Kean University

June 7, 2010
Cash Receipts System Narrative

Note: The following documents our understanding of the Cash Receipts process. All information was obtained thru
discussions with Clarissa Sylvestre, Program Assistant and Warren Johnson, Director of Student Accounting.

A0. Admissions Process

The admissions office is run by Valerie Wilson, Director and Petra Knox, Associate Director. As potential students
apply to the University fees are collected and tracked. Additionally, applicant’s student profiles and student
identification numbers are assigned at this point. Cash receipts are collected by check or credit card. All students
are assigned one student ID number which does not change over the student’s life. This ensures duplicate accounts
from being recorded. Receipts from tuition deposits and application fees are recorded internally and assigned to the
student’s account. The receipts are submitted to student accounting timely, a receipt is saved by student accounting
for each deposit. The admissions office adopted this policy in mid-November 2008. Currently there is no review of
the receipts prior to the deposit to student accounting. The University relies on customer response to ensure all
application fees were processed.

A1. Tuition Process

At the point of registration, student’s accounts are billed based on fees and number of credits enrolled. The cost
coding system is preset in the Course Catalog for each semester. A control exists which is system dependent, to
accurately measure and value the total bill for the student. Each student’s account set-up in Datatel Colleague is
linked to Accounts Receivable. Transactions are subsequently posted to the General Ledger from AR (subsidiary).
When the student registers for classes the student’s account is automatically calculated to reflect the accurate
balance CR 7.

A2. Cash Receipts Process

Clarissa Sylvestre, Program Assistant, handles the cash receipts process. Cashiers in student accounting receive
payments that are presented either in person, or via the mail. The cashiers open the mail that comes in to student
accounting and record this money received the same as money received in person. As cashiers receive money in the
form of cash, checks, or credit cards, the cashier enters the data into the computer system. The data entry is
necessary to create a receipt. CR 2 Before applying a student’s payment to a specific semester the cashier verifies
that the student owes money for that semester. At the end of a cashier’s session each cashier prepares deposit slips
and endorses the checks with a stamp. Clarissa verifies that the deposit slips match the cashier’s daily run entered
into the computer during their session, as reported on a Cash Receipts Session Reconciliation (SSRC) report. CR 3

Sometimes cash or checks are also received by the various departments. Usually the athletic department is the only
one that receives cash, and the other departments receive checks. When a department receives money they must fill
out a transmittal form and submit that along with the cash and/or checks to Clarissa. Clarissa uses this transmittal
form to enter the information into the computer. The departments do not send money over daily, sometimes once
every two to three weeks.

Cash deposits are handled by Armored Services. CR 4 Clarissa checks that the total deposits per the system's
Deposit Summary report match up with the deposit summary of what is being given to Armored Services. Usually
the pick-up is between 1 and 2 pm. Clarissa usually deposits all money received by cashiers whose session ended
before 10 am. Since there is a limit of cash allowed on hand she also collects deposit slips for any cash from
cashiers right before Armored Services comes. The remaining deposits for the rest of the day are kept in a safe
overnight and deposited via Armored Services the next day. If they go over the cash limit allowed to keep on hand,
it is deposited by the University that night.
Tuition Receipts:

Due to the fact that the University handles a large amount of cash receipts, Kean has set up a lockbox at Wachovia
and a payment gateway provided by Tuition Management Systems (TMS). Students can send checks to the lockbox
or TMS, for amounts that they have due to the University, instead of sending checks directly to Kean or coming in to
see a cashier. Wachovia or TMS then records each student’s receipt and sends a file daily to Clarissa while the
amounts received are wired to the bank. Clarissa downloads the file and each individual student’s account is
updated for the payment. Kean’s receiving reports show the operator as Clarissa Sylvestre for the lockbox or TMS
receipts. A separate report is also created that details the lockbox or TMS receipts from each student.

The detail file from the lockbox and TMS get uploaded into the University’s Colleague system and reviewed to see
which accounts will be posted and which accounts have error CR 5 & 6 Occasionally, a student will put the wrong
student ID, etc. and before the cash receipts file can be posted to the General Ledger, these errors must be corrected.
After all errors have been corrected, the file is posted to each individual students account. The next day, a detail
transaction summary comes in for all transactions posted in the lockbox. Everyday, a cashier will verify that the
total posted by the bank matches the total posted by the University. Also, a cashier will go through the transactions
and note which items were not posted by the bank. Occasionally a student will postdate a check, not put a student ID
or Term and therefore, the bank is not able to post the check. In these cases, a cashier researchers the problem and
manually posts the transaction to the students account. Each month a reconciliation report is prepared by Lois
Schmidt, Student Accounting, which reconciles transactions posted to Accounts Receivable and General Ledger,
and the amount which was been deposited in the bank. Tuition payments coming in through cash, credit cards, and
checks from students who come into the Student Accounting office are posted using the same process as the cash
receipts process noted above.
NOTE: Sometimes, cash is received for items that are not A/R related. For example, receipts from transcripts,
parking fines and application fees are recorded as revenue and not a reduction in A/R. A code is given to the receipt
(such as PKF for parking fines, APP for application fees and TRS for transcripts) when it is entered into the system
and, at the end of each day, an entry is made to debit Cash and credit the respective revenue account for each type of
receipt (such as acct# 11-09900-4953 for PKF, acct# 11-09900-4166 for APP and acct# 11-09900-4167 for TRS).

