Formally adopted, written internal policies and procedures are to be established to control the utilization of meals, coffee, and light refreshments at meetings and formal training sessions.

6.2.2.1.4.c

Authorization of travel is to be exercised through use of a Travel Authorization Form (A40), or other equally effective means.

6.2.2.1.4.d

Travel Expense Vouchers are to be signed by the employee and approved by the agency head or authorized designee.

6.2.2.1.4.e

Travel Expense Vouchers of agency heads are to be signed by the chief financial officer certifying that the reimbursement complies with state travel regulations.

6.2.2.1.4.f

Travel Expense Vouchers and supporting documentation of agency heads reporting to the governor are to be submitted for review to the Office of the Governor every six months.

6.2.2.1.4.g

Travel Expense Vouchers and supporting documentation of agency heads not reporting to the governor are to be submitted for review to the appropriate appointing authority every six months.

6.2.2.1.4.h

Written procedures are to be established for authorization and payment of official transportation by common carrier.

6.2.2.1.4.i

Air transportation purchases are to be made in accordance with the Department of General Administration's air travel program (when operational); or until then, are to be made in accordance with the state of Washington Travel and Transportation regulations.

6.2.2.1.4.j

Reimbursement for air transportation in an amount greater than the Department of General Administration's air fare schedules is to be approved in writing in advance by the agency head or designee.

6.2.2.1.4.k

The approval for air transportation in item "j" above is to be in accordance with the conditions found in the Department of General Administrations air fare contract.

6.2.2.1.4.l

Reimbursement for non air transportation in greater than tourist class or its equivalent are to be approved in writing in advance by the agency head or authorized designee.

6.2.2.1.4.m

Written approval for travel outside the continental USA (excluding the one exception found in the state of Washington Travel and Transportation Regulations for portions of Canada) by employees of agencies reporting to the Governor is to be provided by the Office of the Governor.

6.2.2.1.4.n

Written approval for travel outside the continental USA (excluding the one exception found in the state of Washington Travel and Transportation Regulations for portions of Canada) by employees of agencies not reporting to the Governor is to be provided by the appropriate appointing authority.

6.2.2.1.4.o

Prior to payment, the agency copy of the Transportation Request is to be matched to the transportation provider's copy, or the customer copy of the credit card receipt (attached to the Travel Expense Voucher) is to be matched to the monthly statement from the credit card company, whichever is applicable.

6.2.2.1.4.p

Unissued credit cards and blank stock of Transportation Request forms are to be inventoried at least quarterly and kept under lock.

6.2.2.1.4.q

Persons who authorize commercial transportation are not to receive tickets or use the transportation.

6.2.2.1.4.r

The employee responsible for the choice of locations and facilities is to submit justification in writing to the agency head or authorized designee when a convention, conference, or meeting is held at a non state facility and involves attendance of ten or more state employees.

6.2.2.1.4.s

Written approval of the agency head or designee must be obtained prior to authorizing direct billing to the agency and direct payment by an individual of the agency responsible for payment of travel allowances.

6.2.2.1.5

Disbursements—Agency Checking Accounts

Effective Date:

July 1, 1991

6.2.2.1.5.a

Checks are to be pre-numbered.

6.2.2.1.5.b

Checks are to be completely filled out before being presented for signature.

6.2.2.1.5.c

Physical control of checks is to be maintained by someone other than persons originating disbursement requests.

6.2.2.1.5.d

Spoiled or voided checks are to be retained and the signature blocks on the checks are to be removed.

6.2.2.1.5.e

If a check-signing machine is used, the signature plate and use of the check-signing machine is to be kept under control of the official whose name appears on the signature plate or an authorized designee.

6.2.2.1.5.f

Dual signatures are to be required on all checks.

6.2.2.1.5.g

Bills or vouchers are to be presented with checks for signature.

6.2.2.1.5.h

Bills or vouchers are to be marked "Paid" only at the time checks are signed.

6.2.2.1.5.i

Checks are to be mailed by someone other than the person preparing them.

6.2.2.1.5.j

Bills are to be approved for payment by someone other than the persons who sign checks.

6.2.2.1.5.k

Bank statements are to be reconciled at least monthly by an employee not involved in cash receipt or disbursement procedures.

6.2.2.1.6

Purchases

Effective Date:

July 1, 1991

6.2.2.1.6.a

Pre-numbered purchase and field order forms are to be used and strictly accounted for by number.

