Cash Receipts Internal Control
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1.0 General Information

1.1 Statutory References

CGS Sections 3-17, 3-112, 3-114, 4-32, 4-33, 4-37 and 4-69.

1.2 Definitions

"Receipt" means sums actually received in cash from all sources unless otherwise described; CGS Section 4-69(29).

"Revenue" means additions to cash or other current assets which neither increase any liability or reserve nor represent the recovery of an expenditure; CGS Section 4-69(32). Restricted grant receipts are not "revenues" under this definition although the terms "restricted revenue" and "unrestricted revenue" are commonly used and understood. When restricted grant revenue is deposited, budget authority is increased correspondingly.

"Non-Revenue Receipts" means a receipt that converts one asset to another or that increases a liability, reserve or clearing account.

"Funds Awaiting Distribution" (Pending Receipts) are monies received by state agencies that are to be held in suspense until the final disposition is determined. See Section # 6 "Funds Awaiting Distribution".

2.0 Receipts Journal

A Receipts Journal shall be maintained by all agencies receiving money. The journal shall consist of sufficient columns for the entry of the following information:

A. Date of receipt.
B. Receipt number when pre-numbered receipts are issued.
C. Name of payer, or other identification.
D. Separate columns for listing receipts by revenue classification (revenue account code); these column headings will vary from agency to agency.
E. Total receipts.
F. Amount deposited.
G. Deposit slip number.
H. Date of deposit.
I. Additional columns may be added to provide other information desired by the agency.
J. Agencies needing assistance in designing a Receipts Journal should contact the Administrative Services Division of the Comptroller.

2.1 Internal Control Procedures

Internal control over cash receipts shall be established by each agency to minimize the risk of loss. The procedures will vary according to the size of the agency, the number of persons employed, and the problems peculiar to the specific agency regarding the source and type of receipts. Agencies needing assistance in revising or improving their procedures should contact the Administrative Services Division of the Comptroller.

Mail received by an agency may contain cash, money orders, and checks. Receipts of such monies can be safeguarded by procedures which include controls of incoming mail and bank deposits. Where feasible, each of the following duties should be assigned to a different employee:

A. Open incoming mail and record receipts in a Receipts Journal.
B. Depositing receipts.
C. Issuing licenses, permits, etc., to the remitter.

If duties are separated as above, the employee opening the mail should record the following information either on forms, in duplicate, to be devised by the agency, or in a bound journal:

A. Date of receipt.
B. Name of remitter, or the person for whom the remittance was sent.
C. Amount of receipt.
D. Type of receipt: cash, money order, check.
E. Purpose of the remittance.

When the receipts are delivered, the person authorized to receive them should verify the amounts entered on the forms or in the journal. If in agreement, he should then acknowledge delivery of the receipts to him either by:

A. Signing both copies of the forms, returning the original to the person making the delivery and retaining the duplicate, or by

B. Signing the journal or issuing a receipt to cover the amounts entered in the journal.

When cash is received in the mail, a pre-numbered receipt should be issued to the remitter; also, where a separation of duties exists as above and the procedure is feasible, the cash should be given immediately to a cashier in exchange for a receipt for the amount of the cash. The receipt form should then be stapled to the envelope in which the cash was mailed, or to a document contained in the envelope. When all the monies received are delivered to the cashier for deposit, he can then include the cash, previously given to him, in the deposit total. Checks and money orders payable to "cash" or with the payee line left blank should be considered as cash and handled as above, in addition to being stamped or otherwise marked as being payable to the state.

In some instances, it may be advisable to have the employee who opens the mail also stamp the correspondence or document as follows and enter the pertinent information:

RECEIPTS: Date_________ Amount $__________ Check One: Cash Check Money Order Other Signature_____________________________________

Such a stamp is helpful in agencies processing many applications or renewals, especially if monies received should become separated from accompanying documents.

Monies received should not be mingled with Petty Cash Funds. Any money received should be deposited in compliance with the time limitations for depositing receipts.

A receipt form that may be used by all agencies and departments is Form CO-99, Official Receipt. This form is pre-numbered, in duplicate, and comes in 250 sets to a book. Agencies must account for all such receipts issued to them.

An Official Receipt as above, or a substitute form approved by the Comptroller, should be issued for all cash received at a cashier's counter or window and for which a validated license, permit, etc., is not issued to the payer at that time. Such action not only provides for better controls but also protects the employee against a future charge that he received more cash than the receipts records show.

Cash held in an office should be properly safeguarded and controlled to avoid losses by pilferage and should be deposited as soon as possible to decrease the chance of loss by robbery and to conform with the requirements of CGS Sec. 4-32.

