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Cash and Cash Equivalents Policy

 

West Virginia University Policy
Division of Administration and Finance

Policy Number: IARA-02
CASH AND CASH EQUIVALENTS POLICY

 

General Information

Reason For This Procedure:

  • To define cash and cash equivalents for external reporting in a manner that complies with Governmental Accounting Standards Board Statements.

To Whom Does This Procedure Apply:  

  • This Procedure applies to all West Virginia University departments, including those on the regional campuses - Potomac State College of WVU, WVU Institute of Technology, Charleston division of the Robert C. Byrd Health Sciences Center, Jackson’s Mill State 4-H Conference Center and Camp, and the WVU Farms – and the West Virginia University Research Corporation.

Definitions


Cash

All currency, coins and demand deposits maintained at banking institutions.

 

Cash equivalents

 

Highly liquid investments that are convertible to known amounts of cash; have an original maturity of three months or less at the time of purchase; and have insignificant risk of change in fair market value due to shifts in the interest rate.

 

Procedure                            

  • Cash includes deposits held by state agencies on behalf of the institution, for example, cash on deposit with the State of West Virginia. These funds are maintained at a banking institution by the state.
  • For cash equivalents, original maturity is a classification made at the time of purchase and is the period of time until the instrument reaches maturity (not the maturity on the original instrument). Therefore a three-year Treasury Note purchased two months from maturity would be classified as a cash equivalent. Since the cash equivalent classification is made at the time of purchase, no reclassification of short-term investments to cash equivalents will be made. Examples of cash equivalents would be cash in money market investments.

Responsibilities

Procedure Development

  • The responsibility for procedure development of this policy rests with Institutional Accounting, Reporting and Analysis.

Implementation

  • The responsibility for implementation of this policy rests with Institutional Accounting, Reporting and Analysis.

Interpretation

  • The responsibility for interpretation of this policy rests with Institutional Accounting, Reporting and Analysis.

Contacts

Additional information or questions regarding this procedure can be obtained by contacting:

  • Institutional Accounting, Reporting and Analysis at 304.293.4008.
Originally Issued: July 1, 2010
Updated: February 8, 2016
Approved by: Daniel A. Durbin, Senior Associate Vice President for Finance