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CASH: CHECK CONTROLS
Contents
- C-173-
- ACCOUNTING MANUAL Page
- TL 97 **Addition 9/30/
- I. Introduction Page
- II. Procedures for Blank Checks
- A. Procurement
- B. Storage
- C. Blank Check Control Record
- D. Control of Issuance and Return of Blank Checks
- ** E. Testing of Check Stock
- III. Procedures for Check Processing
- A. Transmittal of Checks
- B. Check Signing Controls
- C. Distribution of Signed Checks
- Payroll
- System Revolving Fund 2. General Revolving Fund and Retirement
- “Rush” Checks
- D. Voided or Canceled Checks
- E. Stop Payment Orders
- F. Storage of Paid, Voided and Canceled Checks
- IV. Responsibilities
- V. References
- Appendix: Blank Check Stock Control
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**Addition 9/30/07 TL 97
CASH: CHECK CONTROLS
I. INTRODUCTION
This chapter outlines the procedures required to maintain optimum control over the procurement, storage, and use of blank check stock. The chapter also contains procedures for processing checks, including check signing control for both manual and facsimile signatures. The procedures apply to payroll revolving funds, general revolving funds at all campuses, and UCRS revolving funds at Systemwide. Because of organizational and staffing differences among the various accounting offices, not all aspects of the procedures outlined are equally applicable at each location. Some modifications to reflect local circumstances, therefore, may be permissible. However, the responsible accounting officer should be prepared to justify any such departures should questions arise during audits, etc. (It should be noted that for purposes of this chapter the term accounting officer also applies to the person with functional responsibility for the disbursement of retirement funds.)
While the specific procedures outlined below do not apply to the three Department of Energy Laboratories, the basic control policies that underlie these procedures pertain equally to all University activities.
II. PROCEDURES FOR BLANK CHECKS
A. PROCUREMENT
** 1) It is strongly recommended that all orders for blank payroll, vendor, and retirement system checks are made using a purchase requisition by the UC Printing Services. The quantities ordered are based on estimates of requirements obtained from the office with custodial responsibility for the check stock (i.e., the local campus data processing center, the campus accounting office, ** or the UCRS accounting office). Accounting offices and data processing centers that print checks may make their own arrangements for acquiring check stock if there are circumstances that necessitate an alternate supply method, the action is authorized by the appropriate accounting officer, and the other general controls outlined in this procedure are followed.
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II. PROCEDURES FOR BLANKS CHECKS (Cont.)
C. BLANK CHECK CONTROL RECORD
- Each accounting officer shall establish and maintain a control record of the receipt and use of blank check stock drawn on the payroll, general, or retirement revolving funds for which he/she has accounting responsibility. This record must be maintained by the control clerk who can not also be the storage custodian. The record must be detailed enough to show the use and final disposition of each check number for the sequences received. (See Appendix, Exhibit I, for a suggested control record format.)
- When blank checks are ordered, UC Printing Services or a local purchasing department in the case where an accounting office or data processing center has elected to order their own check stock, forwards a copy of the purchase order to the applicable accounting officer(s) upon whose revolving fund the checks will be drawn. The date and number of the order and inclusive sequence numbers of the checks ordered must be entered by the control clerk in the accounting office control record.
Upon delivery of the blank checks, and after verifying the shipment manifest against the numbers of the checks (see B.2) above), the storage custodian will send the responsible accounting officer a written report of the receipt accompanied by the manifest and a copy of the report of discrepancies, if any.
The control clerk must make appropriate entries in the control record to reflect delivery of the blank checks, including delivery date, check sequence numbers, and any missing numbers indicated on the manifest. If any discrepancies are noted between the inclusive check sequence numbers ordered and the numbers received that are not accounted for either by missing numbers listed on the manifest or by the discrepancy report sent to the accounting officer by the storage custodian, the accounting officer must take immediate steps to determine the reason(s) for such discrepancies.
