Business, Management, and Financial

Cash Management

Cash Management Defined: Information derived from 78590, Federal Register, Vol. 78, No. 248/Thursday, Dec. 26, 2013/Rules and Regulations

The Cash Management Improvement Act of 1990 (CMIA) is the overriding public law for cash management. It was enacted by Public Law 101-453, 31 U.S.C. 3335 and 6503. The implementing regulations are in Title 31 of the Code of Federal Regulations (CFR), Part 200. In addition, the Education Department General Administrative Regulations (EDGAR) defines the CFR specific to administering the U.S. Department of Education’s grants in 34 CFR, Part 75 and Part 81. 

The Department of Education’s grant and cooperative agreement recipients are responsible with the administration of federal funds. Colby Community College is also responsible for ensuring that sub recipients are aware of cash management policies. 

Colby Community College must monitor its cash drawdowns and their sub recipients to assure substantial compliance to the standards of timing and the amount of advances. Additionally, when considered necessary and feasible by the Federal agency, Colby Community College may be required to report the amount of cash advances in excess of three’s days needs in their hands and of their sub recipients and to provide short narrative explanations of actions taken by the college to reduce the excess balances.

Colby Community College is required to minimize the amount of time between the drawdown and the use of the funds from its bank accounts. (See 2 CFR Part 200, subpart D). Funds must be drawn only to meet the college’s immediate cash needs for each individual grant.  Written supporting documentation is mandatory to identify the disbursement of funds drawn down. Documentation will include salary or vendor payment detail supporting the need for federal funds. Each time the G5 system is used to draw down a payment, a box is checked certifying the college is adhering to cash management requirements and the funds will be spent within 3 days. The G5 screen displays the following message: I certify, by processing this payment request and/or reallocation, that the funds are being expended within three business days of receipt for the purpose and condition of the agreement. 

Payments

Advance Payment (preferred):

• Limited to the minimum amounts needed to meet immediate cash needs.
• Timing and amount of payment must be as close feasible to the actual disbursements.
• Advances must be maintained in an insured account.
• The College must use existing resources before requesting an advance; this can be derived from net income generated by the program, any refunds, rebates, or interest earned.

Reimbursement
Pass through must make payment within 30 calendar days after receipt of the billing.

Working Capital Advance

• The pass through determines that the nonfederal entity lacks sufficient working capital. It allows the advance payment to cover the estimated disbursement needs for an initial period.
• The College must use existing resources before requesting an advance; this can be derived from net income generated by the program, any refunds, rebates, or interest earned.

Cash management control includes:

1. Accounts must be interest bearing unless the aggregate federal awards are under $120,000 and the account is not expected to earn in excess of $500 per year and the bank requires a minimum balance so high that such an account is not
2. Interest amounts up to $500 may be retained by the non-federal entity for administrative purposes. The College subject to 2 CFR Part 200, subpart D § 200.305 may keep up to $500/year of interest earned on excess Federal Fund advances to cover administrative costs. All other amounts must be returned to the Department of Health and Human
3. Any federal funds used for other than the specified purpose for which it was given will be deemed unallowable expenditure and these funds (including any earned interest) must be returned to the Department of Education.

Procedure for Payment of Federal Funds

1. Grant Director/Administrator will notify the Controller of the financial needs of its grant regarding the drawdown of funds. (Usually this is based on the reimbursement method).
2. Documentation regarding salaries, overhead, vendor payments, etc. will be given to the Controller in written format or a request made of the Controller to obtain financial information from the General Ledger to support the funding The Grant Director/Administrator will review the grant’s projected cash requirements before each drawdown. The funding request must adhere to the funding agency’s regulations.
3. After the Controller and the Grant Director/administrators agree to the amount to be draw down, the Controller will process the request through the grant’s corresponding website for payment
4. Once the request has been made and electronic notification sent to the Controller, the Grant Director/Administrator will be notified of the completion of the
5. It is the Grant Director/Administrators responsibility to monitor their budgets for accurate determination of funds. The Controller will maintain a spreadsheet identifying drawdowns for audit purposes.

 

[Added May 2015]
[Updated February 2021]