6.2.2.1.6.b

Invoices are to be matched with purchase orders and receiving reports before approval for payment.

6.2.2.1.6.c

Invoice computations and pricing are to be verified before approval for payment.

6.2.2.1.6.d

Invoices are to be paid in a timely manner so that discounts may be taken.

6.2.2.1.6.e

Monthly statements are to be compared with accounts payable balances.

6.2.2.1.6.f

Purchases should be made by competitive solicitation, when applicable.

6.2.2.1.6.g

Payable Subsidiary Ledgers are to be reconciled to the control accounts monthly.

6.2.2.1.6.h

Copies of the order forms are to be distributed to receiving and accounting departments.

6.2.2.1.6.i

Claims are to be filed promptly for goods damaged in shipment.

6.2.2.1.7

Investments and Securities

Effective Date:

July 1, 1991

6.2.2.1.7.a

The authority to purchase, exchange, or sell investments and securities is to be clearly defined.

6.2.2.1.7.b

The custody of securities is to be the responsibility of a person not authorized to purchase, exchange, or sell securities. The securities are to be kept in a safe deposit box or vault. Access to the securities is to be strictly controlled. No single person is to have complete control of vault combinations or keys. Access to the securities is to require the presence of at least two designated officers.

6.2.2.1.7.c

A detailed record of each investment and security is to be maintained by the accounting department. The custodian is to also maintain a record of securities deposited or withdrawn.

6.2.2.1.7.d

Employees handling and having access to securities are to be closely supervised or reviewed by other employees.

6.2.2.1.7.e

Periodic checks are to be made to verify that all income due has been received.

6.2.2.1.7.f

Periodic evaluations of the performance of investment portfolios are to be performed by authorized personnel independent of investment portfolio management activities.

6.2.2.1.8

Receivables

Effective Date:

July 1, 1991

6.2.2.1.8.a

There is to be a separation of duties with regard to billing, collection, cash receiving, receivables accounting, and the maintenance of general ledger control accounts.

6.2.2.1.8.b

Receivables are to be made a matter of record promptly upon the completion of the acts which entitle the agency to collect the amounts owed it (see Section 2.4.4.3.1.b). Separate accounts are to be maintained for each major category of receivables in order to ensure the clear and full disclosure of the agency's resources in its financial reports. Controls are to be established so that receivables are reported in the proper funds and accounts.

6.2.2.1.8.c

Records of receivables are to be strictly guarded. Limited access to these records as well as the physical protection of them is required.

6.2.2.1.8.d

Control accounts are to be balanced with the detailed ledgers at least monthly.

6.2.2.1.8.e

Credit adjustments to receivable balances are to be approved by officials not involved in the collection activity. The use of prenumbered credit memorandum forms is desirable.

6.2.2.1.8.f

Receivable accounts are to be reviewed periodically for credit balances.

6.2.2.1.8.g

There is to be an independent verification of quantities, prices, and clerical accuracy of billing invoices.

6.2.2.1.8.h

Billings are to be prompt and statements are to be sent to all customers on a regular basis.

6.2.2.1.8.i

Receivable accounts are to be aged at least monthly (see Section 2.4.4.3.3.a) and reviewed by authorized personnel.

6.2.2.1.8.j

Controls are to be established to ensure the prompt follow-up of past due receivables.

6.2.2.1.9

Supplies, Inventories, and Fixed Assets

Effective Date:

July 1, 1991

6.2.2.1.9.a

Authorized individuals are to be responsible for receiving and issuing the supplies, merchandise, and fixed assets for an agency. These individuals are to be responsible for inspecting all goods received to verify that they conform to specifications. In addition, these persons are to be responsible for the enforcement of all policies necessary for the internal control of these assets.

6.2.2.1.9.b

Specific central points for receiving and issuing supplies and equipment are to be determined. All loading and unloading operations are to be closely supervised.

6.2.2.1.9.c

Receiving reports and issue reports are to be prepared for all receipts and issues.

6.2.2.1.9.d

Quantities received are to be compared to the bill of lading and receiving report.

6.2.2.1.9.e

Effective control procedures are to be established to ensure that state supplies and fixed assets are used properly and for authorized purposes. In addition, controls are to be established so that state property does not leave the possession of the state except under proper authorization.

6.2.2.1.9.f

State supplies and equipment not currently in use are to be stored in areas where access is limited to authorized personnel only. Storerooms or warehouses where such property is kept are to be locked when not occupied and during other than normal working hours. Special protective measures are to be taken for items having a high pilferage rate or a high value.

