BY ORDER OF THE SECRETARY OF THE AIR FORCE AIR FORCE

BY ORDER OF THE SECRETARY

OF THE AIR FORCE

AIR FORCE MANUAL 34-202

25 JUNE 2019

Services

PROCEDURES FOR PROTECTING

NONAPPROPRIATED FUND ASSETS

COMPLIANCE WITH THIS PUBLICATION IS MANDATORY

ACCESSIBILITY: Publications and forms are available on the e-Publishing website at

www.e-Publishing.af.mil for downloading or ordering

RELEASABILITY: There are no releasability restrictions on this publication

OPR: AF/A1SR

Supersedes: AFI 34-202,

22 December 2015

Certified by: SAF/MR

Pages: 72

This instruction implements Air Force (AF) Policy Directive (AFPD) 34-1, Air Force Services. It

establishes responsibilities, authorities, and procedures for controlling and protecting cash and

other nonappropriated fund assets. This Manual applies to all civilian employees and uniformed

members of the Regular air Force, Air Force Reserve and Air National Guard who perform duties

for or in connection with a Nonappropriated Fund Instrumentality (NAFI) as described in Air

Force Manual (AFMAN) 34-201, Use of Nonappropriated Funds (NAFs). In collaboration with

the Chief of Air Force Reserve (AF/RE) and the Director of the Air National Guard (NGB/CF),

the Deputy Chief of Staff, Manpower, Personnel and Services (AF/A1) develops policy for this

program. The authorities to waive wing-/unit-level requirements in this publication are identified

with a Tier (“T-0, T-1, T-2, T-3”) number following the compliance statement. See Air Force

Instruction (AFI) 33-360, Publications and Forms Management, for a description of the authorities

associated with the Tier numbers. Submit requests for waivers through the chain of command to

the appropriate Tier waiver approval authority, or alternately, to the Publication office of primary

responsibility for non-tiered compliance items. Refer recommended changes and questions about

this publication to the Office of Primary Responsibility using the Air Force Form 847,

Recommendation for Change of Publication; route Air Force Forms 847 from the field through the

appropriate functional chain of command. Ensure all records created as a result of processes

prescribed in this publication are maintained in accordance with AFMAN 33-363, Management of

Records, and disposed of in accordance with the Air Force Records Disposition Schedule located

in the Air Force Records Information Management System (AFRIMS). This instruction directs

collecting and maintaining information subject to the Privacy Act of 1974 authorized by Title 10

2  AFMAN34-202  25 JUNE 2019 
United States Code, Section 8013, Secretary of the Air Force.  The applicable SORN F065 AFSVA 
A,  Nonappropriated  Fund  Instrumentalities  (NAFIs)  Financial  System,  is  available  at: 
http://dpclo.defense.gov/Privacy/SORNs.aspx. 
SUMMARY OF CHANGES 
This instruction has been changed to reflect office and tiering changes since it was last published.  
It also refers the user to AFMAN 34-204, Property Management, for specifics on acquisition, 
management, control, and disposition of assets. 
 
Chapter 1— INTRODUCTION    7 
Section 1A— Internal Control Information    7 
1.1.   Introduction.  ...........................................................................................................   7 
1.2.   Forms.   ...................................................................................................................   7 
1.3.   Supplements.   .........................................................................................................   7 
1.4.   Waivers.   ................................................................................................................   7 
Section 1B— Roles and Responsibilities     8 
1.5.   Air Force Services Directorate (AF/A1S) ...............................................................   8 
1.6.   Air Force Services Center Commander (AFSVC/CC) ...........................................   8 
1.7.   Air Force Services Center Financial Management & Comptroller (AFSVC/FM) .   8 
1.8.   Installation Commander ..........................................................................................   8 
1.9.   Force Support Commander/Director  ......................................................................   8 
1.10.   Resource Management Flight Chief (RMFC)  ........................................................   9 
1.11.   Force Support Activity Manager ............................................................................   10 
1.12.   Activity Cashiers .....................................................................................................   10 
1.13.   MICP Manager  ......................................................................................................   11 
Chapter 2— THE CONTROLLING PROCESS    12 
2.1.   Definition of Internal Control.   ..............................................................................   12 
2.2.   Organizational Structure.   ......................................................................................   12 
2.3.   Internal Control Objectives.   ..................................................................................   12 
2.4.   Internal Control Training.   .....................................................................................   12 
2.5.   Managers’ Internal Control Program (MICP).   ......................................................   13 

AFMAN34-202  25 JUNE 2019  3 
6.   Managers Internal Control Program (MICP) Responsibilities.  .............................   14 
7.   Internal Management Control Reviews of Off-Base NAF Operations.  .................   15 
Chapter 3— PHYSICAL SAFEGUARDS    16 
1.   Protection of Cash.   ................................................................................................   16 
2.   Funds Storage Limits.   ...........................................................................................   16 
3.   Funds Containers.   .................................................................................................   17 
4.   Funds Storage Rooms.   ..........................................................................................   17 
5.   Funds Escort Procedures.   ......................................................................................   17 
6.   Intrusion Detection Systems.  .................................................................................   17 
7.   Cashier Area.  .........................................................................................................   17 
8.   Cashiers' Responsibilities.   ....................................................................................   18 
9.   Cash Registers.   ......................................................................................................   18 
10.   Use of Marked Money.   .........................................................................................   20 
11.   Using AF Form 2555, NAF Collection Record.   ...................................................   21 
12.   Controls for Special Events.   .................................................................................   21 
13.   Employee Conduct During and After a Robbery.   .................................................   21 
14.   Fire Prevention.   .....................................................................................................   22 
15.   General Building Security.  ....................................................................................   22 
16.   Forms and Records.   ..............................................................................................   22 
Chapter 4— CONTROLLING CASH AND CASH EQUIVALENTS    23 
1.   Definition of Cash.   ................................................................................................   23 
2.   Controlling Cash.   ..................................................................................................   23 
3.   Bank Deposits.   ......................................................................................................   23 
4.   Central Cashier Depository.   ..................................................................................   23 
5.   Central Cashier Responsibilities.   ..........................................................................   23 
6.   Functions of the Central Cashier.     ........................................................................   24 
7.   Activity or General Change Fund Cashier Responsibilities.  .................................   25 
8.   Night Depositories.  ................................................................................................   26 
9.   Cashiers’ Deposits.   ...............................................................................................   26 

AFMAN34-202  25 JUNE 2019 
10.   Surprise Cash Counts.   ...........................................................................................   28 
11.   Performing Surprise Cash Counts.   ........................................................................   28 
12.   Cash Refunds.  ........................................................................................................   29 
13.   Controlling Checks and Other Negotiable Instruments.   .......................................   30 
14.   Cashing Checks.   ....................................................................................................   30 
15.   NAF Service Charge for Returned Checks.   ..........................................................   31 
16.   Checks and Cash Received By Mail.   ....................................................................   31 
17.   Endorsing Checks.   ................................................................................................   32 
18.   Returned Checks.   ..................................................................................................   32 
19.   Redemption of Returned Checks.   .........................................................................   32 
20.   Suspension of Check Cashing Privileges.   .............................................................   33 
21.   Disbursements.   ......................................................................................................   33 
22.   Force Support Coupon Controls.   ..........................................................................   34 
23.   National and Local Coupons.   ................................................................................   34 
24.   Gift Certificates.   ....................................................................................................   35 
25.   FSS Gift Cards.   .....................................................................................................   35 
26.   Promotional Gift Cards.   ........................................................................................   36 
27.   Pre-numbered Forms.   ............................................................................................   36 
Chapter 5— ESTABLISHING AND CONTROLLING CHANGE AND IMPREST FUNDS    38 
1.   Establishing Change Funds.   ..................................................................................   38 
2.   Establishing Imprest Funds.   ..................................................................................   38 
3.   Use of Change Funds and Receipts in Lieu of Imprest Funds.   .............................   39 
4.   Change Fund Accountability.   ...............................................................................   39 
5.   Replenishment of Change Funds.   .........................................................................   40 
6.   Change Fund/Receipts Turn-In.  .............................................................................   40 
7.   Petty Cash Imprest Fund.   ......................................................................................   41 
8.   Government Purchase Card (PCard) for NAF Purchases.   ....................................   42 
9.   Special Activity Prize Imprest Fund.   ....................................................................   42 
10.   Vending and Amusement Machine Imprest Fund.   ...............................................   42 

AFMAN34-202  25 JUNE 2019  5 
11.   Replenishment of Imprest Funds.  ..........................................................................   43 
Chapter 6— CONTROL GAMING, AMUSEMENT, MUSIC, AND VENDING 
MACHINES    44 
1.   Gaming Operations Controls and Procedures.   ......................................................   44 
2.   Amusement Machine Operations.   .........................................................................   44 
3.   NAFI-Owned Machines.   .......................................................................................   44 
4.   Cash Collection of NAFI-Owned Machines.   ........................................................   44 
5.   Restocking Vending Machines.   ............................................................................   45 
6.   Customer Refunds.   ................................................................................................   45 
7.   Concessionaire-Owned Machines.   ........................................................................   45 
8.   Cash Collection of Concessionaire-Owned Machines.   .........................................   46 
Chapter 7— CONTROL OF MERCHANDISE AND PROPERTY    47 
1.   Merchandise and Property.   ...................................................................................   47 
2.   Protecting Resale Merchandise.  .............................................................................   47 
3.   Central Storeroom Facilities.   ................................................................................   47 
4.   Ticket and Tour Operations.   .................................................................................   48 
5.   Control and Use of Free or Donated Items.   ..........................................................   48 
6.   Consignment Inventory.   ........................................................................................   48 
Chapter 8— LOSSES AND COLLECTION ACTIONS    49 
1.   Definition of Loss.   ................................................................................................   49 
2.   Reporting Losses.   ..................................................................................................   49 
3.   Determining Value.   ...............................................................................................   49 
4.   Documenting Losses.   ............................................................................................   50 
5.   Resolving Losses.   .................................................................................................   50 
6.   Assessing Pecuniary Liability.   ..............................................................................   51 
7.   Appeals of Assessments of Pecuniary Liability.   ...................................................   52 
8.   Collection Actions.   ...............................................................................................   54 
9.   Claims Involving Losses or Indebtedness.   ............................................................   55 
10.   Collection of Overpayments from NAF Employees.   ............................................   57 

AFMAN34-202  25 JUNE 2019 
11.   Uncollected Losses or Indebtedness (other than returned checks).  .......................   59 
12.   Uncollected Losses or Indebtedness for Returned Checks.   ..................................   60 
13.   Withholding of Pay and Allowances.   ...................................................................   61 
14.   Garnishment of Pay.   .............................................................................................   61 
15.   Administrative Garnishments for NAFIs.   .............................................................   61 
16.   Claims Arising Out of Contract Arrangements.  ....................................................   62 
17.   NAF Asset Insurance Program.   ............................................................................   62 
Chapter 9— CONTINGENCY OPERATIONS    63 
1.   Memorandum of Understanding (MOU) for Suspended Operations.   ...................   63 
2.   Following a Natural Disaster.   ...............................................................................   63 
3.   Continuing Operations.   .........................................................................................   63 
4.   Contingency Operations.  .......................................................................................   64 
Attachment 1— GLOSSARY OF REFERENCES, FORMS, ACCRONYMS AND TERMS    65 
Attachment 2— THE CONTROLLING PROCESS    70 
 
   

AFMAN34-202 25 JUNE 2019 7

Chapter 1

INTRODUCTION

Section 1A—Internal Control Information

1.1. Introduction. AFPD 65-2, Managers’ Internal Control Program, and Air Force Instruction

(AFI) 65-201, Managers’ Internal Control Program Procedures, require all Air Force

organizations establish a cost-effective Managers Internal Control Program (MICP) to protect

resources. This instruction explains the controlling process and outlines procedures for the control,

protection, and loss prevention of cash and other NAF assets according to AFPD 34-1. AF NAFIs

described in AFMAN 34-201, must establish and adhere to the internal control procedures in this

instruction. (T-1) Additional guidelines for Services programs and procedures can be found under

Financial Management in the Financial Training Aids section located on the Air Force Services

Center Portal.

1.2. Forms. Submit requests for changes to the AF forms defined in this instruction to Air Force

Services Center, Financial Services Branch (AFSVC/FMA). The Force Support Squadron (FSS)

may automate AF and NAF forms if the form content and requirements are not changed. If any

application/system has a validated Common Access Card (CAC) enabled electronic signature

which takes the place of a wet signature, the application/system may be deemed a system of record.

The system is then used to store the electronic and paper copies until no longer required in

accordance with the Air Force Records Disposition Schedule located in the Air Force Records

Information Management System.

1.3. Supplements. Air Force Services Center, Financial Management and Comptroller

(AFSVC/FM) reviews and approves/disapproves proposed installation-level supplements.

1.4. Waivers. Activity and functional managers may request waivers to the procedures required

by this instruction. Substantial justification must accompany all requests for waivers. There are

two types of waivers:

1.4.1. Local Waivers. Local waivers are submitted through the Resource Management Flight

Chief to the installation commander for approval as described in this publication.

1.4.2. Other Waivers. The custodian or FSS commander or director submits waiver requests

to AFSVC/FM for circumstances that do not permit local waivers.

1.4.3. Waiver Review. The FSS commander or director reviews all waivers annually and

when circumstances change, determines if the waiver is still required. The FSS commander or

director documents waiver review and briefs NAF Council on results. It is not necessary to

seek approval for waivers deemed valid in the annual review.

1.4.4. Each waiver request, whether granted locally or requiring submission to AFSVC/FM

should:

1.4.4.1. Outline the issue/problem.

1.4.4.2. Identify the specific policy requiring a waiver.

1.4.4.3. Identify how the waiver provides a solution, and

1.4.4.4. Provide justification why the waiver should be approved.

8 AFMAN34-202 25 JUNE 2019

1.4.5. The Resource Management Flight Chief maintains documentation on waivers,

including reviews of waivers, in the life of the fund file. Requests to extend waivers may be

submitted to AFSVC/FM for review via email. The approved extension must be attached to

the original waiver in the life of the fund file.

Section 1B—Roles and Responsibilities

1.5. Air Force Services Directorate (AF/A1S)

1.5.1. Establishes guidance and policy for the protection of nonappropriated fund assets.

1.5.2. Review, approve, and/or disapprove requests for waivers to this instruction.

1.5.3. Develops and maintains Management Internal Control Toolset (MICT) for Services

programs.

1.6. Air Force Services Center Commander (AFSVC/CC)

1.6.1. Serves as the final appeal authority to an assessment of pecuniary liability greater than

$10,000.

1.6.2. Approves/Disapproves waivers of overpayment of NAF Employee claims greater than

$5,000.

1.7. Air Force Services Center Financial Management & Comptroller (AFSVC/FM)

1.7.1. Approves/Disapproves proposed installation-level supplements to this AFMAN.

1.7.2. Approves/Disapproves the use of locally devised forms in support of this AFMAN.

1.7.3. Supplies check endorsement stamps to installations.

1.7.4. Approves/Disapproves all waivers to established policy for internal control procedures

for the slot machine program.

1.8. Installation Commander

1.8.1. Approves local waivers authorized in this AFMAN.

1.8.2. Approves Force Support Activity fund storage limits.

1.8.3. Approves the operation of vending and amusement machines in activities which are not

part of the Army and Air Force Exchange Service (AAFES).

1.8.4. Appoints the investigating officer for NAF losses which exceed $2,500.

1.8.5. Serves as the final appeal authority to an assessment of pecuniary liability up to $10,000.

1.8.6. Approves/Disapproves waivers of overpayment of NAF Employee claims up to $5,000.

1.8.7. Approves write-offs of more than $2,500 for uncollected losses or indebtedness (other

than returned checks)

1.9. Force Support Commander/Director

1.9.1. Appoints the focal point (MICP Manager) to administer the MICP.

1.9.2. Ensures managers and NAF Accounting Office personnel are familiar with the conduct

and ethical standards.

AFMAN34-202 25 JUNE 2019 9

1.9.3. May authorize activities to hold receipts until the last banking day of the month.

1.9.4. May authorize individual activities to accept checks for up to $20 over the amount of a

completed transaction.

1.9.5. Approves the use of, and sets the value for all coupons.

1.9.6. Appoints the individuals who will keep the cashbox keys for NAFI-Owned amusement

machines.

1.9.7. Approves procedures for controlling and utilizing free or donated items.

1.9.8. Appoints an individual to conduct an inquiry for losses over $250 up to and including

$2,500, and for losses of $250 or less which appear to involve negligence or willful

misconduct.

1.10. Resource Management Flight Chief (RMFC)

1.10.1. Provides direction, assistance, and establishes local procedures or operating

instructions for the protection of NAFI assets.

1.10.2. Serves as the single custodian for all NAF assets

1.10.3. Responsible for the propriety and accountability of each action.

1.10.4. Ensures present and future revenues will cover all financial obligations before

authorizing funds.

1.10.5. Ensure managers implement internal control procedures for protection of NAFI assets.

1.10.6. Maintains documentation on waivers, including reviews of waivers, in the life of the

fund file.

1.10.7. Approves waivers to use a locking cashbox for activities with cash receipts less than

$1,000 per month.

1.10.8. Approves/Disapproves the requirement to provide the customer with a receipt.

1.10.9. Authorizes more than one cashier to work out of a single cash register drawer at

activities.

1.10.10. Establishes and oversees the central cashier operation.

1.10.11. Approves the establishment and uses of all change and imprest funds.

1.10.12. Provides authorization to approve cash refunds not to exceed $500.

1.10.13. Approves waivers for making daily deposits for activities which take in minimal

amounts of cash.

1.10.14. Approves or delegates the approval for all disbursement requests.

1.10.15. Signs or delegates the signing of all checks.

1.10.16. Takes collection action for all losses, where appropriate.

1.10.17. Approves write-offs of $2,500 or less.

10 AFMAN34-202 25 JUNE 2019

1.11. Force Support Activity Manager

1.11.1. Develops activity procedures or operating instructions for the protection of NAF

assets; to include cash handling, cash register operation, pre-numbered forms and cash

payments received by mail.

1.11.2. Ensures employees complete the web-based NAF Internal Controls Training within 30

days of hire or assignment and subsequent annual refresher training.

1.11.3. Ensures proper oversight when a safe is left open for temporary access to cash assets.

1.11.4. Controls cash register reset and read keys.

1.11.5. Perform regular inspections of facilities under their control.

1.11.6. Support the Air Force Fire Emergency Services (F&ES) Program.

1.11.7. Ensures completed AF Form 1876, NAF Consolidated Cost Center Report is submitted

electronically to the Shared Service Center along with documentation required to support the

deposit.

1.11.8. Ensures completion of surprise cash counts of all change funds, imprest funds, and

receipts on hand in the activity at least quarterly.

1.11.9. Ensures proper signs are placed at the cashiers' area stating the check cashing policies

and penalties incurred on all returned checks.

1.11.10. Ensures proper approval of all customer refunds.

1.11.11. Takes appropriate steps to report, investigate, and document losses within the

activity.

1.11.12. Ensures all employees are properly trained on local operating procedures for

protection of NAF assets and cash handling responsibilities.

1.12. Activity Cashiers

1.12.1. Complete the web-based NAF Internal Controls Training within 30 days of hire or

assignment and subsequent annual refresher training.

1.12.2. Ring up each sale in view of the customer and give the customer a register receipt.

1.12.3. Sign for cash and accountable documents using AF Form 1875. NAF Individual

Cashier's Report.

1.12.4. Turn in their daily change fund and receipt at the close of business, obtaining a signed

receipt (bottom of AF Form 1875) for total funds turned in.

1.12.5. Secure documents and forms in a locked safe or drawer and secure the entrance to the

cashier's cage if leaving the general cashier area.

1.12.6. Complete all required training on local operating procedures for protection of NAF

assets and cash handling responsibilities.

AFMAN34-202 25 JUNE 2019 11

1.13. MICP Manager

1.13.1. Reviews all MICP reviews, including those conducted by the NAF Financial Analyst

(NAFFA).

1.13.2. Reviews other AF directed agency audits and reviews.

1.13.3. Evaluates internal control programs to ensure they provide for an effective

organization, operation, and protection against fraud.