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As the blank checks are used, the control clerk must make appropriate entries in the control record, including quantities, sequence numbers, dates of checks written and signed, and the sequence numbers of checks canceled, voided, or for any other reason not issued. This information is obtained from the check transmittal memo (for checks written by the data processing center), the check signer control report, and check cancellation notices.
The control clerk is responsible for checking the control record carefully and, if any unaccounted breaks in the sequence numbers are noted, for informing the accounting officer and taking immediate steps to determine the cause.
D. CONTROL OF ISSUANCE AND RETURN OF BLANK CHECKS
The storage custodian is responsible for establishing and maintaining a blank check stock control sheet for each shipment of blank checks received (see Appendix, Exhibit II, for suggested format) to record the delivery date and inclusive check sequence numbers for each shipment of blank checks received. All numbers missing from the sequence also must be entered on the control sheet when a shipment is received. The date and the signatures of the persons issuing and receiving blank checks must be recorded for each such transaction. In addition, the date and inclusive sequence numbers must be recorded for all unused checks returned to stock after issuance. When blank checks are returned to the storage custodian, verification of the last check written must be made to ensure that the sequence is maintained.
** E. TESTING CHECK STOCK
Each accounting office or data processing center is responsible for complying with their disbursing bank’s requirements for testing of new check stock prior to putting it into production to ensure that the check stock will process correctly at the bank.
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the authorized signers. However, a facsimile signature may be used for pressure-sealed or out- sourced vendor checks of $100,000 or more when the appropriate internal controls are in place, i.e., proper documentation, verification, and approvals as defined below.
- An exception report should be created which includes an invoice number or other means to retrieve the original backup to the check;
- The listing should be approved and signed by an authorized University official before the release of a check;
- Any rejected checks on the listing should be identified and removed from the batch or check listing and voided, and any related general ledger entries should be reversed;
- All checks that are out-sourced or printed off- site shall be signed with facsimile signature plates only; and
- The bank reconciliation should emphasize and follow up on all checks over $100,000 to ensure that they have cleared within 30 days.
The accounting officer is responsible for the safe keeping of the check facsimile signature plates and may delegate this responsibility to an appropriate staff member (other than the storage custodian or the signed checks custodian). This delegation must be in writing.
When checks are signed, the signature plates and/or keys are removed from the place of storage and inserted in the check signing machine. Before operation, the number in the counter on the machine is checked by someone other than the person responsible for the check signing operation to verify that it is the same as the number recorded at the end of the previous check signing operation. If there is a discrepancy, the accounting officer will investigate immediately to determine the reason.
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III. PROCEDURES FOR CHECK PROCESSING (Cont.) B. CHECK SIGNING CONTROLS (Cont.)
After the number on the counter has been verified, it is recorded as the beginning number and the check signing process may be started. When the last check has been signed, the number on the counter is recorded as the (new) ending number. The difference between the beginning and ending numbers must equal the count of the checks signed.
After all the checks are signed, they are turned over to the person delegated by the accounting officer as the signed checks custodian. The signed checks custodian is responsible for all checks in process for distribution. At this point, the check signer report is prepared. The report includes the date, the types of checks signed (payroll, vendor, retirement, or "rush"), the check sequence numbers on the counter, the campus at which they were signed, and the signatures of the responsible staff members. If there are any discrepancies between the count of the checks signed and the number recorded on the counter, a full explanation must accompany the report. The report is sent to the control clerk in the accounting office. (A second and third copy of this report may be prepared for use as the transmittal document to accompany the checks sent to another accounting office for distribution--see A.1) above, and C.1.a) below.)
Upon receipt of the check signer report, the control clerk enters the check sequence numbers and dates on the control record under "CHECKS SIGNED", along with any items reported as void or canceled. If any check numbers are not accounted for or any other unexplained discrepancies are noted, an immediate inquiry is made to determine the reason, and corrective action is taken as determined by the accounting officer.
C. DISTRIBUTION OF SIGNED CHECKS
- Payroll
a) If checks for campuses are signed at a different campus accounting office, they must be accompanied by a transmittal document, in duplicate, when sent to another campus for distribution. (See A.1) above.)