6.2.2.1.9.g

An actual physical inventory count of all state supplies and equipment is to be made periodically in accordance with OFM's inventory policy. Causes for differences between quantities determined by physical inspection and those shown on accounting records are to be investigated and, to the extent possible, improvements in procedures are to be made to prevent future error or losses. Accounting records are to be brought into agreement with the physical inventories after authorization by the responsible official. For capitalized fixed assets, reconciliations are to be performed between the agency's authorized property management system, AFRS balances in GL code series 2XXX "Fixed Assets," and AFRS balance in Object J, "Capital Outlays."

6.2.2.1.9.h

Physical inventories are to be taken and certified by personnel acting under written instructions.

6.2.2.1.9.i

Inventories are to be taken by personnel other than those normally responsible for inventories.

6.2.2.1.9.j

A perpetual or periodic inventory record is to be maintained to reflect dollar value and quantities of fixed assets, merchandise for resale, and significant supplies inventories.

6.2.2.1.9.k

Supplies and merchandise are to be arranged so that the earliest received or produced will be issued first.

6.2.2.1.9.l

Damaged and obsolete goods are to be physically segregated.

6.2.2.1.9.m

Supplies and merchandise are to be kept neat.

6.2.2.1.9.n

Detailed records are to be kept of all fixed assets. These records are to contain descriptions of the fixed assets that are brief but factual enough to allow for identification and location.

6.2.2.1.9.o

State equipment is to be permanently tagged to allow for its identification.

6.2.2.1.9.p

Controls are to be established to ensure that all regulations and procedures are followed in the sale or disposition of state property and in the reporting of the loss or theft of such assets.

6.2.2.1.10

Payroll

Effective Date:

July 1, 1991

6.2.2.1.10.a

Responsibilities for supervision and time keeping, personnel, payroll processing, disbursements, and general ledger functions should be assigned to provide division of duties.

6.2.2.1.10.b

Payroll warrants are to be distributed by a person other than the employee's immediate supervisor.

6.2.2.1.10.c

Forms W-2 are to be distributed by personnel other than employees connected with preparation of payroll.

6.2.2.1.10.d

Detailed records of hours worked are to be maintained and approved, as appropriate.

6.2.2.1.10.e

Payroll charges should be reviewed before disbursements are made.

6.2.2.1.10.f

Payroll charges, including fringe benefits, should be recorded and distributed accurately and promptly.

6.2.2.1.10.g

Written procedures are required for approving, recording, and controlling sick leave, vacations, holidays, overtime, compensatory time, and stand-by time.

6.2.2.1.10.h

Procedures are to be established to ensure that all attendance reports and payroll reports are verified by supervisory personnel.

6.2.2.1.10.i

Payroll records and reports should be adequately safeguarded.

6.2.2.1.11

Electronic Data Processing

Effective Date:

July 1, 1991

6.2.2.1.11.a

The electronic data processing (EDP) department is to be independent of the accounting and operating departments for which it processes data.

6.2.2.1.11.b

An appropriate segregation of duties is to be maintained within the data processing function for system development (design and programming), technical support (maintenance of systems software), and operations.

6.2.2.1.11.c

Controls are to be established and followed for the preparation and approval of input transactions outside the EDP department. These controls are to prohibit the EDP department from initiating and processing transactions without the approval of affected users.

6.2.2.1.11.d

Controls are to be established over completeness and accuracy of input, processing and output.

6.2.2.1.11.e

Controls are to be established for error correction of rejected transactions.

6.2.2.1.11.f

Controls are to be established over entry of data in on-line systems to restrict access to terminals and data entry to authorized employees. Password security should be established on an individualized basis.

6.2.2.1.11.g

User controls are to include user reconciliation of output totals to input totals for all data submitted, internal reconciliation of file balances, and the review of outputs for reasonableness.

6.2.2.1.11.h

Controls are to be established over the use and retention of tape and disk files, including provisions for retention of adequate records to provide backup capabilities.

6.2.2.1.11.i

Controls are to be exercised over changes to system software.

6.2.2.1.11.j

Controls are to be in place which safeguard and limit access to data processing equipment, tapes, disks, files, system documentation, and application program documentation to authorized employees.

6.2.2.1.11.k

Written documentation of procedures are to be established and followed by computer operators.

6.2.2.1.11.l

A written and tested contingency plan is to be in place providing for continued processing of critical applications in the event of a disaster to the computer facility.