1.13.4. Ensures all activity managers and functional managers of unit-level NAFI operations

and functions conduct MICP reviews of their assessable units and functions.

1.13.5. Quarterly, evaluates the number and type (directed, special, and recurring) of

evaluations and reviews performed for the assessable units according to the MICP plan.

12 AFMAN34-202 25 JUNE 2019

Chapter 2

THE CONTROLLING PROCESS

2.1. Definition of Internal Control. All AF organizations must use a cost-effective Managers’

Internal Control Program (MICP) to protect resources. (T-1) Internal control procedures apply to

all operation and mission responsibilities and are not limited to financial matters. See AFPD 65-

2, Managers’ Internal Control Program, and AFI 65-20, Managers’ Internal Control Program

Procedures, for additional information on the Air Force Manager’s Internal Control Program.

Internal control is an organizational plan and all the methods and measures used to:

2.1.1. Safeguard resources.

2.1.2. Assure accuracy and reliability of information.

2.1.3. Assure adherence to applicable laws, regulations and policies, instructions, and

2.1.4. Promote operational economy and efficiency.

2.2. Organizational Structure. Controls apply to all aspects contributing to the existence and

well-being of an organization. An effective internal control plan requires each NAFI's

organizational structure provide clear lines of authority and responsibility to ensure no single

individual controls a transaction from beginning to end. This separation of duties protects assets

and provides a cross-check promoting accuracy without duplication. By comparing recorded

accountability to actual existing assets, variances can be readily identified and resolved. In this

example an asset refers to something of value to the NAFI, not simply a fixed asset. A separation

of duties provides a division among:

2.2.1. The initiation and authorization of a transaction.

2.2.2. The recording of a transaction.

2.2.3. The custody of the asset.

2.3. Internal Control Objectives. Internal controls must provide reasonable assurance the

following internal control objectives are achieved:

2.3.1. Obligations and costs comply with AFI 65-106, Appropriated Fund Support of Morale,

Welfare, and Recreation (MWR) and Nonappropriated Fund Instrumentalities (NAFIS) and

AFMAN 34-201 on the proper use of appropriated and nonappropriated funds. (T-1)

2.3.2. All assets are safeguarded against mismanagement, waste, loss, unauthorized use, and

misappropriation. (T-1)

2.3.3. Revenues and expenditures of operations must be recorded and accounted for properly

to prepare reliable financial and statistical reports, and maintain accountability of assets. (T-1)

2.3.4. Resources are effectively and efficiently managed. (T-1)

2.4. Internal Control Training. The Resource Management Flight Chief will ensure managers

implement internal control procedures for protection of NAFI assets. (T-1)

AFMAN34-202 25 JUNE 2019 13

2.4.1. Activity Managers will include the web-based NAF Internal Controls Training

requirement in their self-inspection checklist and local operating instructions. (T-1) The web-

based training module is available via the Force Support Knowledge Center,

https://fskc.adls.af.mil (users must possess a CAC enabled computer or an account to access

this link) for all military and civilian employees directly involved in the handling of NAF funds

or control of specific NAF assets, and those who have oversight of these employees.

Employees will complete the web-based NAF Internal Controls Training within 30 days of

hire or assignment and subsequent annual refresher training. (T-1)

2.4.2. FSS unit training managers will document the training, and ensure the training module

is available to employees not able to access the Force Support Knowledge Center on-line

training. (T-1)

2.5. Managers’ Internal Control Program (MICP). The FSS commander or director will

appoint a focal point (MICP Manager) to administer the MICP. (T-2) Commanders and managers

at every level of the AF must establish, evaluate, improve, and report on internal controls. (T-1)

The AFSVC Commander, installation commander, FSS commander or director may direct a local

internal control review in any NAF area. (T-0)

2.5.1. The FSS commander or director will ensure managers and NAF Accounting Office

(NAF AO) personnel are familiar with the conduct and ethical standards prescribed by

Department of Defense Directive (DoDD) 5500.07-R, Joint Ethics Regulation (JER), and 5

Code of Federal Regulations (CFR) Part 2635, Standards of Ethical Conduct for Employees of

the Executive Branch. (T-0)

2.5.2. Activity and functional managers will implement internal controls specified in Air

Force directives. (T-1) Activity and functional managers will perform and document a self-

inspection/assessment of their activity or function at least annually to determine if required

internal control procedures have been implemented and are functioning effectively. (T-2) If

required, implement additional internal controls. Activity and functional managers

immediately correct any regulatory compliance deficiencies identified in internal review

reports (MICPs, inspections and audits, etc.).

2.5.3. The FSS MICP Manager ensures all activity managers and functional managers of unit-

level NAFI operations and functions conducts MICP reviews of their assessable units and

functions. Manager reviews are in addition to any AF directed reviews or any other reviews

conducted by the NAFFA. Each assessable unit uses these MICP reviews, audits, and

inspections as the basis for preparing the Annual Statement of Assurance for their activity or

function.

2.5.4. The Resource Management Flight Chief as custodian (and as MICP Manager, if

appointed) prepares, directs, and reviews MICP.

2.5.5. The FSS MICP Manager reviews all MICP reviews, including those conducted by the

NAFFA in accordance with AFI 65-107, Nonappropriated Funds Financial Management

Oversight Responsibilities.

2.5.6. The FSS MICP Manager reviews other AF directed agency audits and reviews.

2.5.7. The FSS MICP Manager evaluates internal control programs to ensure they provide for

an effective organization, operation, and protection against fraud by:

14 AFMAN34-202 25 JUNE 2019

2.5.7.1. Allocating responsibility so no single individual has exclusive control over all

phases of a transaction.

2.5.7.1.1. The Resource Management Flight Chief may permit small operations (an

activity with total revenue of less than $12,000 a year and relatively few personnel) to

operate under these circumstances. The Resource Management Flight Chief identifies

these activities in writing and retains the appropriate documentation in the NAFI Life

of the Fund file. The Resource Management Flight Chief will conduct a review, at

least annually, to determine if conditions have changed and the authorization is no

longer required. (T-1)

2.5.7.2. Documenting the review.

2.5.7.3. Providing continuous managerial review at all echelons of responsibility.

2.5.7.4. Establishing a clear functional line of responsibility and authority.

2.5.7.5. Ensuring a clearly defined position descriptions exist for all NAFI employees.

2.6. Managers Internal Control Program (MICP) Responsibilities. Deputy Assistant

Secretary of the Air Force Financial Management for Financial Operations (SAF/FMF) is the focal

point for the AF Internal Management Program. SAF/FMF designates primary reporting elements

and internal control officials according to AFI 65-201. Annually, SAF/FMF tasks all Major

Commands (MAJCOM), Field Operating Agency, and Direct Reporting Unit Commanders (CC)

to prepare and submit the Annual Statement of Assurance.

2.6.1. MAJCOM/Commanders identify the assessable units within their command (i.e.,

MAJCOM divisions and installations) to evaluate for the Annual Statement of Assurance, and

appoint a focal point to administer the MICP. The MAJCOM/CCs, through the focal points,

ensure all MAJCOM-level division chiefs and field installation commanders, including FSS

operations, implement the AF MICP.

2.6.2. If the annual report identifies an FSS nonappropriated fund instrumentality related

weakness, the MAJCOM/CC forwards a copy to AFSVC/CC and Air Force, Director of

Services (AF/A1S).

2.6.3. Installation commanders identify the assessable units within their command (normally

squadrons), and appoint an installation focal point (normally the Financial Manager (FM)) to

administer the MICP. Installation commanders, through their focal point, comply with all

requirements of AFI 65-201 and MAJCOM MICP initiatives.

2.6.4. The installation focal point tasks assessable units including the FSS/CC or Civilian

Leader to identify their assessable units (e.g., flight, unit, branch, activity, etc.) and appoint a

MICP Manager (this may be the Resource Management Flight Chief) to administer the MICP.

2.6.5. Quarterly, the FSS MICP Manager evaluates the number and type (directed, special,

and recurring) of evaluations and reviews performed for the assessable units according to the

MICP plan. (T-3)

2.6.6. Each assessable unit uses these MICP reviews, audits, inspections, and other reviews as

the basis for preparing the Annual Statement of Assurance for their activity or function.

Managers may use a comprehensive self-inspection/assessment checklist as an alternative to

MICP reviews if not Air Force directed. See AFI 65-201.

AFMAN34-202 25 JUNE 2019 15

2.7. Internal Management Control Reviews of Off-Base NAF Operations. The Resource

Management Flight Chief obtains appropriated funds Temporary Duty support for the FSS MICP

Manager to conduct reviews of off-base NAF operations the local FSS supports under a host-tenant

agreement. The reviewing team normally includes the FSS MICP Manager and any other

personnel from within FSS operations or the NAF Accounting Office augment the team.

Authorized IAW AFI 65-106 as part of Executive Control and Command Supervision (ECCS).

16 AFMAN34-202 25 JUNE 2019

Chapter 3

PHYSICAL SAFEGUARDS

3.1. Protection of Cash. Everyone responsible for or directly concerned with the security of

NAF resources must use this instruction, AFI 31-101, Integrated Defense, and the installation

Integrated Defense Plan. The Defense Force Commander may provide guidance for funds storage

limits and general resource protection information. The Integrated Defense Council, Security

Forces and other responsible agencies may provide staff and operational assistance if the funds

stored in applicable activities meet current thresholds for their coordination. The current threshold

for an annual site survey by the installation Security Forces Resource Protection Program Manager

per AFI 31-101 is $100,000. For funds facilities storing $100,000 or more, the owning unit will

conduct surveys annually. Funds facilities storing or maintaining less than $100,000 are exempt

from survey requirements. Survey reports may be completed on a single building, facility, room,

site, Geographically Separated Unit, or an entire installation. As a minimum, survey reports must

include compliance with physical security standards, administrative records (e.g., inventories key

and lock custodians), assessment of non-duty hour and/or nighttime security standards, circulation

control assessment, operating instructions, personnel initial and re-occurring training. (T-1) For

facilities maintaining less than $100,000, while not subject to an annual survey by AFI 31-101,

care and consideration needs to be given to proper funds storage. Contact the local Security Forces

Squadron or Defense Force Commander to obtain the guidance on installation security standards.

(T-1)

3.1.1. The Resource Management Flight Chief approves adequate safeguards, as described in

Attachment 2, for the protection of cash and ensures:

3.1.1.1. There are locally developed written operating instructions (OI) used for handling

and safeguarding cash for the Force Support Squadron and the individual activities. The

OIs must also include procedures to follow when installed duress alarm systems fail. (T-1)

3.1.1.2. Only personnel who have a valid necessity, are authorized and permitted access

to cash or cash equivalents, including those in locked containers or stored in safes.

3.1.1.3. Individuals sign receipts to establish accountability for cash and property

transferred to their custody.

3.1.1.4. Individuals do not store or commingle personal funds with NAF cash, even if

separate containers are used.

3.1.1.5. Cash is not stored in a safe designated for classified material.

3.2. Funds Storage Limits. The installation commander approves fund storage limits based on

the advice and guidance of the Security Forces Squadron or Defense Force Commander and local

Integrated Defense Plan guidelines. Facilities storing $100,000 or more will comply with AFI 31-

101. The NAF Accounting Office and activity will keep a record of all fund storage limits in the

life of the fund file. (T-1)

AFMAN34-202 25 JUNE 2019 17

3.3. Funds Containers. Activities use General Services Administration (GSA) approved safes

for temporary unattended storage of cash assets awaiting bank deposit, or for overnight storage of

change funds for the next day's activities. Containers used to store government funds must

certified as to their capability to protect funds. (T-1) These containers must be GSA approved for

funds storage. If the container does not meet GSA specifications, ensure it has an Underwriters

Laboratory (UL) label (or foreign equivalent) designating it as a burglar-resistant safe. If

necessary, seek advice from the local Security Force squadron. The activity manager or designee

must be present, in a position of effective safeguard, when a safe is left open for temporary access

to cash assets. (T-1)

3.3.1. Standard Form 702, Security Container Check sheet is available on-line via

http://www.gsa.gov/portal/forms/download/115582 to document access of the safe. Record

access (opening/closure) each time the safe is accessed or locked throughout the business day,

and not just at start and end of shift or business day. The form is secured to the exterior of the

safe.

3.3.2. Funds Container and Safe Combinations. Control the funds’ container combination

and restrict it to the minimum number of persons. As a minimum, change the combination at

least annually, when transferring, discharging, separating, or reassigning an individual who

has access to the container, and when directed by the installation’s Integrated Defense Council.

3.3.2.1. Use a locally devised form to store the safe combination, document the

combination change, and list the individuals with access to the safe. Prepare a new form

each time the combination is changed. Attach one copy of the form to the inside of the

funds storage container. Maintain a second copy of the form in a sealed envelope, in a

locked container, in a different secure location (usually the NAF Accounting Office, but it

does not have to be).

3.4. Funds Storage Rooms. A funds storage room is a space specially selected for containing

a funds storage container during non-operating hours. Rooms established for funds storage must

meet the minimum requirements established in AFI 31-101. (T-1)

3.5. Funds Escort Procedures. Funds escort procedures are determined by the Integrated

Defense Council (IDC), Security Forces and other responsible agencies and published in the

Integrated Defense Plan. When needed, FSS facilities are encouraged to contract with security

escort providers, when it is cost effective and warranted by the risk presented.

3.6. Intrusion Detection Systems. Intrusion Detection Systems requirements are determined by

the Security Forces Resource Protection Program survey process described in paragraph 3.1

3.7. Cashier Area. The cashier area serves two purposes: identification and security. It is

designed to tell customers where to get service, protect funds and related documents and forms

while in the care of the general cashier, and reduce interference by other personnel. To ensure the

area is secure and unauthorized individuals do not have access to the activity’s general cashier and

other cashier check-cashing areas (for example, club cashier cages), the activity manager will:

3.7.1. Post signs outside of the area reading, "Authorized Personnel Only." (T-2)

3.7.2. Post a list of individuals authorized access to the area inside the cashier area. (T-1) This

requirement is in addition to signs required by AFI 31-101, for controlled areas in facilities

maintaining $100,000 or more.

18 AFMAN34-202 25 JUNE 2019

3.7.3. Ensure the entrance is locked at all times using a key or an electronically controlled lock

entry. (T-1)

3.7.4. Ensure the cashier’s area contains one or more locking cash drawers with one or more

authorized safes. (T-1)

3.7.5. Ensure the cashier area has at least one cashier window. (T-1)

3.7.6. Ensure use of the work area exclusively for cashier activities and ensures the work area

is large enough to segregate general cashier funds from check-cashing cashier funds. (T-1)

3.7.7. Equip cashier work areas with emergency lighting. (T-3)

3.7.8. Ensure a secure place is available where other cashiers pick up their change funds, turn

in their receipts, and complete AF Form 1875, NAF Individual Cashier's Report. (T-1)

3.7.9. The Activity Manager should conduct a security check of the cashier area upon closing

and ensures all funds are properly deposited or stored and all documents and forms are properly

secured. The manager may designate another individual to perform this function.

3.8. Cashiers' Responsibilities. Before leaving the work area, cashiers will:

3.8.1. Secure documents and forms in a locked safe or drawer and secure the entrance to the

cashier's cage if leaving the general cashier area. (T-1) If the cashier is being relieved or

departing the area, he or she must pass on or secure the funds, documents, forms, and cashier's

cage according to local cash control operating instructions. (T-1) The transfer (pass on) of

funds must be documented with the amount being transferred and written signatures from the

transferring and receiving individuals. (T-1)

3.9. Cash Registers. Use cash registers in activities where the volume of regular cash receipts

is $1,000 or more per month. (T-3) Activities with cash receipts less than $1,000 per month may

use a locking cashbox with Resource Management Flight Chief approval. Do not use cash registers

to store cash during non-operating hours. (T-1) Store cash during non-operating hours in a locked

safe or other secure storage area according to AFI 31-101. (T-1)

3.9.1. Managers must observe cash registers and cashboxes to be sure they are secure and

unauthorized people cannot gain access to them when they contain cash. (T-1)

3.9.2. Cash register drawers will be left open and empty when the register is not in use. (T-3)

This is to prevent unnecessary damage in the event of attempted theft or burglary.

3.9.3. Managers will ensure cashiers receive training on required internal control procedures

and perform their duties according to established operating instructions. (T-1)

3.9.4. Cashiers will ring up each sale in view of the customer and give the customer a register

receipt. (T-3) The receipt may be a register receipt, guest check, or other customer receipt

media.

3.9.4.1. The requirement to provide the customer with a receipt may be waived locally by

the Resource Management Flight Chief. Before requesting a local waiver, managers should

consider the following factors:

3.9.4.1.1. Location of the cash register and the ability to provide a visual display of the

transaction being rung in to the customer.

AFMAN34-202 25 JUNE 2019 19

3.9.4.1.2. Descriptive or visual display features of the cash register equipment.

3.9.4.1.3. Providing an alternate means of satisfying customers’ receipt requests.

3.9.4.1.4. The possibility for cash register manipulation; over, short and no sale rings.

3.9.4.2. No credit card receipt is required at point-of-sale for credit card sales $25 or less.

Activities interested in speeding up check-out and facilitating customer service should

consider this option. Activities must ensure customers are asked whether they would like

a receipt or not. (T-1) Remember to contact AFSVC/FM for the proper re-programming of

the credit card swipe terminal before beginning this procedure.

3.9.5. Cashiers must not adjust an incorrectly rung sale on a subsequent sale. (T-1) Managers

instruct cashiers to account for an error using AF Form 645, NAF Cash Register Adjustment;

annotate the cash register tape to flag the error; and attach the AF Form 645 to AF Form 1875.

3.9.5.1. Point-of-Sale (POS) systems require managers or designees to use a restricted

passcode to authorize system voids for completed sales transactions (or over rings).

3.9.5.2. Cashiers must complete AF Form 645 for POS voids and over rings in the absence

of a manager or designee assigned the restricted pass code. (T-3)

3.9.5.3. The Resource Management Flight Chief will ensure void procedures are clearly

stated in local operating instructions. (T-2)

3.9.6. In most instances, no more than one cashier must work out of a single cash register

drawer. However, on a case-by-case basis the Resource Management Flight Chief may

authorize an activity to operate in this fashion when necessary in the interest of customer

service.

3.9.6.1. The Resource Management Flight Chief must designate, in writing, those

activities authorized to operate with more than one cashier per drawer with adequate

controls to safeguard funds and provide a satisfactory audit trail of accountability. (T-2)

3.9.6.2. The Resource Management Flight Chief approves an activity-specific operating

instruction to ensure internal control of cash when more than one cashier operates from a

single drawer. Keep written authorization at the activity and file a copy in the NAF

Accounting Office maintained life of the fund file.

3.9.6.3. The Resource Management Flight Chief conducts a review, at least annually, in

each authorized activity to determine if conditions have changed and the authorization is

no longer required. (T-1)

3.9.7. The activity manager will control cash register reset and read keys. (T-3)

3.9.7.1. The activity manager ensures operators do not reset registers. Resetting of period

cumulative totals (e.g., daily, weekly) is permitted if the register is so equipped and if the

cumulative journal register is not reset.

3.9.7.2. The activity manager will limit access to reset ("Z") keys or reset function (e.g.,

passcodes used with password-protected software for Point-of-Sale systems) to

supervisory personnel responsible for preparing registers for the next day's business. (T-2)

3.9.7.3. The activity manager tags reset keys not needed to read or lock the register, and

then forwards to the custodian for safekeeping.

20 AFMAN34-202 25 JUNE 2019

3.9.7.4. The activity manager or designee controls the read keys or passcodes and limits

access to read ("X") keys and passcodes to supervisors, head cashiers, and other staff

performing cashier shift changes during a business day.

3.9.7.5. The activity manager or designee will ensure cashiers, including window or

specially designated cashiers, never possess read keys or passcodes unless necessary to

operate the register. (T-1) Operations in which management is not always available (e.g.,

24-hour lodging operations) may want to apply for a local waiver to permit the incoming

cashier use of the read key to ring out the outgoing cashier and subsequently pass the key

to each succeeding incoming cashier. Before requesting a local waiver, be sure to consider

the following important factors:

3.9.7.5.1. The size of the operation and volume of business receipts involved.

3.9.7.5.2. Potential risks involved in permitting cashiers to verify receipts and

determine cash overage or shortage before turn-in.

