LOS ANGELES COUNTY
DEPARTMENT OF MENTAL HEALTH
  Policy 804.01 Clinical Cash Handling, Deposit of Patient Revenues, and Financial Record Keeping
 
Policy Category:  Administrative
Distribution Level:  Directly-Operated Programs
Responsible Party:  Financial Services
 
Approved by Roberto Quiroz, Director, on October 1, 1989
I.  PURPOSE
 
To establish comprehensive policy and procedures for cash receipt handling, patient revenue deposits, and financial record keeping at Los Angeles County Department of Mental Health (DMH/Department) outpatient clinic operations.

To provide sound internal controls; adequate separation of duties within the cash functions; ensure that timely, accurate and complete records of cash transactions are maintained; provide for adequate physical security over cash receipts; minimize the potential for cash-related defalcations; minimize the personal security risk of staff transporting cash receipts; improve cash flow; increase the efficiency of operations; and comply with County and Auditor-Controller policies and recommended practices.

To consolidate and streamline the previously issued policy/procedure memos and directives cited in Section V. Supersedes, as well as DF Policy #9.

To establish the following specific procedures for DMH outpatient clinic operations:
  • Use of the Local Bank Deposit Network (LBDN) in order to enhance the flow and security of patient revenue collections from DMH outpatient clinic operations to the County Treasurer;
  • Handling and receipting of cash received;
  • Appropriate safeguarding of cash received;
  • Reporting of losses resulting from burglary, robbery, or mysterious disappearance; 
  • Recovery of lost checks;
  • Handling overages and shortages encountered in the course of business;
  • Handling Non-Sufficient Funds (NSF) checks.
II.  BACKGROUND
 
The County Fiscal Manual prescribes that specific policies, procedures, and controls be in place with respect to cash handling. In addition, the Auditor-Controller, Audit Division, has made numerous recommendations in this area stemming from internal control weaknesses noted during audits. DMH has experienced thefts of cash receipts on a number of occasions. In addition, staff transporting funds to the County Treasurer are subject to a personal security risk.

Cash is the most liquid of assets and as such can easily be converted temporarily or permanently, to an individual’s personal use (misuse). The highly liquid nature of cash requires that strict controls be established over all phases of cash handling operations.
 
III.  POLICY
 
The DMH shall make every attempt to receive, account for, and safeguard cash receipts in a timely and efficient manner in keeping with the purposes noted above. Cash receipts from patient revenues at outpatient clinic operations shall be deposited as determined by the volume of funds received.

Collections of $100 or more will be deposited daily. Collections of less than $100 per day may, at the discretion of clinic management, be held and deposited when the total reaches $100, except that in no case will deposits be less frequent than weekly.
 
IV.  PROCEDURES
 
V.  SUPERSEDES
 
This policy supersedes the following list of documents:
  • DF Policy #9, dated 4/20/87
  • Financial Record Keeping and Cash Receipt/Handling Procedures, dated 7/15/85
  • Fiscal Internal Controls Procedures, dated 7/15/85
  • Cash Receipts/Handling and Record Keeping Procedures, dated 12/1/84
  • Recommendations for Safekeeping of Revenue, dated 12/1/84
  • Acceptance of Checks and Handling of Non-Sufficient Funds (NSF) Checks Procedures, dated 12/1/84
  • Four-Part Departmental Receipts Memo, dated 10/14/87
  • Auditor-Controller Recommendation via memo, “Request for Reimbursement of Losses,” dated 1/7/87
VI.  AUTHORITIES
 
Los Angeles County Fiscal Manual Sections 1.1.0 through 1.7.3
California Civil Code Section 1719
 
VII.  ATTACHMENTS