2.2 Accountability Reports

The chief fiscal officer, business manager, or other similar employee shall be responsible for the periodic preparation, where feasible, of an accountability report, or cash proof of the total receipts as recorded in the Cash Receipts Journal of the agency. These reports are prepared to compare the monies that were actually recorded with the monies that should have been accounted for.

To accomplish a proper comparison, it is necessary to compute the amount of the receipts that are to be accounted for. The methods used for such computations will depend upon the types of receipts and the documentation involved. Some examples of documentation that may be used as a basis for determining computed receipts, fixed rates times number of items, are as follows:

- Number of licenses issued.
- Number of examinations given.
- Number of students enrolled.
- Serially numbered documents issued (tags, tickets, decals, etc.).
- Number of validating machine impressions recorded.
- Carbon copies of receipts issued to payers. In instances where pre-numbered or inventoried documents are not issued to payers, the following information, where available, will be helpful in determining the computed receipts:
- Cash register totals.
- Mark-up to retail value of the reductions in merchandise inventories.
- Property management records, wherein specific amounts are due at set time intervals, such as rental income from state-owned properties.

For agencies receiving a large volume of unnumbered documents and accompanying receipts in varying amounts, accountability can be established by use of a "batching" method. Under this method, documents and applicable receipts are segregated into batches, either by time intervals as received, or by a preset quantity of documents. They may also be segregated by revenue classification (revenue account). A sequential batch number is assigned to each batch and all documents and checks within the batch are stamped with this batch number.

A recording of receipts for a day could be as follows:

Nov. 12, 20XX Batch # 0995 $1,050.00
  0996 1,000.00
  0997 1,050.00
  0998 1,100.00
  Total (DS# V3569) $4,200.00

Agencies or departments desiring assistance in designing Accountability Reports should contact the Administrative Services Division of the Comptroller.

3.0 Bank Accounts and Bank Deposits

3.1 Opening Bank Accounts

Any account, be it a state account, petty cash, clearing account, agency, trustee account, etc., must have prior written permission from both the Treasurer and the Comptroller.

Requests should be submitted on Form CO-929, Bank Account Establishment Request and Form TR-01, Bank Account Identification, and be forwarded to the Office of the Treasurer: Attention - Assistant Treasurer, Cash Management Division. If approved by the Treasurer, the request will be forwarded to the Comptroller's Budget and Financial Analysis Division for final review and approval.

Upon final approval of the CO-929 and receipt of the TR-01, the Treasurer will submit the proper paperwork to the designated bank. The banks have been instructed to open state accounts only upon the Treasurer's approval. At this point, the agency will be contacted by bank personnel and the deposit slips, checks, and endorsement stamps, if required, will be ordered. The CO-929 and TR-01 must be submitted together.

All petty cash accounts must be opened with the Comptroller's tax identification number: 06-6000798. All other accounts must be opened with the agency's tax identification number: Federal Employer Identification Number (FEIN) or Taxpayer Identification Number (TIN).

All agency, department and institution accounts should have the department name prefixing the name of the account. It should be made very clear so the bank will easily recognize the account as a state agency account. No employee names should appear in account names. However, statements may be mailed to an individual's attention, care of the particular state agency (no personal residences).

The agency must exercise rigid control over who may sign checks for an agency checking account as well as who may make withdrawals from savings accounts, or cash in certificates of deposit.

3.2 Time Limits for Deposits

All monies received for the state will be deposited and paid to the State Treasurer within the following time limitations:

A. Within 24 hours of receipt when the receipts total $500 or more.

B. Receipts of lesser amounts may be held until they equal $500, but for not more than 7 calendar days.

Only the Treasurer is authorized to approve waivers to the above limitations. A written waiver request from an agency head should state the reasons that make compliance impractical. This request must be submitted to the Office of the Treasurer, Attention: Assistant Treasurer, Cash Management. Agencies should complete the confirmation and journalizing of bank deposits by the end of the day that the deposit information is received by the agencies through the Core-CT system. If coding information is not available within the time limitations, refer to the State Accounting Manual section "Funds Awaiting Distribution" (Section 5 below).

Each agency is required to post deposits in Core-CT as soon as the confirmation process is complete or no later than four business days from the accounting date of the deposit. The four-day extension is intended solely for problematic deposits with bank issues that must be resolved.  Deposits that do not raise bank issues should be recorded the same day that the deposit appears on the pick list, unless a waiver has been granted by the State Treasurer under C.G.S. 4-32 (the "twenty-four-hour deposit and reporting rule.")  In addition, all deposits of an accounting period must be posted before the monthly close of the Accounts Receivable module which is usually five days after the last day of the month. 