3.9.7.5.3. Other duties of cashiers.

3.9.7.5.4. Requirement for an alternative internal control procedure.

3.9.8. At the end of each shift, the activity manager or designee reads cash registers, writes

the register identification and date on the tape, records the register readings, and removes the

tape. For POS systems, the activity manager or designee runs the appropriate shift closeout or

summary reports. Cashiers complete AF Form 1875, (or systems generated form providing

individual cashier accountability), and turn-in or deposit receipts. If impractical to turn-in or

deposit cash receipts (e.g., 24-hour lodging operation), receipts may be stored overnight in an

approved storage area and container.

3.10. Use of Marked Money. AFI 31-101, outlines the specific procedures for using “marked

money” when storing $100,000 or more.

3.10.1. For facilities storing less than $100,000 and storing more than $7,500 cash in a

container, safe or vault, or used at a cashier cage or register:

3.10.1.1. Include at least three $20 bills in an unmarked packet. (T-1) This also applies to

foreign currency, where applicable.

3.10.1.2. Record the denomination, serial number, and series year (including letter suffix)

of each bill.

3.10.1.3. Store the information in a locked container separate from the funds.

3.10.1.4. The manager will ensure cashiers place marked money in cash drawers and safes

in such a way as to avoid suspicion or alert unauthorized persons of its presence. (T-1)

Never staple marked money together, paperclip, or store separately from other funds.

3.10.1.5. Cashiers may inadvertently use marked money during the normal course of

business to make change. If used, the cashier marks different currency repeating the

procedures above.

AFMAN34-202 25 JUNE 2019 21

3.11. Using AF Form 2555, NAF Collection Record. Activities or functions without cash

registers will use AF Form 2555 to record sales and services. (T-1) Customers sign the form after

each transaction. The form is not required if using a cash register. Use in conjunction with a cash

require customer signatures to record and verify sales. Attach the completed AF Form 2555 to the

AF Form 1875 as supporting documentation. In concessionaire operations using NAFI-owned

Point-of-Sale (POS) registers with register tapes, AF Form 2555 is not required.

3.12. Controls for Special Events. When AF Form 2555 or a cash register is not practical for

special events such as carnivals, ball games, installation open house days, etc., the Resource

Management Flight Chief, will establish local procedures for the individual or individuals they

designate as responsible for controlling sales and merchandise. (T-3) Local procedures should be

able to establish cash accountability for sales as well as the control of any issued merchandise.

The cashier reports all overages and shortages to the activity manager who takes appropriate action

according to Chapter 8.

3.13. Employee Conduct During and After a Robbery. The primary consideration during a

robbery is always the safeguarding of human life. Managers must provide employees training on

procedures to follow in the event of a robbery, including avoiding any actions potentially posing

increased danger to customers or employees. (T-1) The Resource Protection Program Manager

will conduct an anti-robbery exercise in all facilities storing over $100,000 at least annually. (T-

1) All funds storage facilities must, regardless of amount, conduct anti-robbery training for their

personnel. (T-1) Train employees to:

3.13.1. Activate the robbery alarm system and surveillance system during the robbery if it can

be accomplished safely for locations with an alarm and/or surveillance system.

3.13.2. Follow the robber's special instructions or note.

3.13.3. Give the robber the amount demanded and if possible, include marked money.

3.13.4. Observe the robber's physical features, voice, accent, mannerisms, dress, and if

applicable, identify the type of weapon displayed, and any other characteristics useful for

identification purposes.

3.13.5. Observe the direction of the robber's escape, and description, license plate number and

state of issue of the escape vehicle used.

3.13.6. Telephone Security Forces when it is safe, and inform them a robbery has been

committed.

3.13.7. Secure the scene of the robbery to avoid disturbing any fingerprints left by the robber;

avoid unnecessary handling of any evidence; and safeguard evidence for Security Forces

personnel.

3.13.8. Designate an individual, when safe, to wait outside the office for Security Forces

personnel.

3.13.9. Determine and record the names and addresses of persons witnessing the robbery or

escape.

3.13.10. Avoid discussing details of the robbery with others before reporting observations to

the Security Forces personnel.

22 AFMAN34-202 25 JUNE 2019

3.13.11. Notify the activity manager, Resource Management Flight Chief, and FSS

commander or director and comply with additional instructions as locally determined.

3.14. Fire Prevention. Activity managers must support the Air Force Fire Emergency Services

(FES) Program and comply with procedures outlined in AFI 32-2001, Fire and Emergency

Services (F&ES) Program. (T-0)

3.15. General Building Security. Activity managers must perform regular inspections of

facilities under their control.

3.16. Forms and Records. The NAF Accounting Office and operating activities must provide

adequate storage facilities to secure pre-numbered and controlled forms, automated inventories,

accounts receivable records (where authorized), membership applications, and all Privacy Act

protected information. (T-1) A locked room with limited access satisfies this requirement. See

paragraph 4.27 for additional information on controlling pre-numbered forms.

AFMAN34-202 25 JUNE 2019 23

Chapter 4

CONTROLLING CASH AND CASH EQUIVALENTS

4.1. Definition of Cash. Cash refers to coin, currency, traveler's checks, and all other negotiable

instruments such as blank checks, money orders, and gift certificates. Properly endorsed checks

(refer to paragraph 4.18) are not considered negotiable instruments. Minimum physical

safeguards and other cash protection requirements are specified in Chapter 3 and AFI 31-101.

4.1.1. Document and control checks at all times. (T-1) Store blank check stock (if used at

your location), coupons, gift certificates, and any other items easily converted to cash in a

locked room, locked container, or safe. For normal minimum physical safeguards and other

cash protection requirements (see AFI 31-101).

4.1.2. The Air Force NAF Property and Liability program provides coverage for losses caused

by dishonest acts involving NAF assets for all NAFIs. See AFMAN 34-208, Nonappropriated

Fund Property and Liability Program, for coverage limits for money, securities, inventories,

furniture, fixtures, and equipment.

4.2. Controlling Cash. Managers will ensure cashiers have no accounting duties other than

preparing reports and data associated with cash handling functions. (T-1) Cashiers may not have

access to accounts receivable records or other data used to update the general ledger or subsidiaries.

The activity manager submits a formal request to the Resource Management Flight Chief for

approval to operate under varying conditions on a case-by-case basis when compliance is not cost

effective, operationally practical, or physically possible. If approved, the Resource Management

Flight Chief instructs the activity manager to review the cash handling requirement once a year.

All requesting and review documentation is maintained in the life of the fund file. Exception:

Activities using a POS system enabled to update accounts receivable may permit cashiers access

to these records.

4.3. Bank Deposits. The FSS commander or director and Resource Management Flight Chief

ensure operating managers avoid accumulating cash in excess of operating needs. Activity

managers keep cash on hand to a minimum by making daily deposits to the central cashier or

financial institution.

4.4. Central Cashier Depository. The Resource Management Flight Chief will establish a

central cashier operation, to include a night depository as required designed to provide a one-stop

service for installation activities to make deposits, turn in deposit forms, and obtain change funds,

unless local circumstances justify a waiver of this requirement. (T-1) Submit waiver requests to

AFSVC/FM.

4.5. Central Cashier Responsibilities. The Resource Management Flight Chief designates

central cashier responsibilities, including receipting for funds and AF Form 1878, Central Cashier

Deposit Receipt, from all NAF revenue producing activities. The central cashier consolidates all

activity receipts into one deposit for all NAFIs, and makes one daily cash and/or check deposit to

the financial institution. Installations using the electronic over the counter check processing

function will continue to process checks daily through the Treasury Department for electronic

check deposits. (T-1) Daily, the central cashier will:

4.5.1. Count all cash and negotiable instruments physically present in the central cashier

depository using AF Form 2556, NAF Surprise of General Cashier's Cash Count. (T-1)

24 AFMAN34-202 25 JUNE 2019

4.5.2. Record receipts turned in by activities, change funds issued or turned in, and the amount

of transfers to NAFIs to AF Form 1877, NAF Central Cashier Control Log. (T-1) The

approved AF Form 1877 is electronically transmitted to the Shared Service Center (SSC) Cash

Reconciliation Branch for processing and posting to the general ledger. Note: Internal control

requires the presence of two individuals in the central cashier depository to open locked

activity deposit bags containing receipts left in a designated night depository or with another

activity overnight for turn in to the central cashier.

4.5.3. Consolidates all funds received, and prepares a bank deposit slip in triplicate for all

checks and excess cash. Retains one copy of the deposit slip and sends the original and one

copy to the servicing financial institution with the deposit. An authorized individual may hand-

carry daily deposits or they may be picked up by an armored car service, if warranted. If funds

are hand-carried, advise the security forces control center prior to leaving the secure area and

follow the guidance of AFI 31-101.

4.5.4. Reconciles AF Form 1877, establishing accountability for the central cashier funds and

submits to the Resource Management Flight Chief or designee for approval.

4.6. Functions of the Central Cashier. The Resource Management Flight Chief ensures the

central cashier operation provides banking services for installation activities and NAFIs to make

deposits, obtain change funds, and a separate location to turn in daily paperwork. (T-3)

4.6.1. Use the central cashier operation to:

4.6.1.1. Centralize control to increase efficiency.

4.6.1.2. Save valuable time.

4.6.1.3. Decrease the amount of banking transactions.

4.6.1.4. Increase internal control by ensuring receipts from all activities are deposited in a

timely manner.

4.6.1.5. Consolidate receipts into one deposit for each NAFI for deposit at the banking

facility.

4.6.1.6. Supply foreign currency for activities authorized accommodation sales.

4.6.2. The central cashier is not a check cashing facility for individuals.

4.6.3. The Resource Management Flight Chief will notify AFSVC/FM prior to implementing

a central cashier operation. (T-1)

4.6.4. The Resource Management Flight Chief will prepare operating instructions to establish

internal control procedures ensuring required separation of duties and responsibilities

according to generally accepted accounting principles. (T-1)

4.6.5. The Resource Management Flight Chief, with the cooperation of security forces,

develops local anti-robbery training procedures. (T-3)

4.6.6. The Resource Management Flight Chief, with the activity managers, establishes a

schedule of activity central cashier deposits. (T-3) The schedule should consider the workload

of the activity and NAF Accounting Office, and the hours of operation of the local financial

institution.

AFMAN34-202 25 JUNE 2019 25

4.6.7. The Resource Management Flight Chief ensures central cashier hours correspond to the

normal work hours for the installation, and are responsive to the needs of the activities.

4.6.8. Gives consideration to re-circulating cash when establishing a schedule. For example,

FSS cash producing activities should turn in their receipts first; clubs, as cash users, should

turn in their receipts last.

4.6.9. The Resource Management Flight Chief, or designee, conducts quarterly surprise cash

counts and periodic reviews of the central cashier operations.

4.6.10. The Resource Management Flight Chief, or designee, ensures the level of funds the

central cashier maintains meets the needs of the activities and at the same time retains a

minimum balance in the central cashier fund.

4.6.11. The Resource Management Flight Chief or designee approves purchases of cash from

outside sources to replenish the central cashier.

4.6.12. NAF Accounting Office (personnel other than the central cashier) verifies the deposit

and change fund amount daily and attaches the bank validated copy of the deposit slip to the

original AF Form 1877. Performs various reconciliation and validation functions associated

with revenue processing.

4.7. Activity or General Change Fund Cashier Responsibilities. The activity or general

change fund cashier balances daily receipts on AF Form 1875 or Point-of-Sale (POS) generated

cashier reports.

4.7.1. Prepare AF Form 1876. The activity manager or designee approves and submits

completed AF Form 1876 electronically to the Shared Service Center along with

documentation required to support the deposit. Print two copies keeping original signature

with original supporting documents and turn into the NAF Accounting Office. Retain a copy

in the activity.

4.7.2. If any application/system has a validated CAC enabled electronic signature taking the

place of a wet signature, it may be deemed a system of record. The system is then used to store

the electronic and paper copies until no longer required in accordance with the Air Force

Records Disposition Schedule located in the Air Force Records Information Management

System.

4.7.2.1. Prepare AF Form 1878. Turn in all cash receipts and AF Form 1878 to the central

cashier or designated night depository according to the established schedule.

4.7.2.2. The central cashier returns the original AF Form 1878 and a second copy to the

activity, and retains a third copy to use in preparing the daily consolidated deposit. The

activity manager or designee forwards the original AF Form 1878 to the NAF Accounting

Office with AF Form 1876.

4.7.3. The activity or general change fund cashier also maintains and balances the activity

change funds. The activity cashier may request change fund replenishment or increase from

the central cashier to meet activity check cashing requirements. This is done by exchanging

customer's checks for cash at the central cashier depository. This exchange of funds requires

no accounting entry; the cashier completes AF Form 1878 indicating the total amount of checks

turned in less the cash received.

26 AFMAN34-202 25 JUNE 2019

4.7.3.1. The Resource Management Flight Chief approves any increases to activity change

funds for paydays, weekends, holidays, and special events. Temporary increases must be

within approved fund storage limitations. (T-1) A copy of the fund storage limitations is

kept in the life of the fund file in the NAF Accounting Office. The activity manager should

give the central cashier a minimum of two business days advance notice for the temporary

fund increase to ensure availability of funds.

4.7.3.2. The activity completes an AF Form 2539, NAF Disbursement Request, and

obtains Resource Management Flight Chief approval prior to attaining the funds from the

central cashier. This transaction does not require a check or processing through accounts

payable. The NAF Accounting Office prepares and processes an AF Form 1876 to record

the change fund increase entered on AF Form 1877 with supporting documentation. The

activity manager signs for the temporary increase using AF Form 2557, NAF Cash Receipt

Voucher. Attach the AF Form 2557 with the original receipt and file in the life of the fund

file in the NAF Accounting Office.

4.7.3.3. The activity cashier includes turn-in of any temporary increases to change funds

in the normal deposit of cash receipts on AF Form 1876 on the first workday after

completion of the special event. Point-of-Sale systems which process the individual

cashier reports and consolidated cashier reports will need to be printed out and filed. If the

system cannot properly retain/store the report, then reproduce the form in a readable format

as needed for accounting and audit work.

4.8. Night Depositories. Use night depositories when cash supply at closing time exceeds the

overnight fund storage limits.

4.8.1. The FSS commander, director, or Resource Management Flight Chief requests

installation banking facilities install a night depository when required. Do not use NAFs to

establish a depository within the installation banking facility.

4.8.2. The Resource Management Flight Chief may prescribe a consolidated change fund

storage depository to supplement the bank’s night depository. The Resource Management

Flight Chief may require some activities to deposit receipts in the night depository while

placing change funds in a consolidated depository (for example, a club or bowling center)

when the activity does not have adequate security available.

4.8.3. The Resource Management Flight Chief on installations without night depositories must

provide activities with a suitable safe and all other required security measures for storing cash

during non-banking hours. (T-1)

4.9. Cashiers’ Deposits. Most activities deposit all cash receipts daily, including checks cashed

from the check-cashing change fund. With approval of the Resource Management Flight Chief,

small activities which take in minimal amounts of cash (i.e., fitness centers and libraries) may

make deposits weekly, monthly, or when receipts exceed $200. Individual cashiers maintain daily

cash and receipt accountability using AF Form 1875. Report credit card charges daily using AF

Form 1876.

AFMAN34-202 25 JUNE 2019 27

4.9.1. The Resource Management Flight Chief designates, in writing, activities authorized to

operate under this policy. The Resource Management Flight Chief establishes a regular deposit

schedule for these activities, reviews their fund storage authorizations, and verifies overnight

storage authorization for an amount equal to the amount of their change funds plus $200. These

activities must deposit all receipts by the close of business on the last day of each month. The

central cashier monitors the deposits and reports missing deposits to the Resource Management

Flight Chief. (T-3)

4.9.2. If the FSS Commander/Director, upon the recommendation of the Resource

Management Flight Chief, determines the distance to the depository, or other circumstances

preclude making daily deposits, they may permit activities to hold receipts until the last

banking day of the month as long as fund storage limits are not exceeded. The Resource

Management Flight Chief ensures the AFSVC Shared Service Center Cash Reconciliation

Section is notified. Do not carry receipts from one accounting period to another.

4.9.3. The activity cashier prepares a bank deposit slip in an original and two copies when a

central cashier operation does not exist and for night deposits to the installation banking

facility. The cashier submits the original and one copy to the bank for validation and attaches

one copy to the AF Form 1876 submitted to the NAF Accounting Office.

4.9.3.1. The NAF Accounting Office receives the validated deposit slip from the bank and

compares it to the suspense copy of the deposit slip for accuracy. The NAF Accounting

Office advises the Resource Management Flight Chief and activity manager if differences

exist, or if there is a delay in receiving the validated copy. The Resource Management

Flight Chief and activity manager immediately resolve any problems identified.

4.9.3.2. If the distance to the depository is too great to permit making cash deposits in

person, they may be mailed using postal money orders. Do not deduct the cost of money

orders from receipts to be deposited. Use petty cash funds to purchase money orders.

4.9.3.3. Overseas remote locations may exchange daily cash receipts or excess cash at the

local Financial Services Office, when permitted, for a United States (U.S.) Treasury check.

4.9.3.4. The NAF Accounting Office maintains a list of all checks or postal money orders

mailed to off station depositories until deposit validations are received. Make the list in

sufficient detail to aid in recovering of funds in the event checks are lost, stolen, or

destroyed.

4.9.4. Overseas areas should exchange cash for U.S. Treasury checks when transmitting funds

to the U.S. Use the same procedures for deposits mailed to an overseas military banking

facility or financial institution designated as an authorized depository by the US Treasury. The

US Treasury Department authorizes all overseas military banking facilities to charge a fee for

all uncollectible checks deposited. The Resource Management Flight Chief and NAF

Accounting Office will ensure this charge is passed on to the maker or endorser of the check

when collection is made. (T-3)

28 AFMAN34-202 25 JUNE 2019

4.10. Surprise Cash Counts. All FSS activities and functions are subject to surprise cash

counts.

4.10.1. The activity manager, or designated representative, who has no involvement with the

cash function, will make a surprise cash count of all change funds, imprest funds, and receipts

on hand in the activity at least quarterly. (T-1) In small activities where the activity manager

usually performs cashier duties, the flight chief will appoint an individual to conduct the

surprise cash count. (T-1) The cash count of the funds controlled by a general change fund

cashier includes all funds which have not been issued to other cashiers. The individual

performing the cash count determines whether to count funds already issued (in operation).

While it is not necessary to count these funds each time when performing a surprise cash count,

they must be counted at least annually. (T-1) When these funds are not counted, the individual

conducting the cash count verifies the general change fund contains a receipt for each bank

issued from the fund.

4.10.2. The Resource Management Flight Chief, or designee, will perform a quarterly surprise

cash count of the central cashier at least quarterly. (T-1)

4.10.3. At least once during the fiscal year, the NAFFA or designated representative, conducts

a surprise cash count of all change and imprest funds at each activity within a NAFI.

4.10.4. When it is not practical or economical to travel to satellite or off-base activities to

conduct surprise cash counts, the NAFFA requests the Financial Manager (FM) or site

commander (as appropriate) appoint an independent individual on site to conduct the surprise

cash count at least once during the fiscal year at each off-base activity. File the AF Form 2556

documenting the annual cash count in the activity, and forward a copy to the NAFFA

requesting the count. (T-1)

4.11. Performing Surprise Cash Counts. All activities use an AF Form 2556, or similar locally

devised form, for surprise cash counts. The individual performing the surprise cash count reviews

the source document and verifies the amount of the change or imprest fund being counted, and the

name of the person who signed for the funds. Change funds are subject to fund storage limitations.

Report any funds identified exceeding established limits to the activity manager or Resource

Management Flight Chief. The individual conducting the cash count will:

4.11.1. Count like items or denominations of currency and coins together and enters

individually on AF Form 2556, or similar form. (T-1) When counting funds for a general

cashier, consider the change funds transferred out to cashiers and deposits transferred in from

a shift's receipts.

4.11.2. Review expenditures and advances from petty cash to ensure they were approved and

are supported by AF Form 2557 or AF Form 1401, Air Force Petty Cash/Refund Voucher. (T-

1) Ensure, when added to the cash on hand, the balance equals the amount of funds signed for

and recorded in General Ledger Account Code (GLAC) 105XXXX. (T-1)

4.11.3. Determine accountability of cashiers' funds including payments for dues, fees, charges,

and accounts receivable, by reconciling beginning cash, receipts, and accountable forms

including closing out the cash register. (T-1) Consider any difference between cash on hand

and the computed cash accountability a cash overage or shortage.