6.2.2.1.11.m

Controls are to be established for the use and contents of personal computers.

6.2.2.1.12

General

Effective Date:

July 1, 1991

6.2.2.1.12.a

Accounting records are to be neat and in proper order.

6.2.2.1.12.b

Accounting records are to be kept current.

6.2.2.1.12.c

Employees are to take periodic vacations and their work is then to be performed by other employees.

6.2.2.1.12.d

Internal audits are to be performed.

6.2.2.1.12.e

Journal entries are to be approved by authorized personnel.

6.2.2.1.12.f

A current organizational chart is to be maintained and followed.

6.2.2.1.12.g

Appropriate documentation of procedures is to exist for all agency systems and functions such that the organization could continue to operate if key employees leave.

6.2.2.1.12.h

The accounting department is to be headed by a financial executive with the appropriate background, skills and training.

Return to CHAPTER 2: INTERNAL CONTROL AND AUDITING PROCEDURES

6.2.2.1.1.a	Division of duties in the handling of cash is one of the most effective ways to ensure control over this asset. No individual is to have complete control in the handling of cash. Specifically, there is to be a separation of duties in the actual handling of money, recording the transactions, and reconciling bank accounts. Employees handling cash are to be assigned duties that are complementary to or checked by another employee.
6.2.2.1.1.b	Incoming cash is to be made a matter of record as soon as possible.
6.2.2.1.1.c	Mail is to be opened by two persons. Remittances by mail are to be listed in duplicate at the time the mail is opened. The listing is to be prepared by a person other than the one opening the mail. One copy of the listing is to be forwarded to the cashier with the receipts. The other copy is to form the basis for accounting controls through ledger posting. The listing is to be periodically compared with the deposit by a third person.
6.2.2.1.1.d	Amounts of currency contained in each item of mail are to be verified. Documents enclosed with the currency received are to be machine date stamped or dated and initialed by the employee opening the mail.
6.2.2.1.1.e.	A secure area for the processing and safeguarding of cash received is to be provided. Access to the secured area is to be restricted to authorized personnel only. The secured area is to be locked when not occupied.
6.2.2.1.1.f	Cash is to be protected by the use of registers, safes, or locks, and kept in areas of limited access.
6.2.2.1.1.g	Collections made over the counter or in the field are to be documented by the issuance of sequentially pre-numbered official receipts or through cash registers or automated cashiering systems. All such receipts are to be strictly accounted for and the reason for any missing documents determined and documented. 'Redi-form' receipts are not to be used. Receipts are to indicate mode of payment, such as cash, check, etc. The total dollar amount recorded on cash receipt forms, by mode of payment, is to be balanced daily to total cash, checks, etc. collected.
6.2.2.1.1.h	The cash receiving function of an agency is to be centralized to the extent possible.
6.2.2.1.1.i	When cash is received in branch offices, it is to be transmitted to the central office through the banking system. Branch office personnel are to be restricted to making cash deposits and central office personnel are to make any cash withdrawals and reconcile bank accounts.
6.2.2.1.1.j	A balance and summary of all cash receipts is to be prepared daily. Any shortages or overages are to be carefully investigated and, to the extent possible, corrected.
6.2.2.1.1.k	Receipts are to be deposited intact on a daily basis. In the handling of cash and making of deposits, security procedures that will best safeguard the cash asset are to be followed.
6.2.2.1.1.l	Authenticated, duplicate deposit slips are to be retained and compared with amounts recorded in cash receipts records.
6.2.2.1.1.m	A person other than the cashier or receivable bookkeeper is to make the bank deposit.
6.2.2.1.1.n	Monies are to be picked up or delivered to appropriate authorities on a scheduled basis.
6.2.2.1.1.o	Adequate records are to be maintained to assure the correct handling and final disposition of items held in suspense. Suspense accounting is to be eliminated whenever possible by the direct deposit of the item to the correct fund and account. However, deposits are not to be delayed because the account distribution cannot be immediately determined.
6.2.2.1.1.p	Cash receipts retained on the premises overnight are to be minimized and locked up in a secure place, such as a safe.
6.2.2.1.1.q	Cashiers are to be prohibited from cashing personal checks or notes of personal indebtedness.
6.2.2.1.1.r	Written procedures on all cashiering and cash control procedures are to be maintained by each agency.

