Review of Cash Management Procedures Used by Washington University in St. Louis

This final report presents the results of our audit of the cash management procedures used by Washington University in St. Louis (University) to control the funds paid by the Payment Management System (PMS) during the three years ended June 30, 2000.  We found that the University did not have adequate policies and procedures in place to monitor daily cash balances and to precisely calculate interest earned on positive daily cash balances.  In monitoring the daily cash balances, the University did not consider (1) outstanding checks and (2) overhead costs as incurred. In addition, the University did not use the appropriate interest rates when calculating the interest remitted to the Federal Government. We determined that the amount of excess interest remitted by the University was comparable to the amount of interest that should have been remitted if appropriate procedures had been used.  We believe that this occurrence was a coincidence due to off setting factors in the University's calculation of the amount to be remitted.  We are recommending that the University revise its written policies and procedures to effectively monitor the daily cash balance and to accurately compute the Federal remittance.