AFMAN34-202 25 JUNE 2019 29

4.11.4. Count the cash in the presence of the individual who signed for the funds. (T-1) Ensure

the individual does not leave the area while the count is in progress. (T-1) In a large activity

with more than one cash handling area, counts funds simultaneously. This may require a cash

count team augmented with additional personnel. Counts a variety of funds located adjacent

to one another one at a time, or, if enough personnel are available, simultaneously, to prevent

transfer of moneys between locations to cover a shortage.

4.11.5. Carefully examine the cash counting area and containers and ensures all cash is

counted. Immediately report any I Owe You (IOUs), post-dated checks, personal or payroll

checks from the cashier, or the withholding of deposits by cashiers, to the activity manager and

Resource Management Flight Chief. (T-1)

4.11.6. Discuss the results of the cash count and observations made during the count with

individuals involved, (e.g., cashiers, activity manager, and Resource Management Flight

Chief). (T-1) When the activity manager or representative, designated in writing, performs the

cash count, retain AF Form 2556 in the activity, and provide FM a copy for the NAFFA's

review.

4.12. Cash Refunds. The Resource Management Flight Chief may authorize activity managers

to approve cash refunds not to exceed $500. The Resource Management Flight Chief ensures

adequate supporting documentation and internal controls exist to substantiate cash refunds. Record

refunds on AF Form 1401 or use refund vouchers programmatically produced by the automated

lodging billing or Point of Sale System. Activity managers do not approve refunds for special

order merchandise that cannot readily be sold to another customer or returned to the vendor.

Activity managers only approve refunds including complete customer identification, (name,

address, and telephone number) and signature. Indicate the amount, item or service, and reason

for the refund on the refund authorization. When authorized by the Resource Management Flight

Chief, refunds may be paid from the day's receipts or from a petty cash fund. Consider refunds

paid from receipts when preparing the AF Form 1876. Attach the original refund voucher with the

original sales slip (when available) to the AF Form 1875.

4.12.1. Do not process a credit transaction except as a correction or valid refund for a

previously processed credit card charge transaction; credit a customer's account for refunded

charge sales. This refund must be processed using the same credit card as the original purchase.

Never give a cash refund for a sale made on a credit card. (T-1)

4.12.2. Credit card refunds or adjustments shall not exceed the original transaction amount.

(T-1) The Resource Management Flight Chief ensures adequate supporting documentation and

internal controls exist to substantiate refunds.

4.12.3. Refunds or adjustments shall not be combined for multiple receipts. (T-1) Individual

refunds or adjustments shall be processed for each individual original receipt. (T-1)

4.12.4. Credit card refunds shall not be processed more than 90 days after the original

transaction date. (T-3) If a transaction was conducted with a credit card no longer valid,

(expired, account closed), or a prepaid card that has been discarded (Visa or MasterCard gift

card) and the cardholder is returning items, an exchange of merchandise, in-store credit, or re-

issue of a gift card may be authorized by the activity manager or supervisor. A cash refund is

unauthorized in these situations.

30 AFMAN34-202 25 JUNE 2019

4.13. Controlling Checks and Other Negotiable Instruments. Since checks are highly

susceptible to being converted to cash, document and control their receipt, issue, and return at all

times. Store blank check stock, coupons, money orders, gift certificates, and related items used as

cash or as a cash substitute in a locked container, locked room, or safe. (T-1) Gift Cards are not a

cash equivalent until they are activated. It is encouraged to display inactivated gift cards so

customers can see and purchase easily.

4.14. Cashing Checks. The activity manager must ensure information is readily available to

customers on the Privacy Act provisions according to AFI 33-332, The Air Force Privacy and

Civil Liberties Program, and the activities check cashing policy. (T-1) The activity manager or

designee should post a sign at the cashiers' area stating the check cashing policies and penalties

incurred on all returned checks. The sign:

4.14.1. Lists authorized types of negotiable instruments accepted for cashing and the limits

for each.

4.14.2. Requires customers to show an identification (ID) card to cash a check.

4.14.3. Specifies the amount of the returned check service charge required by the Shared

Service Center, see paragraph 4.15

4.14.4. Prohibits the requirement to provide Social Security Numbers (SSNs).

4.14.5. Specifies the endorser is responsible to the FSS if the check is returned.

4.14.6. States checks initially declined will be re-presented electronically.

4.14.7. Activities cash checks for authorized members or customers only. Cashiers cash two

party checks only with the approval of the activity manager or designee. When accepting two

party checks, cashiers verify the first party placed their endorsement in the proper location on

the back of the check.

4.14.8. Cashiers initial checks verifying the check bears the member's name, grade,

organization or assignment (branch of service for retirees), and mailing address. This

information facilitates timely follow-up and collection actions on returned checks.

4.14.9. Do not create a list of SSNs outside of an approved non-Services database. Collection

and storage of SSNs is prohibited. (T-1)

4.14.10. Activities do not cash their employees' NAF payroll checks unless the employee has

a membership in the employing activity. (T-3) Justification for approval of local waivers to

this requirement must consider the following conditions: (T-1)

4.14.10.1. Isolation of the activity.

4.14.10.2. Distance and availability of a banking facility for employees to cash their

checks.

4.14.10.3. Volume of the check cashing activity and its impact on the activity's capability

to serve its patrons.

4.14.10.4. Cash on hand limits.

4.14.10.5. Impact on cash flow.

4.14.10.6. Local environmental conditions and related risk.

AFMAN34-202 25 JUNE 2019 31

4.14.10.7. Need for a comprehensive operating instruction to prevent compromise of

internal controls.

4.14.10.8. The potential for collusion or compromise of internal controls, or both.

4.14.11. Cashiers will not cash their own checks (personal or payroll) from a change fund or

cash receipts for which they are currently responsible. (T-1) This includes initiating a credit

card transaction to refund their credit card.

4.14.12. The FSS commander or director may authorize individual activities to accept checks

for up to $20 over the amount of a completed transaction. Do not grant blanket approval for

all activities to cash checks over the amount of purchase. (T-2) The NAF Accounting Office

maintains the approval in the life of the fund file. Activity managers submit requests with

adequate justification to the FSS commander or director. As a minimum, justification for

approval must consider the following factors:

4.14.12.1. Isolation of the activity.

4.14.12.2. Local environmental conditions and related risk.

4.14.12.3. Funds storage limitation.

4.14.12.4. Volume of the check cashing activity and its impact on the activity's capability

to serve its patrons.

4.14.12.5. A review of the activity's returned check history and the adverse effect of a

possible increase in returned checks from patrons.

4.14.13. The FSS commander or director, with the installation commander's approval, may

increase installation check cashing controls and follow-up actions when conditions warrant.

4.15. NAF Service Charge for Returned Checks. The service charge for all returned checks

is established by the Shared Service Center and provided to the installations. The service charge

is collected and paid to the Shared Service Center. (T-1) The NAF service charge is in addition to

any bank charge on returned checks.

4.16. Checks and Cash Received By Mail. All activity and functional managers will ensure no

employee has immediate access to cash funds while opening incoming mail and removing checks

and cash. (T-1) The activity manager designates an employee within the activity other than the

general cashier or accounts receivable clerk to open the incoming mail and remove all checks and

cash. (T-1)

4.16.1. The designated employee lists checks daily, indicating the number and date of the

check, the account number and credit amount, and name of the maker. Checks processed

through the electronic check deposit function are not endorsed. Checks included in the daily

cash receipts, deposited to a local financial institution, and must be endorsed using the

endorsement stamp supplied by AFSVC Banking Branch (AFSVC/FMTC). Once all checks

are entered, the designated employee totals and signs the list and gives the checks and list to

the general cashier.

4.16.2. The general cashier verifies and initials the total on the list certifying it is correct,

deposits the checks, and prepares a single receipt for the total amount and attaches the list of

checks as backup.

32 AFMAN34-202 25 JUNE 2019

4.16.3. The activity manager will include cash payments received by mail in the activity cash

handling instructions, including making random reviews by initialing the list on a monthly

basis to ensure all checks received become part of each day's receipts and are included in the

general cashier's report. (T-1)

4.17. Endorsing Checks. Checks processed through the electronic check deposit function are

not endorsed. Checks included in the daily cash receipts, deposited to a local financial institution

must be endorsed using the endorsement stamp supplied by AFSVC/FMTC. (T-1) The

endorsement stamp is printed as follows:

4.17.1. Line 1: For Deposit Only

4.17.2. Line 2: Name of Bank or Credit Union (only if required by the local bank)

4.17.3. Line 3: Local Bank Account Number

4.17.4. Line 4: Dept of AF, Air Force Financial Management Fund (AFFMF)

4.17.5. “Return check to bank name/account number” is included in the bank stamp.

4.18. Returned Checks. All returned checks are consolidated and processed by the U.S.

Treasury or the concentration bank. Checks returned by the check writer’s financial institution are

re-presented electronically for collection on the 1

and 15

of the month if returned upon initial

presentation. The Shared Service Center is responsible for the redemption of all returned checks,

proper accountability for the checks, and follow-up collection actions. In the event a returned

check is returned to the NAF Accounting Office, forward to the Shared Service Center for debt

collection.

4.18.1. The Shared Service Center notifies the NAF Accounting Office of the write-off

amount when a check fails re-presentment and is deemed uncollectible. The Shared Service

Center will approve write-off amounts up to $2,500 for uncollectible returned checks. (T-1)

To write-off returned checks over $2,500 the Shared Service Center must receive local NAF

Council approval. (T-1) After the NAF Accounting Office notifies the Shared Service Center

of the NAFs Council’s approval to write-off, the Shared Service Center processes all eligible

debts for collection via the Treasury Offset Program (TOP) less bank and processing fees. All

payments received from the Treasury Offset Program are sent directly back to the installation

where the debt originated via Cash Management Investment Program (CMIP) transaction.

4.18.2. A due process letter must be forwarded by the Shared Service Center to the debtor,

informing the debtor of the AF debt including applicable bank and processing fees. (T-1)

Returned check expenses are charged to the activity where the check was cashed.

4.19. Redemption of Returned Checks. If an individual approaches a Services activity wishing

to redeem a returned check based on a notification from his/her financial institution, activity

employees should advise the individual two attempts will be made to re-present the check. The

NAF Accounting Office is the redemption point for debtors who have received Shared Service

Center notification in writing of the debt and want to make a payment for returned checks at the

installation. The NAF Accounting Office must contact the Shared Service Center Credit &

AFMAN34-202 25 JUNE 2019 33

Collections Branch to determine the status of the debtor’s account before accepting payment. (T-

1) Do not accept a check to cover a returned check unless the individual provides documentation

they were not at fault, such as a letter from a banking facility acknowledging a bank error caused

the check to be returned; otherwise, accept only cash or money orders. (T-1) Do not accept a credit

card for payment as it is a violation of the Merchant Agreement between the Air Force and the

merchant credit card processing bank.

4.19.1. Installations may establish an allowance for doubtful accounts and accrue for these

write-offs. Installations should only do so if the amounts are consistent and large enough to

warrant an accrual. Installations will maintain these accounts, and adjust the allowance

accounts when notified by Shared Service Center of a write-off. Otherwise, treat these write-

offs as a normal period expense in the applicable activity cost center.

4.19.2. If payment is received at the installation, the NAF Accounting Office processes an

adjustment form to reverse the write-off. Otherwise, Shared Service Center reverses the write-

off when payment is received from the Treasury Offset Program and sent back to the

installation via cash transfer.

4.20. Suspension of Check Cashing Privileges. Activities must obtain the weekly check writers

report (suspension list) for cashier validation prior to accepting customer checks. (T-1) This list

is provided and maintained by the Shared Service Center. Persons who have issued returned

checks, (except those acknowledged in writing as bank errors) are placed on a check suspension

list. Mandatory suspension periods are:

4.20.1. First returned check: 3-month suspension. (T-1)

4.20.2. Two checks within 6 months: 6 month suspension. (T-1)

4.20.3. More than two checks within 6 months: 1-year suspension. (T-1)

4.20.4. Two or more 1-year suspensions: permanent suspension. (T-1)

4.20.5. Cashiers will not accept checks from individuals on the returned check or suspension

list, and will not accept checks from individuals without proper identification. (T-1)

4.20.6. The activity manager or designee must post a sign at the cashiers' area stating the

activity's check cashing policies and the penalties incurred on all returned checks. (T-1)

4.21. Disbursements. The proper office prepares and the Resource Management Flight Chief

or designee approves a disbursement request and submits to the Shared Service Center with proper

documentation specified in AFI 34-209, Nonappropriated Fund Financial Management and

Accounting. The Shared Service Center Accounts Payable (AP) Section will process the

disbursement request and send the check payment or Electronic Funds Transfer (EFT) to the

appropriate payee. Electronic Funds Transfer is the preferred method of payment even when using

the disbursement request process.

4.21.1. Overseas locations requiring use of check stock should refer to AFI 34-209 for

documentation supporting payments, protection of check-signing equipment, control of blank

checks, and check writing requirements. NAF Accounting Office use of facsimile signatures

34 AFMAN34-202 25 JUNE 2019

when using check-signing equipment is authorized. Data imprinted into the check Magnetic

Ink Character Recognition band (located at the bottom of the check) impedes check processing

procedures and causes rejects. Adjust the placement or replace signature plates imprint within

the check Magnetic Ink Character Recognition band. Refer to AFMAN 34-215, Procedures

for the Cash Management and Investment Program, for additional signature requirements.

4.21.2. The Resource Management Flight Chief or an alternate representative signs checks.

See AFMAN 34-215 for signature card requirements.

4.21.3. Do not make checks payable to cash. (T-1)

4.22. Force Support Coupon Controls. The FSS commander or director approves the use of,

and sets the value for all coupons. (T-1) Each coupon issued must have an expiration date and

clearly state its value and when, where, how, and who may use the coupons. (T-1) Activities use

coupons only as a promotional sales device and not as a credit system. To avoid abuse, control

coupons for free play not redeemed in conjunction with a sale, (e.g., free line of bowling, or round

of golf). Exception: These guidelines do not apply to coupons in national or local coupon

redemption programs available to the public.

4.22.1. Color code coupons issued on a recurring basis by series.

4.22.2. The activity manager or designee will maintain a list of the quantity of coupons printed

and issued, and advises the NAF Accounting Office of the quantity, series, type, and expiration

date of coupons issued. (T-1)

4.22.3. Activities do not redeem coupons for cash, or accept coupons for tips, gratuities,

payment of dues, or the purchase of concessionaire merchandise or services. (T-1)

4.22.4. Cashiers void or deface coupons upon receipt. Cashiers account for coupons on the

cashier's report, and attach them to the AF Form 1876 sent to the NAF Accounting Office.

4.23. National and Local Coupons. With the approval of the FSS commander or director,

activities within those states which permit coupon use in the private sector civilian stores may

participate in national or local coupon redemption programs. The FSS commander or director

approves on a case-by-case basis those activities who may participate.

4.23.1. The Resource Management Flight Chief will issue an operating instruction for coupons

including procedures and controls for the participating activities and the NAF Accounting

Office. (T-1) The Resource Management Flight Chief ensures the administrative and

accounting costs associated with the redemption program does not exceed benefits to the

customers or the activity.

4.23.2. The NAF Accounting Office submits coupons for redemption according to

manufacturer and distributor's requirements.

4.23.3. Activities with point-of-sale systems may program their registers to account for

coupons. Activities without point-of-sale account for coupons on a separate key. The total

local coupons separately from coupons on the cashier's report, and attaches them to the AF

Form 1876 sent to the NAF Accounting Office. Refer to AFI 34-209 for detailed accounting

instructions for coupons.

AFMAN34-202 25 JUNE 2019 35

4.24. Gift Certificates. Customers purchase gift certificates to redeem for goods and services.

Gift certificates are not coupons. Distribute and redeem for purchase value, not to exceed face

value. The activity will number gift certificates for control purposes (pre-numbering by the printer

is recommended) and specifies an expiration date. (T-1) The activity manager or designee reports

gift certificate issues and redemptions on AF Form 1875 and maintains a list of gift certificates

printed, issued, and redeemed by number. The list provides an audit trail for the other payables

subsidiary and the applicable general ledger account. To prevent any possible reuse, cashiers will

deface gift certificates at the time of redemption by writing or stamping void across the front of

the certificate. (T-1) At the end of the accounting period, the activity manager or designee

forwards a list of expired gift certificates and their amounts to the NAF Accounting Office.

4.25. FSS Gift Cards. FSS gift cards are pre-numbered to control issuance by maintaining an

accurate inventory of unused cards available for new activation (“sale”). In activities using the

VeriFone Vx-570 credit card swipe terminal, the gift card swipe transaction is processed

independent of the cash register/point-of-sale. The potential exists to load funds on the gift card

through the swipe treminal without recording a transaction into the cash register. Use of the credit

card swipe terminal must always be accompanied by an entry in the cash register/point-of-sale to

avoid any shortages for the business day between the activity AF Form 1876 and Gift Card Report.

(T-1) The FSS gift card may not be redeemed for cash and will not be replaced if lost or stolen.

(T-3)

4.25.1. Air Force Services Center Strategic Marketing (AFSVC/SVK) issues gift cards. The

process for ordering cards is through an “annual call” to the installations conducted by Air

Force Services Center Installation Support (AFSVC/SVI). Consider redistribution from other

activities before requesting additional gift cards from AFSVC/SVK if additional cards are

required prior to the annual call. Contact AFSVC/SVK to request additional cards. Upon

receipt of new cards, the NAF Accounting Office logs all gift cards using the sequential

numbers on the back of the card.

4.25.2. The NAF Accounting Office controls the unloaded gift cards, but not yet issued to an

activity. Maintain the cards in a secure, locked storage container. Use a locally devised form

to log in and issue cards to activity managers or authorized designee.

4.25.3. The NAF Accounting Office determines how many gift cards each activity receives;

issues them in sequential order; and the activity manager or authorized designee signs for the

gift cards.

4.25.4. Cashiers sign for receipt of ‘unsold’ gift cards. Cashiers record the gift card numbers

on the Controlled Documents Log (page 2 of the AF Form 1875) at the beginning of their shift.

At the end of their shift, cashiers annotate the cards activated and any un-activated cards may

remain on display. The number of cards sold are recorded on the AF Form 1875 and verified

at the end of shift. The next cashier logs in the remaining un-activated cards on their AF Form

1875. The AF Form 1876 will reflect the total activated cards for the day.

4.25.5. Managers must ensure all employees complete the sale transaction before activating a

new card and loading/reloading the purchased amount on the gift card. (T-1) Gift cards will

not be issued to patrons without the amount being “purchased” and loaded on the card. (T-1)

This also applies to amounts added to a previously purchased card.

36 AFMAN34-202 25 JUNE 2019

4.25.6. Activities using the AF Form 1875 to record cashier accountability, record card

redemptions on AF Form 1875 in Section V, Cashier Accountability, as a separate line item

from commercial charges, coupons, etc.

4.25.7. In addition to controlling the unsold/unused cards, managers must diligently monitor

daily cash shortages generated through automated merchant processing to ensure cards have

not been loaded without the corresponding sale amount rung in the cash register/point of sale

(POS). (T-1)

4.25.8. When performing the activity managers’ quarterly surprise/unannounced cash counts,

ensure the gift cards issued to cashiers are accounted for as either sold or on-hand.

4.25.9. After recording activated and loaded with the initial purchased amount cards “sold”

on the FSS Gift Card Activity Control Log, the activity no longer is required to track the use

of the cards. Redemptions are tracked using merchant process reporting with the Air Force

Central Funds.

4.25.10. Cards presented by patrons for “re-loading” (purchasing an additional amount to be

added to the card balance) are not tracked in the activity as a controlled form.