6.2.2.1.2.a	Petty cash accounts, other than change accounts, are to be established and maintained as bank checking accounts whenever possible. Only minimal amounts of petty cash are to be kept on hand.
6.2.2.1.2.b	Petty cash accounts are to be on an imprest basis.
6.2.2.1.2.c	Responsibility for a petty cash account is to be vested in only one person.
6.2.2.1.2.d	All disbursements from petty cash accounts are to be supported by original (no photocopies) receipts or vouchers bearing the signature of the payee.
6.2.2.1.2.e	Petty cash checking accounts are to be reconciled monthly by a person other than the custodian.
6.2.2.1.2.f	Surprise counts of petty cash are to be made periodically by a person other than the custodian.
6.2.2.1.2.g	If a postage meter is used:
	The postage meter book is to be properly maintained.
	Purchases of postage are to be made only by check.
	Purchases of postage which were credited to a meter are to be regularly confirmed with the Post Office.
	Purchases of postage are to be compared periodically with usage.
6.2.2.1.2.h	If a postage meter is not used, proper control is to be exercised over postage stamps.

6.2.2.1.3.a	The responsibility for disbursement procedures is to be clearly documented and assigned to specific personnel of the agency.
6.2.2.1.3.b	Disbursements are to be handled in such a manner as to ensure that the proper funds and accounts are charged; that the disbursement is used only for authorized purposes; and that laws, rules, and regulations governing the disbursement are followed.
6.2.2.1.3.c	Controls are to be established to assure that all payments are made on a timely basis and in accordance with all purchase orders and contracts.
6.2.2.1.3.d	Controls are to be established to ensure that duplicate payments are not made.
6.2.2.1.3.e	Original invoices (no photocopies) totaling the amount of the disbursement are to be attached to each voucher before payment.
6.2.2.1.3.f	Employee duties in the handling of disbursements are to be separated to the extent possible with regard to:
	The initiation of purchase requisitions and field orders.
	The approval of vouchers, invoices, and warrant registers.
	The preparation of warrants/checks.
	The mailing of warrants/checks.
	The recording of disbursements. To the extent possible, employee duties in this area are to be complementary to or checked by another employee.
6.2.2.1.3.g	Each cash disbursement is to be properly vouchered and approved by the proper authorities of the agency before the actual disbursement occurs. This will ensure the proper and regular review of all disbursements.
6.2.2.1.3.h	Disbursements are to be made by warrant/check or journal voucher. Where payments are made by check, additional control is to be provided by counter signatures.
6.2.2.1.3.i	Blank warrants/checks are to be kept in locked storage under the control of a designated, responsible employee. Access to blank warrants/checks is to be limited to this employee and a designated alternate. When blank warrants/checks are received; the date, quantity, and inclusive serial numbers are to be recorded and added to the total balance on hand.
6.2.2.1.3.j	When warrants/checks are required from the locked storage, a requisition form is to be completed by the individual requesting the warrants/checks. The custodian of the warrants/checks is to record the date, quantity issued, inclusive serial numbers, and the new balance on hand on the control form.
6.2.2.1.3.k	A separate record is to be maintained for each warrant/check series issued or voided. For "X" warrants, the record is to include the purpose of issue, agency concerned, date, serial number of warrant replaced by the "X" warrant, and initials of person issuing the "X" warrant. The record for voided warrants is to include the date voided, inclusive serial numbers (if more than one warrant in a series is voided), quantity voided, reason for voiding, and initials of individual taking action.
6.2.2.1.3.1	A physical inventory of the entire stock of blank warrants/checks is to be taken on a monthly basis by the custodian and a responsible supervisor. The quantity and inclusive serial numbers of all warrants/checks on hand at the beginning of the period, and receipts, issues, voids, and warrants/checks on hand at the end of the period are to be recorded on an appropriate form. Separate forms are to be completed for each warrant/check series, and furnished to a designated supervisor by the warrant custodian. If the physical inventory agrees with the book inventory, certification of this fact, signed by the custodian and supervisor who assisted in the taking of the physical inventory, will accompany the forms. Any variance between the book or computed quantity of blank warrants/checks and the actual quantity determined by the physical inventory is to be reported to the designated supervisor immediately.