A3. Reconciliation
Clarissa communicates with Bipin Shah/Joe Antonowicz monthly. Bipin/Joe prepares the monthly bank
reconciliations and advises Clarissa of all of the unmatched deposits, which she then researches and corrects.
Occasionally, there will be a direct deposit or wire transfer on the bank statement that Clarissa hadn’t known about,
so it wasn’t recorded in the computer system. Bipin/Joe informs Clarissa and she records the cash receipt. Dennis
Oblack reviews the reconciliation. CR 1

Controls Identified:

Cash Receipts Process

 CR-1 Bank reconciliations are prepared and reviewed timely. The reconciliations are prepared by Bipin
Shah and sent to each financial department leader for review and answers to reconciling items. Dennis
Oblack, is emailed the reconciliations as soon as they are prepared. Monthly reconciling journal entries are
prepared by Bipin Shah. The reconciliation is then reviewed by Dennis Oblack. Evidence of this review
can be seen through monthly meetings held by Dennis or through Reconciling Journal Entries.
o Assertions – The preparation and review of a bank reconciliation is an application and prevention
control which is designed to ensure the completeness, rights/obligations, valuation, and cutoff for
the period ending.
o Test – Auditor haphazardly selected three months of the year and observed evidence of the
reconciliation being performed by Bipin Shaw and reviewed by Dennis Oblack. See work-paper
IC-08 for further detail.
o Evidence – Observation of meetings and email sent by Dennis Oblack scheduling meetings to
review the reconciliation. Also, monthly reconciling journal entries being performed.
  CR-2 As cashiers receive money they must enter the information into the computer in order to print out a
receipt.
o Assertions – The control of data entry creating a necessary step for transactions is a control that is
in place to ensure the prevention of a misappropriation of cash. This system control is in place to
ensure the student’s information is correctly entered and provides a audit trail for claims against
the University. The control ensures the existence or occurrence of an error does not exist.
o Test – Observation of cash receipt. The cash receipt is then traced through the cash receipt
environment (GL, Bank Statement, CRSP, etc.) to ensure the accuracy of the transaction to the
financial statement.
o Evidence – This includes, the Student Accounting Payment Receipt, Kean Daily Deposit
Summary, Lockbox/TMS/Bank Deposit Slip statement, Import File Listing Report, CR Session
Reconciliation Report, Explanation of Charges, Bank Statement, Bank Reconciliation, College
Handbook/Course Catalog (Invoice Recalculation), and Datatel screens (ARAI and ARTI).
 CR-3 Cash receipts daily run report is compared to deposit slips for each cashier at the end of their session.
This is reviewed by Clarissa Sylvestre, Program Assistant and Lori Hemsel. During FY 2008 there were
two prior employees Sandra McClain and Stephanie Hawkins which also reconciled.
o Assertions – To ensure completeness and classification, the daily review will detect mis-posting
and errors. Also, this review will ensure the cash deposited agrees to the GL.
o Test – Observation of “Reconciled” Status on the CR Session Reconciliation Report. The tests
ensure each cashier’s daily session report is reconciled to the General Ledger and checked for
accuracy.
o Evidence – Session reconciliation report.
 CR-4 Deposits are made by a 3rd party (Armored Services).
o Assertions – To assure the existence and occurrence of cash misappropriations the University as
contracted to have these notes delivered by an outside party. This control prevents theft, lost
items, etc.
o Test – Observation of Guard Security Services
o Evidence – Sighted during prior year’s audit fieldwork (fiscal year 2009).

Tuition Receipts Process

 CR-5 Cash/Checks are sent to lockbox and the third party reconciles the cash receipts.
o Assertions – The use of a lockbox ensures the rights and obligations of the University are
properly accounted. The University uses an outside party to count and generate a statement of
assets held by the bank. The application also ensures the valuation of the cash accounts from the
statements provided.
o Test – Observation of third party bank statement (report showing detail of student payee
information).
o Evidence - This includes, the Lock Box Statement, Student Accounting Payment Receipt, Kean
Daily Deposit Summary, Import File Listing Report, CR Session Reconciliation Report,
Explanation of Charges, Bank Statement, Bank Reconciliation, College Handbook/Course Catalog
(Invoice Recalculation), and Datatel screens (ARAI and ARTI).
 CR-6 Information on cash receipt is uploaded directly to the Kean University system – no manual input is
done.
o Assertions – This system control prevents the existence or occurrence of a data entry error from
occurring. This application also ensures the mathematical accuracy (valuation), completeness, and
classification of the data sent from source to the GL.
o Test – Observation of the Electronic File Transfer Report and agree to the CR Session
Reconciliation Report.
o Evidence - EFT Report, where applicable, is observed and agreed to the CR Session
Reconciliation Report. The report is also traced to the bank statement.
 CR-7 The IT linking of the student’s account in Datatel is automatically calculated and measured. This in
turn, when posted to the GL, ensures the measurement and valuation of the Revenue Account and Accounts
Receivable. Since the control is system dependent, completeness is also assured. Additionally all student’s
attending the college to must have a student account set up in Datatel.
 o Assertions – The control ensure the measurement and valuation of the Revenue and Accounts
Receivable since it is linked directly to the student’s Datatel account. Furthermore, since all
students must have an account to attend, the accounts are also complete for all financial activity.
o Test – Obtain a copy of the student’s invoice “Explanation of Charges” and compare the classes
enrolled to the Datatel System. Then recalculate (using the Semester Course Catalog) the total
invoice amount for the semester (including administrative fees and tuition credits) and compare it
to the Datatel System. Observe the cash selection payment crediting the student’s account.
o Evidence – Explanation of Charges Report, Course Catalog, Colleague Student Profile, ARTI and
ARAI screens.

See testing of controls in w/p IC-02d