4.25.11. Record FSS Gift Cards “sold,” both new activations and card re-loads, as well as

cards redeemed, on AF Form 1876. Activities use AF Form 1878 for credit card charges,

issuances, and redemptions. Each charge must be a separate line item. (T-1)

4.26. Promotional Gift Cards. The FSS commander will establish a written policy on the use of

FSS gift cards for activity use, e.g., promotional events, to include establishing procedures for

approving dollar limitations, either recurring or on a case-by-case basis. (T-1)

4.26.1. When an authorized activity, without the ability to process gift cards (e.g., Fund

Administration, Marketing, etc.), issues approved promotional gift cards, the cards must be

activated or swiped in another NAF resale activity. (T-1)

4.26.2. FSS gift cards will not be used for employee on-the-spot awards, or other employee

incentives. (T-1) NAFs may not be used to award Appropriated Funds (APFs) employees or

military member, except where specifically allowed in AFMAN 34-201. (T-1)

4.27. Pre-numbered Forms. Pre-numbered or controlled forms/items are used in various

situations to establish cashier accountability or for tracking items of value. The activity manager

develops and the Resource Management Flight Chief or designee approves operating instructions

for controlling pre-numbered forms issued to the activity.

4.27.1. The NAF Accounting Office or designated personnel (separate from the user

operation) pre-numbers and issues the following forms when used in lieu of cash register

readings for cash accountability:

4.27.1.1. AF Form 1182, Youth Flight Register

4.27.1.2. AF Form 1400, NAF Vending/Amusement Machine Collection Report

4.27.1.3. AF Form 2555, NAF Collection Record, (also used for concessionaire

operations)

4.27.1.4. AF Form 2557, NAF Cash Receipt Voucher

AFMAN34-202 25 JUNE 2019 37

4.27.2. After issue by the NAF Accounting Office or designated personnel, the activity

manager controls the above forms and accounts for them on the back of AF Form 1875. The

cashier attaches forms used to the corresponding AF Form 1875 filed in the activity.

4.27.3. Activities use AF Form 1182 in addition to cash registers to provide other types of

accountability. The activity manager controls them according to the appropriate operational

instruction.

4.27.4. Theme park tickets, advance green fee cards, rounds played cards, and similar

instruments are also controlled forms. The Resource Management Flight Chief and activity

manager will develop local procedures for protecting unused stocks and maintaining

accountability for sales. (T-1) The NAF Accounting Office issues pre-numbered advance

green-fee cards to the activity manager, who controls and protects them at the activity.

4.27.5. For activities unable to support the use of the standard AF Catering software

(mandatory for club operations) to account for unique events such as wedding receptions,

special events, and parties, forms may be locally devised and pre-numbered to record receipts

or establish accountability. Locally devised forms must be submitted to AFSVC/FM for

approval. (T-1)

4.27.5.1. The Resource Management Flight Chief approves procedures for numbering and

controlling all special forms ensuring there is a connecting link between the document

outlining the requirements for the event and the special form used to establish the

receivable.

4.27.5.2. The activity manager purchases and controls special forms and pre-numbers

them prior to issue. Recommend the forms be pre-numbered at the printer. Activity

personnel advise the activity manager and Resource Management Flight Chief of any

missing documents immediately upon discovery. The activity manager provides the

Resource Management Flight Chief with written disposition on all missing pre-numbered

documents.

4.27.5.3. Upon completion of an event, if a payment is not made, forward the special form

to the NAF Accounting Office to establish the appropriate receivable.

38 AFMAN34-202 25 JUNE 2019

Chapter 5

ESTABLISHING AND CONTROLLING CHANGE AND IMPREST FUNDS

5.1. Establishing Change Funds. The Resource Management Flight Chief or site commander

(at isolated or remote locations) authorizes the establishment and amount of all change funds

subject to fund storage limitations established in AFI 31-101. See Chapter 3 of this instruction.

5.1.1. Activities will use change funds only for making change, cashing checks, and with

Resource Management Flight Chief approval, for making petty cash purchases and other

imprest fund requirements (refer to paragraph 5.2 for additional petty cash and imprest fund

uses). (T-1)

5.1.2. Excessive change funds present a potential for cash losses from theft and reduce the

amount of cash available for investment and other purposes. For these reasons, activities keep

change funds to a minimum. The Resource Management Flight Chief reviews all change fund

requirements and reduces change funds to the minimum required for operations. The Resource

Management Flight Chief will determine change fund requirements based on actual

requirements computed from 12 months of historical data, and revalidates each change fund

annually. (T-1)

5.1.3. The Resource Management Flight Chief will establish a squadron operating instruction,

outlining the procedures for the use, control, and protection of all change and imprest funds in

NAFI activities. (T-1) Supplemental operating instructions may be written for activities

requiring specific cash handling procedures. Activity managers ensure all cash-handling

employees perform their duties according to the procedures specified in the operating

instructions. All change and imprest cashiers/custodians, as well as all oversight and

supervisory individuals, must complete the mandatory initial and annual internal control

training through the FSS training manager. (See Chapter 2). (T-1)

5.1.4. Special Change Fund. The Resource Management Flight Chief may authorize a special

change fund for weekends, paydays, and special events. These special change funds are

usually issued to the activity the day before the weekend, payday, or event. The activity must

deposit the special change fund the first business day following the occasion. (T-3)

5.1.5. Slot Machine Change Fund. Change funds are authorized and issued by AFSVC

according to AFMAN 34-151, Gaming Operations Procedures.

5.2. Establishing Imprest Funds. Activities may use imprest funds for a designated purpose

with special controls and limitations. Subject to the limitations of this chapter, the Resource

Management Flight Chief or site commander approves the establishment and dollar amount of all

imprest funds. Authorized types of imprest funds are:

5.2.1. Petty cash fund (maintain funds for U.S. and foreign currency separately).

5.2.2. Special activity prize fund, used for special activities such as bingo, colorama, etc., as

approved by the Resource Management Flight Chief or site commander and FSS commander

or director.

5.2.3. Vending and amusement machine imprest fund.

AFMAN34-202 25 JUNE 2019 39

5.3. Use of Change Funds and Receipts in Lieu of Imprest Funds. At the discretion of the

Resource Management Flight Chief, activities and NAFIs who do not have an imprest fund (e.g.,

petty cash or special activity prize fund) may use change funds and receipts for petty cash

purchases and special activity prize fund requirements. Blanket approval for all activities to make

payments from change funds and receipts is unauthorized.

5.3.1. The Resource Management Flight Chief approves requests on a case-by-case basis

considering factors such as the size and mission of the requesting activity, and the amount of

the existing change fund.

5.3.2. The central cashier or activity cashier reimburses these change funds from daily receipts

after receipt of completed AF Form 1401, Air Force Petty Cash/Refund Voucher, with receipts

attached. Change funds are not reimbursed for advances made to individuals. Use AF Form

2557, to document all advances made from the change fund.

5.3.3. When the Resource Management Flight Chief approves payment from change funds

and receipts, the activity manager will designate, in writing, each cashier authorized to process

petty cash purchases and special activity prize fund requirements. (T-1) The activity manager

provides cashiers with a list of activity personnel authorized to approve transactions

reimbursed by change funds and receipts. The activity manager files a copy of the written

designations in the activity.

5.3.4. The Resource Management Flight Chief, in conjunction with the activity manager, will

prepare an operating instruction establishing cash control procedures and internal controls to

reimburse change funds from receipts. (T-1)

5.3.4.1. Provide detailed instructions for designated cashiers to follow.

5.3.4.2. Include the requirement stating cashiers accept only properly completed AF

Forms 1401.

5.3.4.3. Include guidelines for purchasing resale items using change funds, providing

receipts and updating the resale inventory.

5.3.5. Activity cashiers include on their AF Form 1875, purchases made from the change fund.

Cashiers attach completed AF Forms 1401, with receipts attached to the AF Form 1875, as

backup. The activity manager or designee consolidates all AF Forms 1875, on AF Form 1876,

for submission to the Shared Service Center. Forward hard copy AF Form 1876, including

attached AF Forms 1401 and receipts to the NAF Accounting Office as the office of record.

5.3.6. All other controls, procedures, and limitations for imprest and/or change funds in AFI

34-209, remain in effect and apply to petty cash purchases and special activity prize fund

requirements made from change funds and receipts.

5.4. Change Fund Accountability. The Resource Management Flight Chief establishes and

maintains cash accountability for change funds at all times, using AF Form 2557.

5.4.1. The activity manager signs for all change funds using AF Form 2557. (T-1) File the

original receipt in the activity life of the fund file in the NAF Accounting Office.

5.4.2. The activity manager, in turn, obtains a signed AF Form 2557, from designated or

general change fund cashiers upon receipt of the funds.

40 AFMAN34-202 25 JUNE 2019

5.4.3. Designated or general change fund cashiers, in turn, get receipts from other cashiers

issued funds.

5.4.4. Cashiers sign for cash and accountable documents using AF Form 1875. Cashiers turn

in their daily change fund and receipt at the close of business, obtaining a signed receipt

(bottom of AF Form 1875) for total funds turned in.

5.4.5. Signed AF Forms 1875 remain in the issuing change fund until turn-in occurs.

5.4.6. The activity manager may employ a general change fund cashier (head cashier)

responsible for all activity receipts and ensuring all personnel handling funds follow

established cash control procedures. This cashier counts the general change fund daily using

AF Form 2556, and attaches the original to the AF Form 1876, submitted to the NAF

Accounting Office.

5.4.7. Store change funds overnight at the activity in an approved storage container or locked

safe (refer to AFI 31-101) so they are available to start the following day's activities. Activities

not equipped to store change funds overnight deposit them in a central depository, designated

by the Resource Management Flight Chief, which provides the required safeguards. (See

Chapter 3.)

5.5. Replenishment of Change Funds. Activities replenish change funds using the following

options:

5.5.1. Exchanging customer's checks for cash from cash receipts; bringing the change fund up

to the authorized level.

5.5.2. Exchanging customer's checks for cash at the central cashier depository (refer to

paragraph 4.7.3).

5.5.3. Exchanging completed AF Forms 1401, with receipts attached for cash from daily

receipts.

5.6. Change Fund/Receipts Turn-In. Activities use the following procedures whenever a

cashier turns in their change fund and receipts:

5.6.1. The activity manager or designee produces end of shift report from the point-of-sale

system or cash register. End of shift report is used to validate submission of daily receipts after

receipt of funds from the individual cashiers.

5.6.2. The cashier counts all cash (less reimbursements to the change fund for completed AF

Form 1401s), checks, credit card charges, coupons, and charge slips and records the

information on AF Form 1875, or applicable point-of-sale system report.

5.6.3. The cashier also documents the accountability of all pre-numbered forms on page 2 of

the AF Form 1875.

5.6.4. The cashier transfers all cash and documentation to the activity manager or designee

who verifies the count, computes cash accountability, and records the information on AF Form

1875.

5.6.5. Both individuals sign AF Form 1875, and the cashier keeps the receipt portion.

5.6.6. The activity manager or designee attaches supporting documents to the AF Form 1875,

and secures the funds.

AFMAN34-202 25 JUNE 2019 41

5.6.7. Cashiers are not permitted to retain overages nor are they permitted or required to make

up shortages. (T-1) Shortages are treated as cash losses and resolved according to Chapter 8.

Record overages or shortages to the activity cost center where incurred. The Activity Manager

or designee establishes method to track individual cashier overages and shortages.

5.6.8. The activity manager or designee closely monitors excessive no sale rings and refund

vouchers as they represent potentials for cash manipulation.

5.7. Petty Cash Imprest Fund. The primary function of this imprest fund is for small purchases.

The dollar amount of this fund should be minimal. The Resource Management Flight Chief

delegates purchasing authority to utilize petty cash (refer to AFMAN 64-302, Nonappropriated

Fund (NAF) Contracting Procedures). Do not circumvent NAF purchasing policies and

procedures. (T-1)

5.7.1. The activity manager or designee will ensure individuals advanced petty cash funds

return invoices for items purchased, and all unused cash within two working days. (T-1)

Include this procedure in OIs. Exception: Individuals advanced petty cash funds in

conjunction with out-of-town conferences, workshops, etc., must return invoices and unused

cash within two workdays of returning to the home installation. (T-3)

5.7.2. The Resource Management Flight Chief will set petty cash fund levels of not more than

$3,000 per activity. (T-1) Maintain authorized limits in the life of the fund file in the NAF

Accounting Office and a copy in the activity. The Resource Management Flight Chief,

working with the activity manager, sets the required petty cash fund level. Levels should vary

between activities. Consider the following factors in establishing petty cash fund levels:

5.7.2.1. The solvency of the fund.

5.7.2.2. Established fund storage limitations (refer to AFI 31-101).

5.7.2.3. Type of storage container and facility available to the activity.

5.7.2.4. Volume of transactions; average number and dollar value of monthly

disbursements based on historical review.

5.7.2.5. The activity's mission.

5.7.2.6. Impact on cash flow.

5.7.2.7. Isolation of the activity.

5.7.3. NAFIs do not use petty cash funds to pay employees except as written below,

entertainers, or individual services contractors. Exception: NAFIs located at remote or

isolated sites may pay for entertainment or individual services using petty cash. Payments for

entertainment and individual services requires a contract (refer to AFMAN 64-302). On

occasion, employee pay may also be paid from either general change or petty cash fund when

conditions warrant such payment, upon approval of Resource Management Flight Chief or

designee. However, this practice must be minimized as much as possible. (T-1)

5.7.4. If authorized by the Resource Management Flight Chief, petty cash custodians may

make refunds from petty cash funds. The activity manager or designee must approve all

refunds. (T-1)

42 AFMAN34-202 25 JUNE 2019

5.7.5. Payment for any single purchase, repair, or refund, as authorized above, from a US or

foreign currency petty cash imprest fund may not exceed $500. (T-1) Do not split expenditures

from petty cash funds to circumvent the limitations.

5.8. Government Purchase Card (PCard) for NAF Purchases. The NAF PCard is the

preferred method of payment for NAF purchases. Using the NAF PCard streamlines purchasing

and reduces high administrative costs associated with the processing of purchase orders and vendor

payments. The NAF PCard is the only authorized credit card for NAF purchases. (T-1) To

implement the use of the NAF Government Purchase Card for NAF small purchases within FSS

NAF activities, the Resource Management Flight Chief follows AFI 34-275, Air Force

Nonappropriated Fund (NAF) Government Purchase Card Program. In the case of credit card

abuse, the Resource Management Flight Chief takes appropriate action according to Chapter 8.

5.9. Special Activity Prize Imprest Fund. NAFIs use the special activity prize imprest fund

for the purpose of awarding cash prizes for business activity special events such as bingo.

5.9.1. The Resource Management Flight Chief will ensure the established level of cash for the

prize fund will not exceed the total cash for the total sessions of play. (T-1)

5.9.2. Activities are authorized to make payment of cash prizes from the cash receipts or

change fund.

5.9.3. The activity pays all individual prizes by cash. The activity issues Internal Revenue

Service (IRS) Form W-2G from the Services Information System for cash prizes of $1,200 or

more for one game, at the time of the win. Unless the customer requests taxes be withheld,

taxes are not required to be withheld on bingo winnings.

5.9.4. If the winner elects to receive a check or electronic funds transfer, the activity prepares

and submits AF Form 2539 with a copy of a similar locally developed Bingo Activity Report

for other special activities to the Shared Service Center through the NAF Accounting Office

the first business day after the day of the win.

5.9.5. Forward a copy of the IRS Form W-2G to the NAF Accounting Office the next business

day with the activity reimbursement request. The activity manager will ensure either

replenishment or deposit of the special activity prize fund on the first workday after completion

of a session of play. (T-1) The activity manager specifies in an operating instruction if the

funds are replenished or deposited. Note: If there is only one or two special activity sessions

per month, it may be advantageous to deposit the funds to reduce the amount of idle cash on

hand.

5.9.6. AFSVC/FM centrally reports the data electronically to the IRS at the end of the calendar

year. Although the information will be centrally reported, installations are responsible for

depositing and reporting withholding taxes and completing IRS Form 945 by 31 January each

calendar year. (T-1) An IRS Form 1099-MISC is not issued for bingo winnings. (T-0)

5.10. Vending and Amusement Machine Imprest Fund. Activities use this fund for the

reimbursement of vending and amusement machine malfunctions and maintenance testing.

5.10.1. A designated cashier may advance the fund to other individuals such as the game room

attendant, or maintenance worker, etc., to conduct maintenance operations or customer refunds

using AF Form 1401.

AFMAN34-202 25 JUNE 2019 43

5.10.2. The Resource Management Flight Chief and activity manager ensures the size of the

imprest fund is sufficient for conducting a month's business without replenishment.

5.11. Replenishment of Imprest Funds. Activities replenish imprest funds as many times as

necessary, but always as of the last workday of the month. The activity manager or designee

approves the AF Form 1401 supporting requests for replenishment.

44 AFMAN34-202 25 JUNE 2019

Chapter 6

CONTROL GAMING, AMUSEMENT, MUSIC, AND VENDING MACHINES

6.1. Gaming Operations Controls and Procedures. The Air Force Gaming Program is an Air

Force centrally managed and operated program. All activities with slot machine operations must

implement and strictly follow AFSVC developed internal control procedures to protect the

integrity of the slot machine program. (T-1) AFMAN 34-151 contains specific policies,

procedures, and responsibilities for the operation of the slot machine program.

6.1.1. Waivers. Air Force Services Center, Programs Directorate (AFSVC/SVP) and

AFSVC/FM approve, in writing, all waivers to established policy and internal control

procedures for the slot machine program.

6.1.2. Slot Machine Change Fund. AFSVC/SVP and AFSVC/FM provide and establish the

kiosk fill-levels and activity change fund requirements to enable proper machine operation

between harvest dates, and maintain sufficient cash levels for customer use. The Resource

Management Flight Chief issues the slot machine change fund for use by the central cashier

and activity for slot machine operations.

6.2. Amusement Machine Operations. The installation commander approves operation of

vending and amusement machines in activities which are not part of the Army and Air Force

Exchange Service (AAFES) and are not in direct competition with them (refer to AFI 34-101, Air

Force Morale, Welfare, and Recreation (MWR) Programs and Use Eligibility). Within the

continental United States (CONUS), District of Columbia, Puerto Rico, American Samoa, Guam,

and the Virgin Islands, establishment and operation of vending facilities/programs are subject to,

Department of Defense Instruction (DoDI) 1152.03_AFI 34-206, Vending Facility Program For

The Blind on Air Force Property. Vending and amusement machines may be NAFI- or

concessionaire-owned. Specific controls apply to each type of machine.

6.3. NAFI-Owned Machines. All NAFI-owned machines should have meter capability and

must have a 2-lock system (one lock for the machine and a separate lock for the cashbox). (T-3)

Control procedures require that the activity manager keep the machine keys and the NAF

Accounting Office control the cashbox keys. (T-3) The Resource Management Flight Chief

develops a comprehensive operating instruction to cover the removal of cash and the stocking of

machines, including the internal controls specified below. (T-3)

6.4. Cash Collection of NAFI-Owned Machines. To remove cash from a machine, an

individual appointed by the FSS commander or director, obtains the cashbox key from the NAF

Accounting Office.

6.4.1. When it is not practical or economical for the NAF Accounting Office to safeguard the

cashbox keys for machines located at SV activities, the FSS commander or director appoints

the individuals who will keep the cashbox keys and who must be present during cash collection.

The activity manager or designee counts and verifies the cash amount collected, and returns

the keys immediately to the NAF Accounting Office, (or to the individuals appointed to keep

the keys). (T-3)

AFMAN34-202 25 JUNE 2019 45

6.4.2. When a collection or exchange is made, the activity manager or designee verifies the

amount of all cash removed, records the meter readings (when applicable), and signs the pre-

numbered AF Form 1400 with the individual appointed to make the collection. The activity

cashier completes an AF Form 1875 for vending and amusement machine receipts, attaches

the original AF Form 1400, and files with all other AF Forms 1875 for the day's business. Use

the remaining two copies of AF Form 1400 as needed.

6.4.3. When metering devices are available, the individual making the collection records the

meter readings on AF Form 1400 and the activity manager or designee compares the number

of plays to the cash collected. Several factors can cause an apparent cash variance, such as;

defective meters, errors in recording meter readings, and counting of cash, etc. The following

general guidelines apply:

6.4.3.1. The activity manager or designee flags any machine having a cash collection

difference in excess of $5.00 and checks it on a subsequent report. If continuing variances

exist, the activity manager notifies the Resource Management Flight Chief or maintenance

technician to correct or repair the problem.