6.2.2.1.4.a	Written procedures are to be established consistent with state of Washington Travel and Transportation Regulations.
6.2.2.1.4.b	Formally adopted, written internal policies and procedures are to be established to control the utilization of meals, coffee, and light refreshments at meetings and formal training sessions.
6.2.2.1.4.c	Authorization of travel is to be exercised through use of a Travel Authorization Form (A40), or other equally effective means.
6.2.2.1.4.d	Travel Expense Vouchers are to be signed by the employee and approved by the agency head or authorized designee.
6.2.2.1.4.e	Travel Expense Vouchers of agency heads are to be signed by the chief financial officer certifying that the reimbursement complies with state travel regulations.
6.2.2.1.4.f	Travel Expense Vouchers and supporting documentation of agency heads reporting to the governor are to be submitted for review to the Office of the Governor every six months.
6.2.2.1.4.g	Travel Expense Vouchers and supporting documentation of agency heads not reporting to the governor are to be submitted for review to the appropriate appointing authority every six months.
6.2.2.1.4.h	Written procedures are to be established for authorization and payment of official transportation by common carrier.
6.2.2.1.4.i	Air transportation purchases are to be made in accordance with the Department of General Administration's air travel program (when operational); or until then, are to be made in accordance with the state of Washington Travel and Transportation regulations.
6.2.2.1.4.j	Reimbursement for air transportation in an amount greater than the Department of General Administration's air fare schedules is to be approved in writing in advance by the agency head or designee.
6.2.2.1.4.k	The approval for air transportation in item "j" above is to be in accordance with the conditions found in the Department of General Administrations air fare contract.
6.2.2.1.4.l	Reimbursement for non air transportation in greater than tourist class or its equivalent are to be approved in writing in advance by the agency head or authorized designee.
6.2.2.1.4.m	Written approval for travel outside the continental USA (excluding the one exception found in the state of Washington Travel and Transportation Regulations for portions of Canada) by employees of agencies reporting to the Governor is to be provided by the Office of the Governor.
6.2.2.1.4.n	Written approval for travel outside the continental USA (excluding the one exception found in the state of Washington Travel and Transportation Regulations for portions of Canada) by employees of agencies not reporting to the Governor is to be provided by the appropriate appointing authority.
6.2.2.1.4.o	Prior to payment, the agency copy of the Transportation Request is to be matched to the transportation provider's copy, or the customer copy of the credit card receipt (attached to the Travel Expense Voucher) is to be matched to the monthly statement from the credit card company, whichever is applicable.
6.2.2.1.4.p	Unissued credit cards and blank stock of Transportation Request forms are to be inventoried at least quarterly and kept under lock.
6.2.2.1.4.q	Persons who authorize commercial transportation are not to receive tickets or use the transportation.
6.2.2.1.4.r	The employee responsible for the choice of locations and facilities is to submit justification in writing to the agency head or authorized designee when a convention, conference, or meeting is held at a non state facility and involves attendance of ten or more state employees.
6.2.2.1.4.s	Written approval of the agency head or designee must be obtained prior to authorizing direct billing to the agency and direct payment by an individual of the agency responsible for payment of travel allowances.

6.2.2.1.5.a	Checks are to be pre-numbered.
6.2.2.1.5.b	Checks are to be completely filled out before being presented for signature.
6.2.2.1.5.c	Physical control of checks is to be maintained by someone other than persons originating disbursement requests.
6.2.2.1.5.d	Spoiled or voided checks are to be retained and the signature blocks on the checks are to be removed.
6.2.2.1.5.e	If a check-signing machine is used, the signature plate and use of the check-signing machine is to be kept under control of the official whose name appears on the signature plate or an authorized designee.
6.2.2.1.5.f	Dual signatures are to be required on all checks.
6.2.2.1.5.g	Bills or vouchers are to be presented with checks for signature.
6.2.2.1.5.h	Bills or vouchers are to be marked "Paid" only at the time checks are signed.
6.2.2.1.5.i	Checks are to be mailed by someone other than the person preparing them.
6.2.2.1.5.j	Bills are to be approved for payment by someone other than the persons who sign checks.
6.2.2.1.5.k	Bank statements are to be reconciled at least monthly by an employee not involved in cash receipt or disbursement procedures.

6.2.2.1.6.a	Pre-numbered purchase and field order forms are to be used and strictly accounted for by number.
6.2.2.1.6.b	Invoices are to be matched with purchase orders and receiving reports before approval for payment.
6.2.2.1.6.c	Invoice computations and pricing are to be verified before approval for payment.
6.2.2.1.6.d	Invoices are to be paid in a timely manner so that discounts may be taken.
6.2.2.1.6.e	Monthly statements are to be compared with accounts payable balances.
6.2.2.1.6.f	Purchases should be made by competitive solicitation, when applicable.
6.2.2.1.6.g	Payable Subsidiary Ledgers are to be reconciled to the control accounts monthly.
6.2.2.1.6.h	Copies of the order forms are to be distributed to receiving and accounting departments.
6.2.2.1.6.i	Claims are to be filed promptly for goods damaged in shipment.

