200 Custodian Funds Policy

UW-Madison Administrative Policy
Policy # 200
Custodian Funds Policy

Effective Date: June 29, 2018
Last Updated: September 12, 2018
Last Reviewed: September 12, 2018
Next Review: TBD

Functional Owner: Cash Management, Business Services
Executive Sponsor: Asst. Vice Chancellor for Business Services
Policy Contact: Custodian Funds Mailbox: cstdnfnd@bussvc.wisc.edu


Policy Summary

UW-Madison often conducts research studies that include research participants. This policy applies to the methods of compensation to study participants when compensation is offered in recognition of their willingness to participate in the research study. Research conducted involving research participants is overseen by UW-Madison’s Institutional Review Board (IRB). Its purpose is to facilitate human subjects research and to ensure the rights and welfare of human subjects are protected during their participation. All plans to compensate research participants in research studies must receive prior approval or an exemption from the IRB. Options for payment include check, cash, or gift cards via Custodian Funds. Payments to research participants are to be processed using either one of the following Custodian Funds:

A. Replenishable Account, which is used when the research participant study will be for 1 year or longer and payment to research participants will be by check.

B. Temporary Fund, which is used to pay research participants by cash or gift cards when a research study will be for less than 1 year. Thus, it is not feasible to set up a UW-Madison checking account.

 

In addition, UW-Madison maintains the following custodian funds for business process purposes:

C. Contingent Checking Accounts are used to pay authorized vendors by check when the purchasing card cannot be used and when the accounts payable process is not an option.

D. Transaction Balance Accounts (TBA) are deposit bank accounts for tracking specific department deposits. The deposits are transferred to UW-Madison’s main deposit account at the end of each day.

E. Administrative Bank Accounts are used by departments within the Division of Business Services.

F. Change Funds are used by departments that operate retail operations and cash registers, which require coin/currency handling.

G. Petty Cash is used by departments for handling small purchases that cannot be effectively handled by a University Purchasing Card or check.


Policy Application

This policy applies to all Deans, Directors, Financial Officers, and staff associated with custodian funds.


Rationale

Research relies on volunteers to participate in studies. It is not uncommon for a researcher to reimburse research participants for participation in a study. Some studies may also offer compensation as a means to attract volunteers.


Policy Detail

For all types of Custodian Funds, there is a required in-person training session for all individuals to attend that are involved with the management and control of Custodian Funds. The information for this in-person training session is available on Accounting Services Training webpage (https://businessservices.wisc.edu/about/training/). After the training session is completed, a certificate of completion is obtained by correctly answering multiple-choice questions. An annual online recertification is required.

The following includes the policy details for each type of Custodian Fund:

A. Replenishable Checking Accounts are used to pay research subjects by check when a research study will be for 1 year or longer.

  1. Custodian, Signers, and Reconciler are UW-Madison employees.
  2. There is no conflict of interest and no related parties between Custodian, Signers, and Reconciler.
  3. All research participant studies are to be approved or an exemption formally documented and provided by the Institutional Review Board (IRB).
  4. Family Educational Rights and Privacy Act (FERPA), Health Insurance Portability and Accountability Act (HIPAA), IRB, and all other UW policies are followed.
  5. All payments of $250 or more are to be completed through the Payment to Individual Report (PIR) process with Accounts Payable and supported with a completed and signed W-9 form.
  6. There will be a minimum of two and a maximum of four signers authorized to sign checks.
  7. At least 10 checks will be written per month.
  8. Replenishments are based on checks written. All checks are to be written out directly to the appropriate recipient in accordance with the purposes of the account and in chronological order. Payments will not include travel, meals, or hotel. See Expense Reimbursement procedures.
  9. Cash will not be advanced out of the checking account.
  10. Personal funds will not be used to maintain the checking account balance.
  11. Checking account is to maintain a positive balance.
  12. Monthly bank reconciliations are to be completed, documented, and sent to Cash Management and the Dean’s/Business Office within 30 days of month end.
  13. Any errors on the bank account are to be reported within 30 days of month end.
  14. Replenishments are to be done at least every 90 days, based on activity.
  15. Stop payments for 24 months are to be placed on all checks older than 90 days old.
  16. Tax reporting is to be completed for payments that are $600 or more in total to research participants that participate in one or more UW-Madison research study in a calendar year.
  17. Replenishable Checking Accounts will be reviewed periodically by Cash Management.
  18. The procedures for opening, maintaining, and closing a Replenishable Checking Account are in Procedure 200.1: Replenishable Checking Accounts.

 

B. Temporary Funds are used to pay research participants by cash or gift cards when a research study will be for less than 1 year. Thus, it is not feasible to set up a UW-Madison checking account.

  1. Temporary Custodian Funds are open for 3 months or less, at a time.
    1. Note that if cash or gift cards are needed to pay research participants studies beyond 3 months and less than 1 year, then a Temporary Custodian Fund needs to be opened for 3 months and then closed after the 3 months. Then another Temporary Custodian Fund would need to be opened for an additional 3 months or less, depending on the needs of the research study.
  2. Custodian is a UW-Madison employee.
  3. The individual(s) giving the cash or gift cards to the research participants is a UW-Madison employee.
  4. All research participant studies are to be approved or an exemption formally documented and provided by the Institutional Review Board (IRB).
  5. All payments of $250 or more are to be completed through the Payment to Individual Report (PIR) process with Accounts Payable and supported with a completed and signed W-9 form.
  6. The documentation for closing a Temporary Fund is due to Cash Management within 30 days of the end of the Temporary Fund.
  7. Past Due Notices are sent by Cash Management if the closing documentation is not received by Cash Management within the 30-day deadline.
  8. GPR funds will be charged if closing documentation is not received.
  9. The procedures for opening, maintaining, and closing a Temporary Fund are in Procedure 200.2: Temporary Funds.