6.4.3.2. If willful misconduct is observed or suspected, the activity manager documents

the observation and notifies the Resource Management Flight Chief and FSS commander

or director who will take action according to Chapter 8. (T-1)

6.4.4. If the internal control requirement for two individuals to make cash collections from

NAFI-owned vending machines is deemed impractical or uneconomical, activity managers

may request approval of a local waiver. The Resource Management Flight Chief and FSS

commander or director considers these factors before recommending the installation

commander approve a waiver:

6.4.4.1. Location of vending machines and availability of two individuals to empty the

machines

6.4.4.2. Implementation of alternate control procedures to verify cash collected

6.4.4.3. Existing manufacturer designed internal control devices, such as counters

6.5. Restocking Vending Machines. Activities restock machines and collect cash on a

scheduled basis. Make the last collection as close to the end of the month as possible. To restock,

use AF Form 1735, NAF Interfund Purchase Order, or AF Form 2533, Transfer Between Cost

Centers, as appropriate, to record the transaction when supplying merchandise to vending

machines from a NAF storeroom or from another activity.

6.6. Customer Refunds. Activity cashiers use AF Form 1401 to reimburse customers for cash

lost because of inoperative machines. The activity manager or designee approves all refunds.

6.7. Concessionaire-Owned Machines. The Resource Management Flight Chief specifies the

merchandise, key and cash controls, and cash collection procedures for all concessionaire-owned

machines. All machines require written contracts which specify the number and type of machines

covered, percentage of income accruing to the NAFI, and contain the following provisions:

6.7.1. Amusement, music, and vending machines require meter capability and at least 2-lock

system (one lock for the machine and one lock for the cashbox). The concessionaire keeps the

machine keys and the NAF Accounting Office maintains the cashbox keys using the same

procedures specified for NAFI-owned machines (refer to paragraph 6.3).

46 AFMAN34-202 25 JUNE 2019

6.7.2. If a concessionaire cannot supply machines with a 2-lock system at a price comparable

to a 1-lock machine, the Resource Management Flight Chief applies the following controls for

a 1-lock machine and specifies them in the contract:

6.7.2.1. The NAF Accounting Office retains the one key to the machine in a locked pouch.

6.7.2.2. The activity manager retains the key to the locked pouch.

6.7.2.3. Coin collection and maintenance of the machines requires the presence of an

independent observer (IO) from the NAF Accounting Office or the activity, and the

concessionaire's representative (unless the concessionaire provides a written waiver to the

right to be present).

6.7.2.4. Restock machines and collect cash on a scheduled basis, but not less than once

each month. (T-3) If making more than one collection, make the last collection as close to

the end of the month as possible.

6.8. Cash Collection of Concessionaire-Owned Machines. When making collections or

exchanges from concessionaire-owned machines, the activity manager or designee verifies the

amount of all cash removed, records the meter readings, and with the concessionaire, signs the

pre-numbered AF Form 1400, and gives a copy immediately to the concessionaire. When metering

devices are available, the procedures in paragraph 6.4.3 apply.

6.8.1. The activity cashier completes an AF Form 1875 for vending and amusement machine

receipts, attaches a copy of the AF Form 1400, and files with the other AF Forms 1875 for the

day's business. The cashier attaches the original AF Form 1400 to the AF Form 1876

forwarded to the NAF Accounting Office.

6.8.2. The NAF Accounting Office maintains a cumulative record of receipts and other records

necessary for ensuring receipt of all proceeds due the activity when concessionaire agreements

do not provide for a sharing of the proceeds upon emptying machines. The NAF Accounting

Office general ledger entry reflects only the income accruing to the NAFI. The NAF

Accounting Office uses the original AF Form 1400 to support payment to the concessionaire

of proceeds not shared upon emptying machines.

6.8.3. The Resource Management Flight Chief may recommend the installation commander

waive the procedural requirements in this instruction for collecting cash from concessionaire-

owned amusement, music, and vending machines on a case-by-case basis considering the

number of and distance between machines.

AFMAN34-202 25 JUNE 2019 47

Chapter 7

CONTROL OF MERCHANDISE AND PROPERTY

7.1. Merchandise and Property. All FSS personnel must protect NAF assets under their

control. (T-1) The Resource Management Flight Chief, or other authorized custodian, security

forces, and other responsible agencies provide staff and operational assistance as required.

7.1.1. The Resource Manager will prepare operating instructions providing guidance for

storing, transporting, and utilizing all property and monitoring compliance. (T-1)

7.1.2. Activity managers coordinate with the security forces to establish periodic patrols of

areas storing NAF property, particularly during night hours. Activity managers will prepare

an operating instruction outlining methods of surveillance for detecting and preventing

misappropriation or misuse of property. (T-2)

7.1.3. Certain kinds of NAF assets, such as aircraft, firearms, and boats, require special

protection and control not specifically related to conservation, but to safety. Activity managers

ensure protection of these assets meets the safety and control requirements in AFI 31-101,

AFMAN 34-204, AFMAN 34-208, AFI 34-209, and individual activity operations procedures

AFIs.

7.2. Protecting Resale Merchandise. The degree of security resale merchandise requires

generally depends upon the size of the inventory, value of individual items, accessibility of the

merchandise to patrons, limitations of visual surveillance, sensitivity of resale items (firearms,

liquor, etc.) and the physical characteristics of the facility.

7.2.1. Activity personnel will not leave merchandise unattended during resale activity

operating hours. (T-1)

7.2.2. Activity personnel will secure the facility when the resale activity closes. (T-1)

7.2.3. Activity managers establish a single entry and exit control point for surveillance of

walk-in type sales locations such as arts and crafts facilities and golf pro shops. (T-3)

7.2.4. Activity personnel need to take care and consider the value and vulnerability of location

of items displayed to encourage sales.

7.2.5. Activity managers use secure inside storage areas whenever possible. Lock all outside

storage areas unless one or more authorized individuals are present, and use lighting and

fencing for additional security.

7.3. Central Storeroom Facilities. The FSS commander or director may establish a central

storeroom for receiving and distributing common supplies and merchandise to various activities.

The FSS commander or director will ensure the central storeroom is a secure facility. (T-1) Where

possible, the facility should be large enough to house all supplies and merchandise under a single

roof, and:

7.3.1. Provide adequate temperature controls in the facility to avoid damage to foodstuffs.

7.3.2. Provide a loading dock convenient to the storeroom, if possible.

48 AFMAN34-202 25 JUNE 2019

7.3.3. Provide secure exterior doors and windows protecting assets and minimize the

possibility of forced entry, (e.g., solid doors and windows and strong locks, not easily forced).

The use of window bars is recommended.

7.4. Ticket and Tour Operations. These operations often maintain a substantial inventory of

tickets, either on consignment or purchased with NAFs which must be protected. NAF purchased

tickets for resale are assets of the activity included in the definition of resalable inventory. Activity

personnel ensure protection of all tickets. The activity manager will prepare an operating

instruction to control and protect all tickets. (T-1)

7.5. Control and Use of Free or Donated Items. Activities may accept free or donated items

to give away to FSS customers as a sales promotion according to AFMAN 34-201 and AFI 34-

108, Commercial Sponsorship and Sale of Advertising. The FSS commander or director approves

procedures for controlling and utilizing free or donated items according to AFI 34-209.

7.6. Consignment Inventory. Consigned merchandise is not NAF property. Activities account

for these items as resale merchandise inventory and protect them accordingly. The activity

manager issues an operating instruction for control and protection of all consignment items. Refer

to Training Aid NA-5, Tickets Purchased or Consigned for Resale, available on the CAC enabled

Air Force Services Center Portal.

AFMAN34-202 25 JUNE 2019 49

Chapter 8

LOSSES AND COLLECTION ACTIONS

8.1. Definition of Loss. A loss occurs when NAF assets (including cash or cash equivalents,

fixed assets, resale merchandise, consumable supplies, and securities) are lost, destroyed,

damaged, or have to be paid out as a result of a natural disaster, accident, unexplained

disappearance, or acts of individuals, firms or groups. In addition, the following situations are

considered losses for the purposes of this chapter.

8.1.1. Consider any unreconciled asset, liability, or equity account to be a loss if the

adjustment is required to bring the general ledger and related subsidiary accounts into balance,

results in a decrease to fund equity. For example, an unreconciled balance between the General

Ledger Account Code (GLAC) 1010000, Cash-in-Bank and Cash Management & Investment

Reports (CMIP) reports at the end of any given accounting period is a loss if the correcting

entry reduces GLAC 1010000 for the NAFI.

8.1.2. Claims submitted under the following NAF insurance programs are considered losses:

8.1.2.1. Asset

8.1.2.2. Liability

8.1.2.3. Aero club hull

8.1.2.4. Aero club liability.

8.2. Reporting Losses. All AF military and civilian personnel have an individual responsibility

for preventing losses, and, when a loss occurs, promptly notifying the proper authorities. (T-1)

Commanders are responsible for prompt detection, proper investigation, and appropriate corrective

action. (T-1) Individuals reporting NAF losses are protected from reprisal.

8.2.1. Notify the security forces, the Resource Management Flight Chief, and FSS commander

or director of any type of loss resulting from forceful entry, or malicious damage to NAF

property, as soon as discovered. The security forces may investigate such incidents or refer

them to the Air Force Office of Special Investigations (AFOSI) according to AFI 71-101V1,

Criminal Investigations Program.

8.2.2. Notify the AFOSI of incidents appearing to involve criminal activities.

8.2.3. Notify Air Force Services Center Banking Products and Services Branch

(AFSVC/FMTB) of any unreconciled balances including cash overages/shortages between

GLAC 1010000 and the CMIP report at the end of any given accounting period.

8.2.4. Provide notification of losses resulting in claims under the insurance program according

to AFMAN 34-208.

8.3. Determining Value. AFSVC/FM pays a claim when it receives reasonable evidence

indicating the installation suffered a covered loss and the Resource Management Flight Chief has

accurately determined the value of the loss. Where more than one item is involved, use the

collective (total) amount of the loss as the basis for action under this chapter. See AFMAN 34-

208 to value insurance claims.

8.3.1. Use the actual cash value to determine the amount of a loss.

50 AFMAN34-202 25 JUNE 2019

8.3.2. The value of a NAF property loss is the original cost less depreciation - the book value

of the asset. Zero value or fully depreciated assets are not reimbursed.

8.3.3. Compute the value of resalable inventories and supplies at cost or replacement value,

whichever is less.

8.4. Documenting Losses. Document each loss, even those caused by acts of nature. Include

sufficient information to show what happened, who was responsible, what should be done about

it, and how to prevent similar losses in the future. It is not necessary to duplicate the investigative

work of the security forces, AFOSI, or other federal and local agencies. Security forces reports

may become part of the Services case file. Do not include AFOSI reports of investigation in the

case file; use extracts and summaries according to AFI 71-101V1. Comply with all restrictions

and instructions placed on the investigative reports of other federal and local agencies. Since the

investigative reports will focus on criminal allegations, conduct other inquiries as necessary to

determine the administrative actions needed to reduce the potential for future losses.

8.5. Resolving Losses. Resolve losses based on the dollar amount and type of loss.

8.5.1. For losses up to and including $50, the activity manager will conduct an informal

review, document the results, and with the written approval of the Resource Management

Flight Chief, file the documentation in the activity. (T-3) If the review indicates negligence

(simple or gross) or willful misconduct, the activity manager will notify the Resource

Management Flight Chief and the FSS commander or director immediately so further action

may be taken. (T-1)

8.5.2. For losses over $50 up to and including $250, use a memorandum attached to the

cashier's report for cash shortages. The activity manager will conduct a review and provides a

brief written explanation to the Resource Management Flight Chief. (T-1) If the review

indicates negligence (simple or gross) or willful misconduct, the activity manager will notify

the FSS commander or director immediately to take further action. (T-1)

8.5.3. For losses over $250 up to and including $2,500, and for losses of $250 or less which

appear to involve negligence or willful misconduct, the FSS commander or director will

appoint an individual to conduct an inquiry. (T-1) Inquiries are less formal, less lengthy, and

less costly than investigations. The individual conducting the inquiry examines available

reports and documents pertinent to the loss, and interviews individuals having knowledge of

the circumstances surrounding the loss. Affidavits are not required. The Resource

Management Flight Chief reviews the report of inquiry for completeness and submits it to the

FSS commander or director for action. Refer reports of losses appearing to involve simple or

gross negligence or willful misconduct through the local Installation Comptroller and the

Office of the Staff Judge Advocate to the installation commander for action. The report of

inquiry must specifically address the following:

8.5.3.1. The nature and amount of loss. (T-1)

8.5.3.2. The date and place where the loss was discovered. (T-1)

8.5.3.3. The circumstances under which the loss occurred. (T-1)

8.5.3.4. The adequacy of corrective actions taken or recommendations for appropriate

corrective actions to be taken. (T-1)

8.5.3.5. Any indications of negligence (simple or gross) or willful misconduct. (T-1)

AFMAN34-202 25 JUNE 2019 51

8.5.3.6. The name and grade of the person or persons who caused or contributed to the

loss, if known, and an appropriate recommendation to assess or not to assess pecuniary

liability. (T-1) If employed by the Federal Government, indicate if paid by APFs or NAFs.

8.5.4. Instead of, or in addition to an inquiry, the installation commander may require an

investigation whenever he or she deems such action necessary to protect the interests of the

Air Force, or to determine more accurately whether pecuniary liability is properly assessable

or claims action is warranted.

8.5.5. For losses which exceed $2,500, the installation commander will appoint an

investigating officer, independent of any NAFI under the purview of the NAFs Council to

conduct an investigation. (T-1) The investigating officer complies with the investigative

guidance provided in AFI 90-301, Inspector General Complaints Resolution. Conduct

investigations as expeditiously as possible to allow the installation commander to act on the

completed report within 60 days after discovery of the loss. If extenuating circumstances make

it impossible to meet this deadline, the investigating officer submits an interim status report to

the installation commander not less than 5 days before the end of the 60-day period. Provide

a copy of the interim report to the Resource Management Flight Chief. The report of

investigation must specifically address the elements in paragraph 8.5.3. The Resource

Management Flight Chief reviews the report of investigation for completeness, and submits

the report through the FSS commander or director, the installation Comptroller, and the Judge

Advocate Office, to the installation commander for action. (T-1)

8.6. Assessing Pecuniary Liability. Reports of inquiry and investigation must identify, to the

extent practical, those whose actions caused or contributed to a loss, and make specific

recommendation as to whether or not the commander should hold them financially responsible for

the loss and damages. The investigating officer will prepare recommendations to the installation

commander for assessing pecuniary liability according to the definitions of simple negligence,

gross negligence, and willful misconduct. (T-1) Prepare recommendations within these

guidelines:

8.6.1. A military member of the uniformed services or a civilian employee of the Federal

Government (APF or NAF), may be held pecuniary liable for a loss caused by their gross

negligence or willful misconduct. In cases where gross negligence or willful misconduct is

found, involuntary collection from pay cannot exceed total liability.

8.6.2. In addition to the above, NAFI-assigned or employed personnel on duty (including

military assigned, and APF and NAF employees) may be held pecuniary liable for any loss

caused by their simple negligence. In cases where simple negligence is found, limit involuntary

collection from pay to one month's base pay.

8.6.3. Aero club members may also be held pecuniary liable for any loss caused by their simple

negligence.

8.6.4. When a loss is caused by individuals, firms, or groups other than those identified above,

the local Staff Judge Advocate uses gross or simple negligence, willful misconduct, or any

other conduct creating liability recognized by the civil jurisdiction in which the loss occurred

as the basis for claims action under AFI 51-306, Claims For and Against the Air Force.

52 AFMAN34-202 25 JUNE 2019

8.6.5. Government employees (including assigned military personnel, APF civilians, and NAF

civilians) cannot be assessed pecuniary liability for NAFs paid out to satisfy third-party claims

resulting from their conduct while acting within the scope of their federal offices or

employment.

8.6.6. Limit assessments of joint and several pecuniary liability to cases where the loss

resulted from the combined action or inaction of two or more persons.

8.6.7. When the investigating or inquiring officer intends to recommend assessment of

pecuniary liability, he or she advises each named person of the basis on which he or she may

be held pecuniary liable. Each person is also advised he or she may submit any matters in

mitigation or defense. The investigating or inquiring officer reviews all facts and

circumstances, including any matters in mitigation or defense, and includes them in the report

of investigation with appropriate recommendations for action by the installation commander.

8.6.8. Action by the Installation Commander. Submit completed reports through the local

Installation Comptroller and Office of the Staff Judge Advocate to the installation commander

for action. The installation commander carefully reviews and acts on each report, takes proper

action with respect to those who caused or contributed to the loss, and implements corrective

measures to reduce the potential for recurrence.

8.6.9. Commanders have a wide range of options in dealing with pecuniary liability. Do not

overlook the normal range of administrative and disciplinary personnel actions. Additional

training and more clearly defined procedures may also be of value in reducing the potential for

recurrence.

8.6.10. Where appropriate, the installation commander assesses pecuniary liability.

Responsibilities include: Advising the person held pecuniary liable of their appeal rights as

prescribed in paragraph 8.7. Notifying all persons held jointly and severally liable; each

remain individually liable for the total uncollected amount until the entire amount of the loss

is paid. In the interest of fairness, those responsible for collections should generally attempt

to collect an equal part from each person held liable. When such attempts fail, collection in

full is made from the person or those persons who are liable and from whom collection can be

made.

8.6.11. When the loss results from negligence or willful misconduct of a military member of

the uniformed services, or a civilian employee of the Federal Government, the installation

commander refers the file to the Resource Management Flight Chief. The Resource

Management Flight Chief takes collection action, where appropriate.

8.6.12. When the loss was caused by any other person's negligence, willful misconduct, or any

other conduct creating liability recognized by the civil jurisdiction in which the loss occurred,

the installation commander refers the file to the local Office of the Staff Judge Advocate for

appropriate claims action under AFI 51-306.

8.7. Appeals of Assessments of Pecuniary Liability. Military members or civilian employees

of the Federal Government (APF or NAF) may appeal the assessment of pecuniary liability.

AFMAN34-202 25 JUNE 2019 53

8.7.1. The installation commander has the authority to render final decisions on appeals

involving pecuniary liability claims of $10,000 or less. Retain copies of all decisions in the

life of the fund file of the NAFI involved. The installation commander has 15 calendar days

from receipt of the appeal to render a decision. Forward all appeals of claims over $10,000

through command channels to Air Force Services Law Division for further review and

recommendation to the AFSVC Commander.

8.7.2. Submit appeals within 3 months of the assessment to the installation commander who

assessed pecuniary liability, or their successor. State specifically the alleged errors or

irregularities relied upon by the appellant.

8.7.3. The installation commander furnishes one copy of the appeal file to the appellant's

paying office responsible for processing the indebtedness. The paying office files the copy of

the appeal file with the indebtedness notice and suspends collection action until a final decision

on the appeal has been made.

8.7.4. Upon receiving an appeal, the installation commander verifies the facts contained in the

appeal to the extent possible, secures a legal review and opinion on the appeal, and reconsiders

the assessment action giving full consideration to the matters presented in the appeal. The

installation commander then revokes or sustains the assessment action, or requires further

inquiry or investigation, and resubmission of the report.

8.7.5. If further inquiry or investigation is required, the installation commander secures a legal

review and opinion on the revised report and appeal, reconsiders the assessment action, again

giving full consideration to the matters presented in the appeal, and either revokes or sustains

the assessment action.

8.7.5.1. If the installation commander revokes the assessment action, he or she informs the

appellant, and notifies the paying office to refund all previous collections.

8.7.5.2. If the installation commander sustains the assessment action, he or she forwards

the appeal, with a local Office of the Staff Judge Advocate legal review and opinion, to the

Air Force Center Law Division, AFSVC/JA, 2261 Hughes Ave, Ste. 156, JBSA-Lackland

AFB TX, 78236-9854; who prepares a memorandum recommending approval or

disapproval of the appeal. The appeal file must contain the following:

8.7.5.2.1. The memorandum

8.7.5.2.2. The appeal

8.7.5.2.3. The installation-level legal review

8.7.5.2.4. The assessment of pecuniary liability

8.7.5.2.5. The report of inquiry or investigation

8.7.5.2.6. Any other documentation considered pertinent to the assessment and appeal.

8.7.5.3. After review of the appeal file, Air Force Services Center, Office of Counsel,

AFSVC/JA forwards it to the AFSVC Commander for action.