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III. PROCEDURES FOR CHECK PROCESSING (Cont.) C. DISTRIBUTION OF SIGNED CHECKS (Cont.)
- General Revolving Fund and Retirement System Revolving Fund (Cont.)
employee acting within the recognized scope of assigned responsibilities, unless specific instructions in writing were received from the payee. Any person other than the payee, who receives a check, including an authorized University employee, must sign a receipt for it. A check may not be given to a University employee who approved or caused its issuance.
c) Completely processed signed checks awaiting distribution must be kept in a locked storage place accessible only to the check custodian (or alternate).
- "Rush" Checks
a) So-called "rush" checks are checks written in the accounting office, rather than as part of the regular check writing. When using a typewriter with a correction device (such as an IBM typewriter with "lift-off" correction tape) to type on check stock, cloth typewriter ribbons should be used instead of carbon ribbons because the correction device on the typewriter is not compatible with cloth ribbons. This procedure helps to ensure that a check could not be altered without the alteration being detected.
b) When "rush" checks are written by a person other than the check custodian and signed, they must be turned over to the check custodian for safekeeping pending distribution. The requirement of locked storage is the same for "rush" checks as for the other types of checks. The same person who writes the checks must not also be responsible for storage and distribution.
c) Restrictions on distribution to persons other than the payee are the same for "rush" checks as for other checks.
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D. VOIDED OR CANCELED CHECKS
A voided check is a check spoiled in the process of preparation, before it is recorded monetarily in a reimbursement schedule.
A canceled check is a check recorded monetarily in a reimbursement schedule which is reversed from the University's accounting records and is not paid by the bank.
Voided or canceled checks must be thoroughly defaced by prominently imprinting the word "VOID" or "CANCELED" with a rubber stamp across the payee's name area. Both voided and canceled checks must be retained until completion of the external audit for the year in which they were defaced.
The check numbers of all voided or canceled checks and the date of the action must be reported in writing to the accounting office control clerk for entry in the control record under the heading "VOID/CANCELED". For checks voided or canceled during processing, this notification may be made as part of the transmittal documents or the check signer report.
E. STOP PAYMENT ORDERS
The accounting officer is responsible for approval of all orders to stop payment of a check after it has been issued. This responsibility may be delegated in writing to an accounting office staff member, with a copy provided to the bank for information and guidance. The bank's acknowledgment of the stop payment order should be sent to the accounting office control clerk.
F. STORAGE OF PAID, VOIDED AND CANCELED CHECKS
Paid checks returned with the bank statements must be kept, along with any voided and canceled checks, in locked storage until completion of the external audit for the year in which they were written. These checks may be accessible only to the accounting officer or his/her designated alternate (ordinarily, the staff member assigned responsibility for reconciling the revolving fund account).
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University Controller Joseph A. Pastrone, Memorandum to University Forms Coordinator Crawford on "Vendor Rush" Check Stock, July 27, 1981.
Original Accounting Manual chapter first published 1/1/80. Revised 6/15/85, 4/15/86, 8/15/87, 6/30/94, 3/31/95, 3/31/96, 3/31/97, 3/31/98, 6/30/98, and 9/30/07; analyst—Rich Powell.
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APPENDIX: BLANK CHECK STOCK CONTROL
Exhibit I
BLANK CHECK STOCK CONTROL Campus:_____________ ACCOUNTING OFFICE CONTROL RECORD
TYPE ( 9 ) PLACE OF STORAGE (indicate which) Payroll Vendor “Rush” Accounting Office:
CHECK NUMBERS DATE
PURCHASE ORDER NO. (^) QUANTITY Beginning Ending Checks Ordered: Delivered
By Printer: \\\\\\\\\\\\\
NUMBERS MISSING FROM SEQUENCE WHEN DELIVERED From To From To From To
CHECKS WRITTEN CHECKS SIGNED VOID/CANCEL Check Numbers Check Numbers Check Quantity Beginning Ending Date Quantity Beginning Ending Date Numbers Date