6.2.2.1.7.a	The authority to purchase, exchange, or sell investments and securities is to be clearly defined.
6.2.2.1.7.b	The custody of securities is to be the responsibility of a person not authorized to purchase, exchange, or sell securities. The securities are to be kept in a safe deposit box or vault. Access to the securities is to be strictly controlled. No single person is to have complete control of vault combinations or keys. Access to the securities is to require the presence of at least two designated officers.
6.2.2.1.7.c	A detailed record of each investment and security is to be maintained by the accounting department. The custodian is to also maintain a record of securities deposited or withdrawn.
6.2.2.1.7.d	Employees handling and having access to securities are to be closely supervised or reviewed by other employees.
6.2.2.1.7.e	Periodic checks are to be made to verify that all income due has been received.
6.2.2.1.7.f	Periodic evaluations of the performance of investment portfolios are to be performed by authorized personnel independent of investment portfolio management activities.

6.2.2.1.8.a	There is to be a separation of duties with regard to billing, collection, cash receiving, receivables accounting, and the maintenance of general ledger control accounts.
6.2.2.1.8.b	Receivables are to be made a matter of record promptly upon the completion of the acts which entitle the agency to collect the amounts owed it (see Section 2.4.4.3.1.b). Separate accounts are to be maintained for each major category of receivables in order to ensure the clear and full disclosure of the agency's resources in its financial reports. Controls are to be established so that receivables are reported in the proper funds and accounts.
6.2.2.1.8.c	Records of receivables are to be strictly guarded. Limited access to these records as well as the physical protection of them is required.
6.2.2.1.8.d	Control accounts are to be balanced with the detailed ledgers at least monthly.
6.2.2.1.8.e	Credit adjustments to receivable balances are to be approved by officials not involved in the collection activity. The use of prenumbered credit memorandum forms is desirable.
6.2.2.1.8.f	Receivable accounts are to be reviewed periodically for credit balances.
6.2.2.1.8.g	There is to be an independent verification of quantities, prices, and clerical accuracy of billing invoices.
6.2.2.1.8.h	Billings are to be prompt and statements are to be sent to all customers on a regular basis.
6.2.2.1.8.i	Receivable accounts are to be aged at least monthly (see Section 2.4.4.3.3.a) and reviewed by authorized personnel.
6.2.2.1.8.j	Controls are to be established to ensure the prompt follow-up of past due receivables.

6.2.2.1.9.a	Authorized individuals are to be responsible for receiving and issuing the supplies, merchandise, and fixed assets for an agency. These individuals are to be responsible for inspecting all goods received to verify that they conform to specifications. In addition, these persons are to be responsible for the enforcement of all policies necessary for the internal control of these assets.
6.2.2.1.9.b	Specific central points for receiving and issuing supplies and equipment are to be determined. All loading and unloading operations are to be closely supervised.
6.2.2.1.9.c	Receiving reports and issue reports are to be prepared for all receipts and issues.
6.2.2.1.9.d	Quantities received are to be compared to the bill of lading and receiving report.
6.2.2.1.9.e	Effective control procedures are to be established to ensure that state supplies and fixed assets are used properly and for authorized purposes. In addition, controls are to be established so that state property does not leave the possession of the state except under proper authorization.
6.2.2.1.9.f	State supplies and equipment not currently in use are to be stored in areas where access is limited to authorized personnel only. Storerooms or warehouses where such property is kept are to be locked when not occupied and during other than normal working hours. Special protective measures are to be taken for items having a high pilferage rate or a high value.
6.2.2.1.9.g	An actual physical inventory count of all state supplies and equipment is to be made periodically in accordance with OFM's inventory policy. Causes for differences between quantities determined by physical inspection and those shown on accounting records are to be investigated and, to the extent possible, improvements in procedures are to be made to prevent future error or losses. Accounting records are to be brought into agreement with the physical inventories after authorization by the responsible official. For capitalized fixed assets, reconciliations are to be performed between the agency's authorized property management system, AFRS balances in GL code series 2XXX "Fixed Assets," and AFRS balance in Object J, "Capital Outlays."
6.2.2.1.9.h	Physical inventories are to be taken and certified by personnel acting under written instructions.
6.2.2.1.9.i	Inventories are to be taken by personnel other than those normally responsible for inventories.
6.2.2.1.9.j	A perpetual or periodic inventory record is to be maintained to reflect dollar value and quantities of fixed assets, merchandise for resale, and significant supplies inventories.
6.2.2.1.9.k	Supplies and merchandise are to be arranged so that the earliest received or produced will be issued first.
6.2.2.1.9.l	Damaged and obsolete goods are to be physically segregated.
6.2.2.1.9.m	Supplies and merchandise are to be kept neat.
6.2.2.1.9.n	Detailed records are to be kept of all fixed assets. These records are to contain descriptions of the fixed assets that are brief but factual enough to allow for identification and location.
6.2.2.1.9.o	State equipment is to be permanently tagged to allow for its identification.
6.2.2.1.9.p	Controls are to be established to ensure that all regulations and procedures are followed in the sale or disposition of state property and in the reporting of the loss or theft of such assets.