54 AFMAN34-202 25 JUNE 2019

8.7.5.4. The decision of the AFSVC Commander on the appeal is final. The AFSVC

Commander may approve, disapprove, or modify the assessment action, or return the file

for further inquiry or investigation or analysis. The AFSVC Commander notifies the

appellant of the decision on the appeal through command channels, and instructs the

appellant's paying office to refund previous collections or to resume collection action as

appropriate.

8.8. Collection Actions. The Resource Management Flight Chief immediately initiates

collection actions on all losses where the installation commander assesses pecuniary liability. The

Resource Management Flight Chief actively pursues restitution from individuals’ assessed

pecuniary liability for all losses including those covered by the Air Force Insurance Fund. The

NAF Accounting Office establishes a claim against the responsible person, sets up a file for all

pertinent documents, and:

8.8.1. Notifies Air Force Services Center, Benefits and Insurance Branch (AFSVC/SVXHI),

2261 Hughes Ave, Suite 156, JBSA-Lackland AFB TX 78236-9854, the responsible individual

for the claim intends to make restitution.

8.8.2. Forwards all payments to offset the payment made from the Air Force Insurance Fund

immediately upon receipt to AFSVC/SVXHI, 2261 Hughes Avenue, Suite #156, JBSA-

Lackland AFB TX 78236-9854.

8.8.3. Upon notification from AFSVC/SVXHI to expect restitution of the claim, AFSVC/FM

establishes a receivable in the accounting system for the amount owed, and keeps

AFSVC/SVXHI advised of the payment status.

8.8.4. The servicing Staff Judge Advocate pursues claims action against parties other than

members of the uniformed services and employees of the Federal Government. The Resource

Management Flight Chief establishes a claim file and tracks restitution in these cases.

8.8.4.1. The FSS must give the debtor the opportunity to voluntarily pay the debt. (T-0)

8.8.4.2. If the debtor does not voluntarily pay the debt, the Resource Management Flight

Chief personally reviews and verifies the accuracy and validity of the debt from an

administrative viewpoint, and takes collection action on the indebtedness as instructed in

this chapter.

8.8.4.3. If the debtor disputes the validity of the debt, he or she may submit an appeal

through the Resource Management Flight Chief and the FSS commander or director to the

installation commander. When a debtor submits an appeal, the Resource Management

Flight Chief suspends collection until the installation commander determines the outcome

of the appeal. Follow the appeal procedures in paragraph 8.7. Exception: This limitation

does not apply when the individual involved is an employee who the commander expects

to terminate their employment (voluntarily or involuntarily). In any such case, follow the

collection procedures in paragraph 8.11.

8.8.4.4. Claims Covered by Commercial Insurance. Claims asserted against a person for

any conduct causing a loss covered by commercial insurance, require the Resource

Management Flight Chief to:

8.8.4.4.1. Furnish the insurance company a preliminary notification of the loss

involved. Furnish proof of the loss under the terms of the insurance contract.

AFMAN34-202 25 JUNE 2019 55

8.8.4.4.2. Notify the insurance company of any collections made reducing the final

company’s liability.

8.9. Claims Involving Losses or Indebtedness. When initiating collection action for other

losses or indebtedness, excluding returned checks, caused by a member (or family member) of the

uniformed services or an employee of the Federal Government, the Resource Management Flight

Chief forwards a statement of account with a request for payment to the person held pecuniary

liable. Certified mail, return receipt requested, or personal delivery is used for accountability, to

ensure the availability of proof of collection efforts. If the individual responsible for the loss or

indebtedness does not settle the claim outright, the Resource Management Flight Chief takes the

following action:

8.9.1. NAF employee indebtedness. The Resource Management Flight Chief authorizes

payroll deductions, not to exceed one-fourth of gross pay due or to become due to the employee

from the NAFI. Refer to AFI 34-310, Nonappropriated Funds Personnel Management and

Administration, for determining whether a disciplinary action against the NAF employee is

appropriate. Exception: Payroll deductions may be increased or all payouts withheld if the

employee terminates or leadership becomes aware of impending employee termination of

employment.

8.9.2. Civil service employee indebtedness. The Resource Management Flight Chief will

forward a claim to the Shared Service Center for submission to the Treasury Offset Program if

a terminated or retired civil service employee responsible for the loss or indebtedness does not

settle the loss or indebtedness outright. (T-1) For handling an active civil service employee

indebtedness, see para 8.9.4.3.

8.9.3. Collecting from FSS customers for debts incurred by family members or guests. The

Resource Management Flight Chief may not withhold money from an FSS customer for

amounts due NAFIs resulting from debts incurred, or returned checks negotiated by family

members or guests of the customer. This is true even for a returned check drawn on a joint

checking account of the customer. However, a deduction may be made from pay or other

monies due to the customer when the individual provides an appropriately worded consent

agreement as described in paragraph 8.9.3.1 The Shared Service Center requires consent

agreements when the debt is incurred by a family member or guest of the military member.

Attach a copy of the consent agreement to the Shared Service Center Account Placement Form.

This form is a word document and the collection account number is assigned once received by

the Shared Service Center.

8.9.3.1. The following is an example of an acceptable consent agreement covering debts

and returned checks of the customer, and their family members and guests. "In

consideration of the (NAFI involved) accepting payment by check for goods or services,

cashing personal checks, and accepting credit sales for myself, my family members, and

guests, I hereby authorize a deduction from my appropriated fund or nonappropriated fund

pay or other moneys due me for any debt (including any associated processing charge) or

charge that is not paid timely."

56 AFMAN34-202 25 JUNE 2019

8.9.3.2. Activities may obtain consent agreements in advance. The customer signs a

deduction authorization to pay any unpaid debt to be incurred and redeem any unpaid

returned check to be negotiated by the customer, or their family members or guests.

Activities should include consent agreements in the format of the membership application

to be modified to apply to any NAFI.

8.9.3.3. The activity and NAF Accounting Office can also obtain consent agreements

during normal debt collection processing. Consent agreements obtained after the

indebtedness occurs must include the amount of the debt, the date of the debt, the

customer’s Department of Defense (DoD) ID Number, and the customer's signature.

8.9.3.4. A customer may withdraw a consent agreement at any time, in writing; however,

deductions are authorized for any indebtedness incurred under the agreement before the

date the NAFI receives the written withdrawal.

8.9.3.5. Other military services will not accept consent agreements pertaining to Air Force

NAFI debts signed by their civilian employees. Activities should consider this when

accepting checks from these individuals.

8.9.4. Collecting from FSS Customers. The Shared Service Center Debt Collection Branch is

responsible for processing Military Pay Orders (MPO) and Treasury Offset Program (TOP)

debt collections procedures for losses or indebtedness. This includes returned checks, caused

by a member (or family member) of the uniformed services or an employee of the Federal

Government. For collections other than returned checks, the Resource Management Flight

Chief pursues collection of the customer debt until the Resource Management Flight Chief

determines the debt is uncollectible. Once the debt is determined uncollectible, the Resource

Management Flight Chief forwards the debt to the Shared Service Center for additional

collection efforts. For losses or debts remaining with the installation for collection until

deemed uncollectible, the Resource Management Flight Chief:

8.9.4.1. Forwards a statement of account with a request for payment to the person held

pecuniary liable. Certified mail, return receipt requested, or personal delivery is used for

accountability to ensure the availability of proof of collection efforts.

8.9.4.2. Recover as much of the claim as possible. If a NAF employee was responsible

for the loss or indebtedness and does not settle the claim outright, the Resource

Management Flight Chief authorizes payroll deductions not to exceed one-fourth of gross

pay due or to become due the employee from the NAFI. (T-1) Exception: Payroll

deductions may be increased or all payouts withheld if the employee terminates

employment. See paragraph 8.11 for indebtedness collection procedures, and AFI 34-

310, to determine whether disciplinary action against a NAF employees is appropriate.

8.9.4.3. Forwards the claim, if a civil service employee responsible for the loss or

indebtedness does not settle the loss or indebtedness outright or grant written consent for a

deduction from their pay, to the Civilian Personnel Flight (CPF) servicing the employee

for action under AFI 36-703, Civilian Conduct and Responsibility.

AFMAN34-202 25 JUNE 2019 57

8.9.4.4. Contacts the individual by telephone (when practical) and by a written request for

payment if a member of any military service was responsible for the loss or indebtedness.

If the individual does not settle the loss or indebtedness outright, or grant written consent

to a deduction from their active or retired pay, the Resource Management Flight Chief

forwards a claim for the loss or indebtedness to the Shared Service Center for submission

to the Treasury Offset Program.

8.10. Collection of Overpayments from NAF Employees. Deductions from the pay of NAF

employees, retirees, and/or survivor annuitants without their consent are permitted to satisfy debts

to their employing NAFIs arising out of erroneous or excessive payments of wages, allowances,

differentials, or benefits. The Air Force Services Center, Benefits and Insurance Branch prepares

forms correcting the action which caused the overpayment for the NAF retiree and/or survivor

annuitant. Air Force Services Center, Benefits and Insurance Branch computes the amount of debt

owed and notifies the retiree and/or survivor annuitant, in writing over the overpayment, the

amount of overpayment, the conditions that caused the overpayment, that repayment is required,

and the options available for making repayment. This also includes the value of annual and sick

leave advanced under AFI 34-310, but not earned or otherwise repaid, when the employee retires,

resigns, or is otherwise separated. FSS uses the following procedures for collection of

overpayments resulting from payroll and entitlement errors made within the activity or NAF

Accounting Office, administrative or managerial error, or erroneous employee provided

information.

8.10.1. The NAF-Human Resources Section (NAF-HR) prepares AF Form 2545, NAFI

Notification of Personnel Action, correcting the action which caused the overpayment. (This

is not required when the error is made within the activity or NAF Accounting Office.)

8.10.2. The Shared Service Center computes the amount of debt owed and notifies the

servicing NAF Accounting Office who then notifies the employee, in writing, of the

overpayment, the amount of overpayment, the conditions that caused the overpayment, that

repayment is required, and the options available for making repayment. The NAF Accounting

Office advises the employee they have 15 days from receipt of the letter advising of the

overpayment to request a review to waive the indebtedness or negotiate a grievance.

8.10.3. The NAF Accounting Office or Air Force Services Center, Benefits and Insurance

Branch also advises the employee of the failure to agree to reasonable repayment procedures

or waiver approval will result in an automatic payroll deduction of an established amount from

each pay period not to exceed one-fourth of gross pay.

8.10.4. Activity management, representatives of the NAF Accounting Office or

AFSVC/SVXHI, working with the employee, retiree, survivor annuitant should jointly come

to an agreement as to the method of repayment. The agreement should ensure full

reimbursement as soon as possible without creating undue hardship on the employee, retiree,

or survivor annuitant. The following methods are available:

8.10.4.1. The NAF Accounting Office and/or Air Force Services Center, Benefits and

Insurance Branch accepts cash payment if the employee, retiree, or survivor annuitant

chooses to pay cash.

58 AFMAN34-202 25 JUNE 2019

8.10.4.2. Adjust future earnings if agreed upon by all parties (for example, decreasing the

appropriate items of pay on subsequent payrolls). The rate of deduction cannot exceed

two-thirds (for a one time reimbursement) of the employee's gross pay after mandatory

deductions.

8.10.4.3. If collection cannot be made as stated above, deduct an established amount from

each succeeding paycheck. This amount cannot exceed one-fourth of gross pay.

Exception: This limitation on the amount deducted does not apply when the employee

involved is expected to terminate their employment (voluntarily or involuntarily). In any

such case, deduct at levels ensuring full collection when possible, and maximum collection

if full collection is not possible. If full collection is not completed before termination and

from termination entitlements, a valid indebtedness remains in force for the uncollected

amount. When this happens, notify the Shared Services Credits & Collections Branch so

the remaining debt can be transferred to Treasury Offset Program for further collection.

8.10.4.4. Notify Shared Service Center when debt is satisfied to stop deductions.

8.10.5. If the employee, retiree, or survivor annuitant doubts the validity of the indebtedness,

or believes the amount or method of collection creates an unreasonable hardship (an inability

to maintain a minimal standard of living if they had to repay), the employee may within 15

calendar days of receipt of the letter advising of the overpayment, exercise one of the following

options:

8.10.5.1. Request a review of the debt or the collection method.

8.10.5.2. Use any negotiated grievance procedure available.

8.10.6. The employee, retiree, or survivor annuitant submits a request for review through the

Resource Management Flight Chief or Air Force Services Center, Benefits and Insurance

Branch and the FSS commander or director to the installation commander. Include details of

the case and any appropriate background documents. The installation commander evaluates

each request in a manner which assures the application of equity and good conscience. Upon

receipt of a request for review or a negotiated grievance, the Resource Management Flight

Chief suspends collection of the overpayment until notified of the installation commander's

decision. The Air Force Services Center Commander or designee has authority to render final

decisions on requests for review from retiree and survivor annuitants after review request.

Exception: This suspension of payment does not apply when the employee is expected to

terminate their her employment (voluntarily or involuntarily). The installation commander has

authority to render final decisions on requests for review. The Resource Management Flight

Chief retains copies of all decisions in the file of the NAFI. Except in unusual circumstances

(documented in the file), the installation commander should render a decision within 15

calendar days from receipt of the review request.

8.10.7. A valid NAFI claim resulting from an erroneous payment of wages, allowances,

differentials, or benefits may be waived or compromised when the erroneous payment was

made through administrative error, and:

8.10.7.1. There is no indication of fraud, misrepresentation, fault, or lack of good faith on

the part of the requesting employee, and

8.10.7.2. The debtor is incapable of paying both now and in the foreseeable future, or

AFMAN34-202 25 JUNE 2019 59

8.10.7.3. The debtor cannot be located, or

8.10.7.4. The cost of recovery will exceed the expected recovery, or

8.10.7.5. The claim is not legally supportable, or

8.10.7.6. Available evidence does not substantiate the claim.

8.10.8. The installation commander approves waivers for overpayment of NAF Employee

claims involving $5,000 or less. The installation commander must carefully consider all of the

information available and each element of the waiver criteria. For example, even though a

waiver seems justified for an erroneous payment due to an administrative error when there is

no indication of fraud, misrepresentation, fault, or lack of good faith on the part of the NAF

employee, the criterion involving the debtor's ability to pay now or in the foreseeable future is

a factor of importance.

8.10.8.1. The installation commander forwards requests for waiver of overpayment of

NAF Employee claims involving more than $5,000 through channels to AFSVC/JA for

further review and recommendation to the AFSVC Commander for final decision.

8.10.8.2. The Air Force Services Center Commander or designee approves waivers for

NAF overpayment claims for retirees and survivor annuitants.

8.10.8.3. Overpayments represent assets rightfully belonging to a NAFI. Unless the

requesting employee, retiree, or survivor annuitant provides sufficient information or

evidence to support a reasonable conclusion he or she is incapable of repaying both

currently and in the foreseeable future, their her request should be denied.

8.10.8.4. Accordingly, encourage employees, retiree, or survivor annuitant to provide as

much pertinent information as possible to ensure their requests have a fair chance of

approval. Do not impose undue financial hardships in requiring repayment of funds.

However, bear in mind recipients of overpayment have received NAF assets to which they

are not entitled. The effect is a negative impact on the availability of NAFs for their

intended purposes.

8.10.8.5. Under extreme circumstances, when a waiver of a claim has been denied at the

installation, the Resource Management Flight Chief, while working with the debtor and

coordinating with the FSS Commander or director, may request a further review by

AFSVC/JA with a recommendation to the AFSVC Commander for a final decision.

8.11. Uncollected Losses or Indebtedness (other than returned checks). When it is

reasonably certain losses or indebtedness cannot be collected through the above procedures within

120 days, (except when an appeal is pending), the Resource Management Flight Chief notifies the

NAFI activity manager the claim is uncollectible and writes it off. The Resource Management

Flight Chief approves write-offs of $2,500 or less. The installation commander approves write-

offs of more than $2,500. The Resource Management Flight Chief documents write-offs of losses

and indebtedness according to AFI 34-209, and forwards to the Shared Service Center to process

through the Treasury Offset Program.

8.11.1. If none of the above procedures results in collection of the loss or indebtedness, the

Resource Management Flight Chief seeks counsel from the servicing Office of the Staff Judge

Advocate on uncollected losses or indebtedness of more than $100 but less than $600, and

determines whether to pursue further administrative action.

60 AFMAN34-202 25 JUNE 2019

8.11.2. Prior to transfer of accounts, the NAF Accounting Office sends a final debt notice to

the debtor's last known address. Ensure the debt notice letter informs the debtor unless the NAF

Accounting Office receives full payment of the entire outstanding balance within 15 days of

the date of the final notice, their delinquent account will be referred for Treasury Offset

Program collection. The Resource Management Flight Chief forwards all pertinent facts,

documents, and evidence of collectability, as follows:

8.11.2.1. Send all eligible accounts to Shared Services Center Credit and Collections

Section (AFSVC/FMSRC) for submission to the Treasury Offset Program. Send accounts

no more than 180 days delinquent, as experience indicates collection of older accounts is

less successful.

8.11.2.2. Send claims exceeding $600 arising in the United States, its territories and

possessions, the District of Columbia, and Puerto Rico, other than those of AAFES, to the

servicing Office of the Staff Judge Advocate for further collection assistance or further

forwarding to AFSVC/JA.

8.11.3. For claims of $600 or more other than those stated above:

8.11.3.1. If the Resource Management Flight Chief does not expect the debtor to return to

the United States, its territories and possessions, the District of Columbia, or Puerto Rico,

he or she provides the case file to the servicing Office of the Staff Judge Advocate. The

servicing Judge Advocate Office forwards it to the MAJCOM/JA of the overseas command

in which the debt arose to review and determine whether to pursue further administrative

collection action. The MAJCOM/JA takes any further administrative collection action. If

such action fails, or if the MAJCOM/JA deems further administrative collection action is

inappropriate, he or she forwards the case file to AFSVC/JA along with recommendations

for disposition.

8.11.3.2. If the debtor has returned to the United States, its territories or possessions, the

District of Columbia, or Puerto Rico, or is expected to do so shortly, the Resource

Management Flight Chief sends all pertinent facts and the case file to the servicing Office

of the Staff Judge Advocate for forwarding to AFSVC/JA.

8.11.4. Consolidate debts for individual(s) with other government agencies. Under the

provisions of AFI 51-301, Civil Litigation, AFSVC/JA may submit aggregate totals of $600 or

more to the United States Attorney for collection. The Resource Management Flight Chief

submits request for collection through the servicing judge advocate office to AFSVC/JA.

8.12. Uncollected Losses or Indebtedness for Returned Checks. The Shared Service Center

Debt Collection Branch is responsible for processing debt collection of returned checks. The

Shared Service Center may write-off accounts up to $2,500. Write-off amounts over $2,500 must

be presented to the applicable installation NAFs Council for approval. After the NAF Accounting

Office notifies the Shared Service Center of the installation commander’s approval of the write-

off, the Shared Service Center processes all eligible debts for collection via the Treasury Offset

Program. All payments received from Treasury Offset Program less bank and processing fees are

sent directly back to the installation where the debt originated via CMIP.

AFMAN34-202 25 JUNE 2019 61

8.13. Withholding of Pay and Allowances. When a consent statement is available and all

collection attempts have failed, pay and allowances may be withheld from civilian employees as

prescribed in AFI 34-310. The Resource Management Flight Chief submits all available

paperwork to the Shared Service Center for submission to the Treasury Offset Program.

8.14. Garnishment of Pay. Federal pay (including pay of NAF employees) is subject to

garnishment under the regulations set forth in 5 CFR 581, Processing Garnishment Orders for

Child Support, and 5 CFR 582, Commercial Garnishment of Federal Employees’ Pay.

8.14.1. Effective 3 February 1994, pay of federal employees can be garnished the same as pay

of any non-federal individual.

8.14.2. Legal processes involving the garnishment of pay of AF NAF employees must be

served by AFSVC/JA. Accomplish service only by certified or registered mail, return receipt

requested, or by personal service.

