Procedures for Returned Bad Checks

The State Treasury implemented procedures effective October 1, 1998 for handling bad checks returned from the bank. The procedures were developed due to agencies not timely furnishing the State Treasury with a Certificate of Deposit to reduce cash in the agency’s fund by the amount of the bad check(s). A negative Certificate of Deposit is to be submitted the same day that the agency is notified of the bad check. If no Certificate of Deposit is submitted, the State Treasury will process their own Certificate of Deposit to remove cash from the agency’s fund.

There are some AFNS procedures that need to be considered due to the changes in handling returned bad checks. These procedures are attached.

PROCEDURES

FOR BAD CHECKS

RECOMMENDED PROCEDURES

1. The State Treasury will call the department to inform the agency that a bad check has been received for their agency.

2. Agencies are required to complete a negative Certificate of Deposit for the amount of the bad check. The Certificate of Deposit must reverse the account coding that was used on the original deposit.

To correct bad checks deposited in the prior year, follow the instructions in chapter 3 of the Fiscal Policy and Procedures Manual.

3. The form must be delivered to the State Treasury by 2:00 PM the same day.

4. Agencies should make every effort to deliver the Certificate of Deposit to the State Treasury that same day. Certificates of Deposit not delivered to the Treasury by the 2:00 p.m. deadline must call 242-7520 before 2:00 p.m. and provide the Treasury with the original account coding of the bad check and a certificate number. The State Treasury will prepare a negative Certificate of Deposit for the agency using the certificate number provided.

5. REMINDER – Enter the Certificate of Deposit in AFNS or using a Cash Receipt (CR) document. The CR must reverse the account coding that was used on the original deposit. (Use original document number and account coding, if possible.)

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STATE TREASURY’S CERTIFICATE OF DEPOSIT

Agencies that fail to comply with the RECOMMENDED procedures on page 1 must follow the procedures listed below.

1. Agencies that are unable to furnish the account coding that was used on the original deposit must call the State Treasury Office (242-7520) by 2:00 p.m. and provide the Treasurer’s with the fund number to use on the Certificate of Deposit. The State Treasury will assign the certificate number unless the agency provides one to the Treasury.

The State Treasury will complete a negative Certificate of Deposit using the CAS balance sheet account ‘Bad Checks Receivable’ (1215). This Certificate of Deposit will remove cash from the agency’s fund.

Every time the State Treasury uses BS 1215 on a Certificate of Deposit the agency must enter a cash receipt (CR) to record the transaction in AFNS (credit to cash and debit to BS 1215). Then follow instructions in step 4 on page three.

2. A copy of the Certificate of Deposit will be sent to the agency.

3. If the State Treasury used their own Certificate of Deposit number the following instructions will apply:

STAND ALONE AGENCIES

A CR document will be used to record the data. State Treasury’s Certificate of Deposit number may be used as the CR number in the Stand Alone applications.

Stand Alone Agencies may choose to use their own standard number sequence for CR documents. When choosing this option it is recommended that the State Treasury’s Certificate of Deposit’s number be entered in the COMMENT field on the header of the CR document or enter the number in the DESCRIPTION field on each line of the CR.

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PUBLIC HEALTH ONLY

The State Treasury’s Certificate of Deposit has already updated CAS. Therefore, the CR document must begin with ‘OT’ so integration will not pass the CR document to CAS.

GENERIC AGENCIES

The State Treasury will assign their own numbering sequence for the Certificate of Deposit. This may create duplicate CR documents numbers if more than one Generic agency receives a bad check on the same day. To eliminate this from occurring, DO NOT USE THE CERTIFICATE OF DEPOSIT NUMBER ASSIGNED BY THE STATE TREASURY to enter the second CR document into AFNS.

Generic agencies must use the standard number sequence for CRs to record the data in AFNS.

EXAMPLE

3 __ __ __ 0 0 1 5

½ 1rr2rr3 1rr2rr3

FY Agency Department’s

Code Discretion

Generic agencies’ security is based on the 2nd, 3rd and 4th positions of the CR document number, which is the agency code.

To assist with an audit trail, it is recommended that the State Treasury’s Certificate of Deposit number be entered in the COMMENT field on the header of the CR document or enter the number in the DESCRIPTION field on each line of the CR.

4. When the original account coding of the bad check is determined, the agencies will fill out a zero dollar Certificate of Deposit. The certificate must be submitted to the State Treasury as soon as possible.

When entering the second CR document into AFNS, the first line(s) of the second cash receipt document should indicate a decrease of the original account coding of the bad check (i.e. revenue source, balance sheet account or expenditure object). The second line should reflect and increase to BS account 1215 to reduce the balance sheet account.

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PUBLIC HEALTH this Certificate of Deposit is required to go through integration.

GENERIC AGENCIES AND STAND ALONE AGENCIES will use their standard numbering sequence.

5. Any amounts remaining in BS account 1215 as of the end of the fiscal year must be reclassified as indicated in step 4 by the end of the 13^th accounting period.

Any Certificates of Deposit processed in the 13^th accounting period to reclassify amounts recorded in the prior year to BS account 1215 should be coded to the 13^th accounting period. (The increase and decrease must be to the same fund.)

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