3.3 Endorsement of Checks for Deposit

An endorsement is required on the back of each check being deposited. This endorsement is usually applied with a rubber stamp or with an endorsing machine. Agencies should contact the Treasurer for specifications of a proper endorsement.

All endorsements must include bank name, bank account number, agency name and agency number.

3.4 Bank Deposit Tickets

The deposit ticket is used by the Treasurer's Office as the originating document and is the source document for posting to the Treasurer's ledgers. The bank date required by the Treasurer's Office is the date that the bank actually posts the credit to the account. Generally, if a deposit is made after 3:00 p.m., the credit is posted the following day.

3.5 Foreign Checks and Money Orders

All checks should be drawn on a United States bank and made payable in United States currency. Any check drawn on a foreign bank, other than a Canadian bank, should not be accepted, even if payable in United States currency.

Noncompliance with these procedures will result in foreign exchange and collection fees which will be charged to the agency as a bad check charge or debit adjustment. The agency or department will then follow the procedures for recording and recovering bad check charge-backs in paragraph 4.0 in Corrections and Adjustments to Receipts.

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This section is under review.

4.0 Corrections and Adjustments to Receipts

4.1. Bad Check Charge-Backs

There are special accounting procedures for checks deposited by an agency and then returned by the bank for insufficient funds or another reason.

Returned checks are sent directly to the depositing agency and reported as a negative deposit in Core-CT for the agency that originally deposited the check. The agency is responsible for recovering any money still owed to the State .

Agencies must keep a list of the returned checks. This list will include the following:
Item Number
Check number
Amount Collected
Balance Due
Reason for the return, i.e. stop payment or insufficient funds.

When a bad check is recovered, it should be treated as a new deposit.

4.2. Charge-Backs to the Wrong Agency

An Agency receiving bad checks should verify (1) that the amount on the check and the debit memo are the same, and (2) that the check received belongs to their agency.

If there is a discrepancy, forward the check and debit memo, along with a note stating the problem, to the Office of the State Treasurer.

4.3. Correction of Bank Deposits

The bank may correct previous deposits by issuing a debit or credit memo to the Treasurer's bank account. The memo may come from the bank directly or from the Treasurer's office to the depositing agency. The adjustment will appear as a separate bank transaction in Core-CT, Accounts Receivable. The coding for the adjustment should be the same as the original deposit.

4.4 Adjustments of Revenue and Corrections of Receipts Coding Errors

Corrections or adjustments to receipt codings are made by the agency on a GL Journal or a Spreadsheet Journal. The amount of the incorrect or original entry must equal the amount of the new entry.

All prior year errors and adjustments must also be corrected on a GL Journal or a spreadsheet Journal. See the following for Job Aids for Online Journal Entry or Spreadsheet Journal Entry: 

4.5 Revenue Refund Procedures

When an unrestricted General Fund, Transportation Fund or other budgeted Special Revenue Fund item must be refunded, it is recorded as a reduction of revenue.  The revenue is refunded against the specific budgeted fund- SID 12001- account 46200 (refunds of payments).

Refunds of restricted grant receipts or refunds from other than the General, Transportation or other budgeted Special Revenue Funds are either recorded as a refund of the original revenue or expenditures against the grant appropriations or fund involved. 

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5.0 Funds Awaiting Distribution (Pending Receipts)

5.1 Statutory Reference

CGS Sec. 4-32

5.2 Definition

"Funds Awaiting Distribution" any money received by state agencies that has to be held in suspense until the final disposition is determined. Some examples of Funds Awaiting Distribution are:

- Collection of fees where immediate distribution is uncertain.
- Receipts without sufficient identification to properly determine the source.
- Receipts in incorrect amounts or amounts in dispute.
- Cash receipts determined unacceptable after payee has left the office.

5.3 Deposits of Receipts

5.3.1 Coding for Funds Awaiting Distribution

Any receipt of money that cannot be posted to the correct funding source must use the following coding: Agency Fund 34003, Funds Awaiting Disposition. This fund has been established to enable agencies to comply with statutory depositing requirements.

The coding for funds awaiting distribution on a direct journal in Core-CT is Fund 34003, SID 42350 and Account 20920. This coding string will put the funds into the proper account and will create the correct accounting entries. Follow the Core-CT Accounts Receivable job aid "Direct Journal a Deposit" using the coding above to handle all "Funds Awaiting Distribution".

It is incumbent on the agency to determine the correct coding for these funds and disburse them as needed to clear this fund.

This section is under review

6.0 COP-9 Receipts Processing

6.1 COP-9 Forms

6.2 COP-9 Entry into Core-CT

6.3 Depositing Employee Overpayments in Core-CT

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