8.14.3. Any federal employee receiving such process in the course of their duties pertaining

to a NAF employee, was served by certified or registered mail, return receipt requested, or by

personal service, must immediately forward it to AFSVC/JA. Ensure the forwarding

correspondence identifies the named employee's employing NAFI (e.g., the Joint Base San

Antonio-Randolph Morale, Welfare, and Recreation Fund), and forward all documentation

received and the envelope in which it was received. Service of process is not considered

accomplished until AFSVC/JA receives it.

8.14.4. If a NAF employee questions the validity of a legal process, the employee must

challenge it in the appropriate court. The Air Force will not litigate or otherwise judge the

validity of any such challenge.

8.14.5. Any legal process must contain the name of the employee and the employee's SSN.

Send any process received without sufficient information to identify the employee to the

servicing Judge Advocate Office for return directly to the issuing authority with an explanation

of the deficiency. (T-1)

8.14.6. Upon receipt of a properly served, valid legal process, AFSVC/JA advises the

employee's NAF payroll office of the amount to be garnished and provides a copy of the legal

process. The employee's NAF payroll office complies with AFSVC/JA’s pay withholding

instructions upon receipt. (T-1)

8.15. Administrative Garnishments for NAFIs. Under 31 U.S.C. 3720D, the Chief Legal

Counsel, AFSVC/JA, or designee, may garnish the disposable pay of any individual indebted to

an AF NAFI. This authority does not extend to the pay of Federal personnel.

8.15.1. The amount garnished during any pay period may not exceed fifteen percent of the

individual’s disposable pay.

8.15.2. Procedures are prescribed in 31 CFR Part 285, Debt Collection Authorities Under the

Debt Collection Improvement Act of 1996. Claim files will be processed through the

AFSVC/JA for action under this paragraph. Follow the same procedures for file submission

as outlined in paragraph 8.14 above.

8.15.3. Amounts collected will be distributed to the appropriate NAFIs through the Air Force

Central Fund CMIP account.

62 AFMAN34-202 25 JUNE 2019

8.16. Claims Arising Out of Contract Arrangements. The Resource Management Flight

Chief refers all claims to the contracting officer for appropriate action. Adjudicate and settle

claims arising out of contract arrangements (e.g., contracts, leases or purchase orders), either for

or against a NAFI, using the procedures provided by the disputes clauses in the contracts.

Exception: In cases where established procedures do not apply to certain types of claims arising

out of NAFI operations, the contracting officer submits the case through channels to the AFSVC

Commander for resolution.

8.17. NAF Asset Insurance Program. For a loss of an asset covered by the asset insurance

program, file claims according to AFMAN 34-208.

AFMAN34-202 25 JUNE 2019 63

Chapter 9

CONTINGENCY OPERATIONS

9.1. Memorandum of Understanding (MOU) for Suspended Operations. In areas subject to

recurring weather, geographic, or climate events, the FSS commander or director will ensure the

installation has a MOU with another location, which provides a contingency plan to guarantee

continuous operation and protection of NAF assets in the aftermath of a natural disaster or conflict.

(T-1) The MOU is essential to guarantee continuous operation and must be all inclusive to

provide:

9.1.1. Computer support

9.1.2. Software availability and protection

9.1.3. Hard copy storage and recovery

9.1.4. Asset protection

9.1.5. Lines of responsibility/accountability

9.2. Following a Natural Disaster. The Resource Management Flight Chief, FSS commander

or director, and installation commander assess overall damage. While determining the feasibility

of continuing operations, they ensure continued protection of all remaining NAF assets and

property by the following means:

9.2.1. Conduct all salvage, recovery, and reconstruction efforts with the utmost attention to

safety.

9.2.2. Empty safes and secure all cash and cash equivalents.

9.2.3. Safeguard highly pilferable items.

9.2.4. Ensure items dangerous to one's health are destroyed or confiscated.

9.2.5. Assess damage to the NAF Accounting Office and determine requirements for recovery.

9.2.6. Determine if off-site processing is necessary. If so, arrange for transport of only those

records necessary to conduct business.

9.3. Continuing Operations. When total destruction of the NAF Accounting Office has

occurred, after securing the processing site and workplace, avoid or minimize future losses by:

9.3.1. Securing as many fixed assets as reasonably possible. Use tents or trucks to store

property, depending upon the condition of the facilities. Destroy or use all perishable

inventories. Maintain an inventory of disposed items. Request additional vehicle support if

needed, from nearby installations.

9.3.2. Securing as many resale items and other highly pilferable items as possible and store

them in a secure location.

64 AFMAN34-202 25 JUNE 2019

9.4. Contingency Operations. Contingency operations will follow all applicable AF NAF

guidelines for protection of NAFs. In addition, contingency operations will work with the assigned

supporting location to ensure all requirements are met.

Shon J. Manasco

Assistant Secretary of the Air Force

Manpower and Reserve Affairs

AFMAN34-202 25 JUNE 2019 65

Attachment 1

GLOSSARY OF REFERENCES, FORMS, ACCRONYMS AND TERMS

References

DoDD 5500.07-R, Joint Ethics Regulation, 17 November 2011

DoDI 1125.03_AFI 34-206, Vending Facility Program for the Blind on Air Force Property, 6

November 2018

AFPD 34-1, Air Force Services 11 October 2018

AFPD 65-2, Managers’ Internal Control Program, 16 May 2016

AFI 31-101, Integrated Defense (FOUO) 5 July 2017

AFI 32-2001, Fire and Emergency Services (F&ES) Program, 28 September 2018

AFI 33-332,Air Force Privacy and Civil Liberties Program, Incorporating Change 1, 17

November 2016

AFI 34-101, Air Force Morale, Welfare, and Recreation (MWR) Programs and Use Eligibility,

16 April 2019

AFI 34-108, Commercial Sponsorship and Sale of Advertising, 21 August 2018

AFI 34-209, Nonappropriated Fund Financial Management and Accounting, 10 January 2005

AFI 34-275, Air Force Nonappropriated Fund (NAF) Government Purchase Card Program, 23

June 2011

AFI 34-310, Nonappropriated Funds Personnel Management and Administration, 3 June 2019

AFI 36-703, Civilian Conduct and Responsibility, 30 August 2018

AFI 51-301, Civil Litigation, 2 October 2018

AFI 51-306, Claims For and Against the Air Force, 14 January 2019

AFI 65-106, Appropriated Fund Support of Morale, Welfare, and Recreation (MWR) and

Nonappropriated Fund Instrumentalities (NAFIS), 15 January 2019

AFI 65-107, Nonappropriated Funds Financial Management Oversight Responsibilities, 13 June

2018

AFI 65-201, Managers’ Internal Control Program Procedures, 9 February 2016

AFI 71-101V1, Criminal Investigations Program, 8 October 2015

AFI 90-301, Inspector General Complaints Resolution, 28 December 2018

AFMAN 33-363, Management of Records, 1 March 2008

AFMAN 34-151, Gaming Operations Procedures, 7 March 2019

AFMAN 34-201, Use of Nonappropriated Funds (NAFs), 28 September 2018

AFMAN 34-204, Property Management, 9 October 2018

AFMAN 34-208, Nonappropriated Fund Property and Liability Program, 18 September 2018

66 AFMAN34-202 25 JUNE 2019

AFMAN 34-215, Procedures for the Cash Management and Investment Program, 9 February

2016

AFMAN 64-302, Nonappropriated Fund (NAF) Contracting Procedures, 8 November 2016

5 CFR Part 2635, Standards of Ethical Conduct for Employees of the Executive Branch

5 CFR Part 581, Processing Garnishment Orders for Child Support

5 CFR Part 582, Commercial Garnishment of Federal Employees’ Pay

31 CFR Part 285, Debt Collection Authorities Under the Debt Collection Improvement Act of

1996

31 U.S. Code § 3720D, Garnishment

Adopted Forms

AF Form 645, NAF Cash Register Adjustment

AF Form 1182, Youth Flight Register

AF Form 1400, NAF Vending/Amusement Machine Collection Report

AF Form 1401, Air Force Petty Cash/Refund Voucher

AF Form 1735, NAF Interfund Purchase Order

AF Form 1875, NAF Individual Cashier's Report

AF Form 1876, NAF Consolidated Cost Center Report

AF Form 1877, NAF Central Cashier Control Log

AF Form 1878, NAF Central Cashier Deposit Receipt

AF Form 2533, Transfer Between Cost Centers

AF Form 2539, NAF Disbursement Request

AF Form 2545, NAFI Notification of Personnel Action

AF Form 2555, NAF Collection Record

AF Form 2556, NAF Surprise or General Cashier’s Cash Count

AF Form 2557, NAF Cash Receipt Voucher

Standard Form (SF) 702, Security Container Check Sheet

IRS Form W-2G, Certain Gambling Winnings

IRS Form 945, Annual Return of Withheld Federal Income Tax

IRS Form 1099-MISC, Miscellaneous Income

Abbreviations and Acronyms

AAFES—Army and Air Force Exchange Service

AF—Air Force

AFMAN34-202 25 JUNE 2019 67

AFB—Air Force Base

AFFMF—Air Force Financial Management Fund

AFI—Air Force Instruction

AFMAN—Air Force Manual

AFOSI—Air Force Office of Special Investigations

AFPD—Air Force Policy Directive

AFRIMS—Air Force Records Information Management System

AO—Accounting Office

APF—Appropriated Fund

CC—Commander

CMIP—Cash Management Investment Program

CONUS—Continental United States

CPF—Civilian Personnel Flight

DoD—Department of Defense

DR—Disbursement Request

FM—Financial Manager

FSS—Force Support Squadron

GLAC—General Ledger Account Code

GSA—General Services Administration

IDC—Integrated Defense Council

IRS—Internal Revenue Service

IOU—I owe you

MAJCOM—Major Command

MICP—Managers’ Internal Control Program

MPO—Military Pay Order

NAF—Nonappropriated Fund

NAFFA—Nonappropriated Fund Financial Analyst

NAFI—Nonappropriated Fund Instrumentality

PCard—Purchase Card

POS—Point of Sale

SSN—Social Security Number

TOP—Treasury Offset Program

68 AFMAN34-202 25 JUNE 2019

US—United States

USAF—United States Air Force

Terms

Central Cashier—The central cashier provides a service to all base activities by consolidating

funds before deposit. The primary benefits are: improved internal controls over cash deposits,

convenience to the activities, and reduction of man hours in both the activities and

Nonappropriated Fund Accounting Office (NAF AO) in banking tasks. The central cashier also

issues and replenishes change funds and imprest funds, issues increases to change funds for

holidays and long weekends, serves as a supplier of foreign currency for the club's accommodation

sales, redeems returned checks, and encodes checks for deposit.

Doubtful Account—is a contra-asset account that reduces the total receivables reported to reflect

only the amounts expected to be repaid. The allowance is established by recognizing a bad debt

loss on the financial statements in the same accounting period when the associated sale is reported.

Gross Negligence—is the failure to exercise even a slight degree of care, or an extreme departure

from the course of action expected of a reasonable person, all circumstances considered.

Imprest Funds—An imprest fund is a small amount of cash that is set aside for use in paying for

expenses.

Joint and Several Liability—is the combined negligence, gross or simple, or willful misconduct

of two or more persons which results in a loss. They may be held jointly and severally liable for

the full amount of any loss. If the loss resulted from the willful misconduct of one or more persons

and the negligence of another or others, all may be held jointly and severally liable. In all other

cases, assess liability on an individual basis.

Life of the Fund File—A collection of documents, usually stored in the NAF accounting office,

that provides a chronology of selected activity from inception of a fund or NAFI through

dissolution of the fund or discontinuance of the NAFI

Magnetic Ink Character Recognition—A technology used to verify the legitimacy or originality

of paper documents, especially checks. Special ink, which is sensitive to magnetic fields, is used

in the printing of certain characters on the original documents. The information appears at the

bottom of a check and includes the bank's routing number, the customer's account number, and the

check number

Pecuniary Liability—A personal or joint monetary obligation to make good any lost, damaged,

or destroyed assets resulting from fault or neglect.

Proximate Cause—is the cause which, in a natural and continuous sequence, unbroken by any

new cause, produces the loss, and without it the loss would not have occurred. To support an

assessment of pecuniary liability, the negligence or willful misconduct involved must constitute

the proximate, rather than a remote, cause of the loss.

Simple Negligence—The failure to act as a reasonably prudent person would have acted under the

same or similar circumstances.

Survivor Annuitant—A person who is entitled to an annuity based on the service of a deceased

employee or annuitant.

AFMAN34-202 25 JUNE 2019 69

Willful Misconduct—is an intentional or knowing violation of rules or regulations including fraud

and dishonesty.

Write-Off—Refers to an accounts receivable amount deemed to be uncollectible and removed

from a receivable account in the general ledger.

Z Key—The cash register key enables the cash register to run the Z report. The Z report will

provide the sales totals for the day and will reset the cash register’s totals for the day.

70 AFMAN34-202 25 JUNE 2019

Attachment 2

THE CONTROLLING PROCESS

A2.1. The Degree of Control. The first step of the controlling process is determining the

amount or degree of control required for adequate protection of assets. This step involves several

factors:

A2.1.1. The first factor is motivating and controlling people. People are the key to an effective

internal control system. Activity and functional managers hire and retain competent personnel,

and train and motivate them to understand what they have to do, appreciate why they must do

it, and agree it must be done.

A2.1.2. The second factor involves determining risk, error, or irregularity. One needs to

determine risk before it can be controlled. "Control risk" is the risk of having too little or too

much control as it relates to management's responsibilities to safeguard assets. Once the

activity or functional manager identifies a risk, he or she determines whether it should or can

be controlled. For example, cash and items readily converted into cash are more at risk and

need more controls than equipment.

A2.1.3. The third factor involves determining the probability of error or irregularity.

Determining risk also considers the probability of loss rather than the possibility. Controls can

reduce the probability, but rarely eliminate the possibility. A manager's responsibility to

safeguard assets requires they be adequately protected and controlled. However, the manager

must also weigh the controls to ensure they do not hamper the productivity by the controls

implemented for any asset. Contact the Security Forces (SF) crime prevention section for a

survey of physical security risks.

A2.1.4. The fourth factor is achieving reasonable assurance of prevention or detection of

errors or irregularities. The cost of control should not exceed the anticipated benefits. Activity

and functional managers can usually estimate the direct cost of a specific control as it usually

involves known factors such as extra equipment or additional personnel. Effectiveness is more

difficult to determine. If an error or risk situation arises, managers must determine if the

control being considered will actually prevent or detect the occurrence. Weighing the indirect

costs and benefits is the most difficult. Before implementing the control, managers must

determine if the new control restricts operations to the extent losses are greater than the assets

at risk. Reasonable assurance recognizes determining these factors require estimates and

judgments on the part of management.

A2.1.5. The fifth factor recognizes inherent limitations. To fully consider the effectiveness of

internal controls, managers should recognize the following inherent limitations:

A2.1.5.1. People. People operate the system and represent the major limitation in any

control system. Faulty personal performance may result from a misunderstanding of

instructions, mistake in judgment, distraction, fatigue, or simple carelessness.

A2.1.5.2. Circumvention or Collusion. Whenever internal control relies on the work of

one person being checked by another, there is always a risk of circumvention or collusion

which can reduce or destroy the effectiveness of those procedures.

AFMAN34-202 25 JUNE 2019 71

A2.1.5.3. Control Override. Procedures can be overridden in certain circumstances. The

most notable are bypasses by higher level managers or subordinates under their orders, of

controls implemented to monitor the occurrence of errors or irregularities.

A2.1.5.4. Changing Circumstances. Factors external to the organization such as

commercial and political forces are always changing, and internal factors such as changes

in operations, systems, or people involved can occur without conscious or complete

planning. Accordingly, the effectiveness of controls may be constantly changing and

future periods are subject to the risks arising from these changes.

A2.2. Internal Control Standards. The second step in the controlling process requires activity

and functional managers to implement internal control standards in AF directives. These standards

define the minimum level of quality acceptable for an internal control system and comprise the

criteria against which all systems are to be evaluated. There are three types of internal control

standards; general, specific, and resolution standards. The following are general standards:

A2.2.1. Reasonable Assurance. This standard recognizes the objectives of the systems are

accomplished, and the cost of internal control and security does not exceed the benefits

derived.

A2.2.2. Supportive Attitude. Attitude affects the quality of internal controls. Managers must

demonstrate commitment to achieving strong internal controls through their actions concerning

organization, personnel practices, communication, protection, and use of resources through

systematic accountability, monitoring and reporting, and general leadership. Adequate

supervision, training, and motivation of employees in the area of internal controls are vital to

maintaining and demonstrating a positive and supportive attitude toward internal controls at

all times.

A2.2.3. Competent Personnel. Managers and employees must possess personal and

professional integrity and maintain a level of competence allowing them to accomplish their

assigned duties and understand the importance of developing and implementing good internal

controls.

A2.2.4. Control Objectives. Internal control objectives (desired outcomes) should be logical,

applicable, and reasonably complete. This standard requires managers tailor objectives to

operations. Complying with this standard requires the manager to identify functions within

the activity, or program, and analyze each in detail to ensure control objectives are met.

A2.2.5. Control Techniques. These are used to accomplish control objectives and should be

effective and efficient to continually provide a high degree of assurance the internal control

objectives are being achieved. Examples are specific policies, procedures, organization plans

such as separation of duties, and physical arrangements such as locks and alarms.

A2.3. Specific standards.

A2.3.1. Documentation. Internal control procedures and all transactions must be clearly

documented and fully support the transaction. Documentation must be readily available and

accessible for examination.

A2.3.2. Recording Transactions and Events. Accounting for NAFIs ensures all transactions

and other significant events are promptly recorded and properly classified to maintain

pertinent, relevant, and valuable information used to control operations and make decisions.

72 AFMAN34-202 25 JUNE 2019

A2.3.3. Execution of Transactions and Events. Managers ensure transactions and other

significant events are authorized and executed only by persons acting within the scope of their

authority.

A2.3.4. Separation of Duties. To reduce the risk of non-detection, managers ensure no one

individual controls all key aspects of a transaction or event. Separate among individuals, key

duties and responsibilities in authorizing, processing, recording, and reviewing transactions to

ensure effective checks and balances.

A2.3.5. Supervision. Supervision requires supervisors continuously review and approve their

staffs' assigned work to assure achievement of internal control objectives; and provide

guidance and training to their staffs to minimize errors, waste, and/or wrongful acts.

A2.3.6. Access to and Accountability for Resources. Managers limit access to resources and

records to authorized individuals. Managers assign and maintain accountability for the custody

and use of resources to reduce the risk of unauthorized use or loss.

A2.3.7. The resolution standard requires activity and functional managers take prompt,

responsive action on all identified internal control findings and recommendations. Activity and

functional managers correct deficiencies, produce improvements, demonstrate the findings and

recommendations are either invalid, or do not warrant further action.

A2.3.7.1. Evaluate and test performance against standards. Activity and functional

managers perform and document a self-inspection/assessment of their activity or function

at least annually to determine if required internal control procedures have been

implemented and are functioning effectively. This review consists of two parts: evaluation

and testing.

A2.3.7.1.1. Evaluation determines whether a control exists, what established it, if it is

adequate, and if any controls are excessive and uneconomical for the function's inherent

risk exposure.

A2.3.7.1.2. Testing determines whether the control is functioning as intended and

ensures it is effective in minimizing the risk exposure it was designed to control.

A2.3.7.2. Activity and functional managers document the results of the Managers Internal

Control Program (MICP) reviews. This documentation contains information that includes

whether the internal control standards were met, identifies any weaknesses, identifies

excessive controls contributing to a lack of economy or efficiency, and states the corrective

action taken or pending to resolve any discovered internal control weakness. Following an

MICP, inspection, or audit report, activity and functional managers will:

A2.3.7.2.1. Immediately correct any regulatory compliance deficiencies and resolve

all noted internal control deficiencies identified.

A2.3.7.2.2. Provide appropriate feedback by advising the MICP Manager (refer to

paragraph 2.6), Resource Management Flight Chief, FSS commander or director, and

any other installation NAFI activities of the results of the self-inspection/assessment;

include common findings, weaknesses and any unfavorable trends. As appropriate,

provide information to the applicable NAF oversight office.