6.2.2.1.10.a	Responsibilities for supervision and time keeping, personnel, payroll processing, disbursements, and general ledger functions should be assigned to provide division of duties.
6.2.2.1.10.b	Payroll warrants are to be distributed by a person other than the employee's immediate supervisor.
6.2.2.1.10.c	Forms W-2 are to be distributed by personnel other than employees connected with preparation of payroll.
6.2.2.1.10.d	Detailed records of hours worked are to be maintained and approved, as appropriate.
6.2.2.1.10.e	Payroll charges should be reviewed before disbursements are made.
6.2.2.1.10.f	Payroll charges, including fringe benefits, should be recorded and distributed accurately and promptly.
6.2.2.1.10.g	Written procedures are required for approving, recording, and controlling sick leave, vacations, holidays, overtime, compensatory time, and stand-by time.
6.2.2.1.10.h	Procedures are to be established to ensure that all attendance reports and payroll reports are verified by supervisory personnel.
6.2.2.1.10.i	Payroll records and reports should be adequately safeguarded.

6.2.2.1.11.a	The electronic data processing (EDP) department is to be independent of the accounting and operating departments for which it processes data.
6.2.2.1.11.b	An appropriate segregation of duties is to be maintained within the data processing function for system development (design and programming), technical support (maintenance of systems software), and operations.
6.2.2.1.11.c	Controls are to be established and followed for the preparation and approval of input transactions outside the EDP department. These controls are to prohibit the EDP department from initiating and processing transactions without the approval of affected users.
6.2.2.1.11.d	Controls are to be established over completeness and accuracy of input, processing and output.
6.2.2.1.11.e	Controls are to be established for error correction of rejected transactions.
6.2.2.1.11.f	Controls are to be established over entry of data in on-line systems to restrict access to terminals and data entry to authorized employees. Password security should be established on an individualized basis.
6.2.2.1.11.g	User controls are to include user reconciliation of output totals to input totals for all data submitted, internal reconciliation of file balances, and the review of outputs for reasonableness.
6.2.2.1.11.h	Controls are to be established over the use and retention of tape and disk files, including provisions for retention of adequate records to provide backup capabilities.
6.2.2.1.11.i	Controls are to be exercised over changes to system software.
6.2.2.1.11.j	Controls are to be in place which safeguard and limit access to data processing equipment, tapes, disks, files, system documentation, and application program documentation to authorized employees.
6.2.2.1.11.k	Written documentation of procedures are to be established and followed by computer operators.
6.2.2.1.11.l	A written and tested contingency plan is to be in place providing for continued processing of critical applications in the event of a disaster to the computer facility.
6.2.2.1.11.m	Controls are to be established for the use and contents of personal computers.

6.2.2.1.12.a	Accounting records are to be neat and in proper order.
6.2.2.1.12.b	Accounting records are to be kept current.
6.2.2.1.12.c	Employees are to take periodic vacations and their work is then to be performed by other employees.
6.2.2.1.12.d	Internal audits are to be performed.
6.2.2.1.12.e	Journal entries are to be approved by authorized personnel.
6.2.2.1.12.f	A current organizational chart is to be maintained and followed.
6.2.2.1.12.g	Appropriate documentation of procedures is to exist for all agency systems and functions such that the organization could continue to operate if key employees leave.
6.2.2.1.12.h	The accounting department is to be headed by a financial executive with the appropriate background, skills and training.