Review of Cash Management Procedures Used by the University of Iowa

This final report presents the results of our audit of the cash management procedures used by the University of Iowa (University) to control funds paid by the Payment Management System (PMS) during the three year period 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) actual dates of electronic payments,  (2) expenses exceeding authorized grant amounts, (3) year-end adjustments,  (4) actual dates of deposits, and (5) overhead costs as incurred.  Also, the University was not able to reconcile cash balances used to calculate remitted interest to those amounts reported on the Federal Cash Transaction Reports.   We determined that the amount of interest remitted by the University for the Department of Health and Human Services (DHHS) funds was less than the amount of interest that should have been remitted if appropriate procedures had been used.  Although the difference between the amount of interest remitted and our estimates was not significant, we have concerns that the deficiencies we noted could cause future interest remittances to be inaccurate.