 

C. Contingent Checking Accounts are used to pay authorized vendors by check when the purchasing card cannot be used and when the accounts payable process is not an option.

  1. Contingent Checking Accounts are opened for 1 year or longer.
  2. Custodian, Signers, and Reconciler are UW-Madison employees.
  3. There is no conflict of interest and no related parties between Custodian, Signers, and Reconciler.
  4. Family Educational Rights and Privacy Act (FERPA), Health Insurance Portability and Accountability Act (HIPAA), Institutional Review Board (IRB), and all other UW policies are followed.
  5. Individual check payments may not exceed $5,000.00 per UW Madison Purchasing policies.
  6. There will be a minimum of two and a maximum of four signers authorized to sign checks.
  7. Replenishments are based on checks written. All checks are to be written out directly to the appropriate recipient in accordance with the purposes of the account and in chronological order. Payments will not include travel, meals, or hotel. See Expense Reimbursement procedures.
  8. Cash will not be advanced out of the checking account.
  9. Personal funds will not be used to maintain the checking account balance.
  10. Checking account is to maintain a positive bank balance
  11. Monthly bank reconciliations are to be completed, documented, and sent to Cash Management and the Dean’s/Business Office within 30 days of month end.
  12. Any errors on the bank account are to be reported within 30 days of month end.
  13. Replenishments are to be done at least every 90 days, based on activity.
  14. Stop payments for 24 months are to be placed on all checks older than 90 days old.
  15. Contingent Checking Accounts will be reviewed periodically by Cash Management.
  16. The procedures for opening, maintaining, and closing a Contingent Checking Account are in Procedure 200.3: Contingent Funds.

 

D. Transaction Balance Accounts (TBA) are deposit bank accounts for tracking specific department deposits. The deposits are transferred to UW-Madison’s main deposit account at the end of each day.

  1. The procedures for opening, maintaining, and closing a TBA are in Procedure 200.4: Transaction Balance Accounts.
  2. Custodian and Reconciler are UW-Madison employees.
  3. There is no conflict of interest and no related parties between Custodian and Reconciler.
  4. Cash will not be advanced out of the bank account.
  5. Personal funds will not be used to maintain the bank account balance.

 

E. Administrative Bank Accounts are used by departments within Business Services.

  1. The procedures for opening, maintaining, and closing an Administrative Bank Account are in Procedure 200.5: Administrative Bank Accounts.
  2. Custodian, Signers, and Reconciler are UW-Madison employees.
  3. There is no conflict of interest and no related parties between Custodian, Signers, and Reconciler.
  4. Cash will not be advanced out of the bank account.
  5. Personal funds will not be used to maintain the bank account balance.

 

F. Change Funds are used by departments that operate retail operations and cash registers which require coin/currency handling.

  1. Change Funds are used for point of sale/retail operations.
  2. Change Funds are for the period of time needed for the point of sale operation to manage currency and its change.
  3. The Change Fund will not be used as Petty Cash. Change Fund cash will not be used to purchase product/food/expenditures needed for the point of sale operation.
  4. Cash will not be advanced out of the Change Fund.
  5. Personal funds will not be used to maintain the Change Fund.
  6. Refunds will not be issued from the Change Fund.
  7. Custodian must be a UW-Madison employee.
  8. Daily reconciliations of the Change Fund will be performed and documented.
  9. Coin request procedure will be followed to replenish change for point of sale/retail operations.
  10. Change Funds will be reviewed yearly by Cash Management.
  11. The procedures for opening, maintaining, and closing a Change Fund are in Procedure 200.6: Change Funds.

 

G. Petty Cash is used by departments for handling small purchases that cannot be effectively handled by a University Purchasing Card or check. Petty Cash is generally set up for less than $100.

  1. Cash will not be advanced from Petty Cash.
  2. Personal funds will not be used to maintain Petty Cash.
  3. Custodian must be a UW-Madison employee.
  4. Weekly reconciliations of the Petty Cash will be performed and documented.
  5. Replenishments of the Petty Cash are to be done at least every 90 days, based on activity.
  6. Refunds will not be issued from Petty Cash.
  7. Petty Cash Funds will be reviewed yearly by Cash Management.
  8. The procedures for opening, maintaining, and closing Petty Cash are in Procedure 200.7: Petty Cash.

Consequences for Non-Compliance

Employees will not be reimbursed if research participant payments to study participants are paid using a Personal Credit Card or personal funds. Employees would have to reimburse the University if research participant payments to study participants are paid using a Purchasing Card (P Card) or University Personal Liability Credit Card (Corporate Card).

Improper or fraudulent use of any amounts may result in disciplinary action up to and including termination of employment.


Supporting Tools


Definitions

  • Custodian Funds – Funds or accounts set up to serve the various cash related needs of UW-Madison, such as paying research participants or business processes.

General Responsibilities

Cash Management Office: Responsible for oversight of Custodian Funds and processing requests for opening, maintaining, and closing Custodian Funds.

Dean/Director’s Office: Provides signature as approval for Custodian Fund activities, such as opening, maintaining, and/or closing Custodian Funds. Also, helps with the oversight of their Custodian Funds.

Campus Department: Provides signature as approval for Custodian Fund activities, such as opening, maintaining, and/or closing Custodian Funds. Also, helps with the oversight of their Custodian Funds.


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