PROCEDURES
FOR INSUFFICIENT FUND CHECKS
If you deposit a check with the State
Treasurer’s Office and it is returned by US Bank for insufficient funds, the
State Treasurer’s Office will create a journal entry debiting your Fund.132900
(NSF Suspense Account) for the amount of the returned check. The Treasurer’s Office will then send you a
copy of the journal entry and return the check to the agency.
When you receive the copies, agencies
should create a journal entry to credit the agency Fund.132900 and debit the
agency BU.revenue object code where the money was
originally deposited. It is a good
procedure to have a copy of the original Treasurer’s Deposit Document and the
Treasurer’s journal entry as back-up for this JE.
Agencies should be monitoring this
account (Fund.132900) on a monthly basis to ensure that all JE’s are being made
correctly. To review
this account, go to General Accounting > Inquiries & Reports >
Accounting Inquiries > Account Ledger Inquiries > Account Ledger Inquiry.
In the Account field enter your agency
Fund.132900, in the From Date field enter
If the differences are not obvious,
you should export all the information for these columns: Doc Number, Do Ty, G/L Date, Explanation, LT1
Debit, LT1 Credit. Then check off each dollar amount
in the debit column that agrees to the same amount in the credit column. Those amounts not checked off are your
‘problems’. If you have several entries
for the same dollar amount, it may be difficult to tell which debit matches
which credit and you may need to drill down and review the details or do
further research.
On a quarterly basis, the Treasurer’s
Office will also send agencies an IBT for the returned check fees which
currently are $20.00 for each returned check.
Agencies pay this IBT through the usual voucher processing on
Follow-up
on the insufficient fund check
Agencies should have a policy on how
to follow-up on insufficient fund checks.
For example:
When a check is returned for
insufficient funds, the (employee title) will attempt to contact the person a
minimum of two times to collect the money.
The first contact may be by phone and the second by written letter. In either situation, the (employee) will
explain to the person that they must bring in the cash or mail in a cashier’s
check or money order for the returned check plus a returned check fee of
$20.00. In addition, whenever this
person wants to do business with this agency in the future, they must always
pay by cash, a cashier’s check or by money order.
If the returned check was for a
license or other document that can be revoked, the person should also be
informed that unless payment is made within 10 days (or an appropriate amount
of time) the license or other document will be revoked.
It is always a good procedure to
document your contacts when trying to collect on a returned check. This documentation could be a log sheet
indicating date you tried to make contact, date you made contact and a few
notes about what was said.
Receipt
of payment on a returned check
When an agency receives payment for a
returned check, the money should be deposited with the Treasurer following the
agency procedure for deposits. The
amount for the returned check fee should be deposited into object code (559100)
that was (or will be) used to record the returned check fee from the Treasurer’s
Office.
Print
Deposit document and have signed. Take
to State Treasurer’s office.
The
agency should also return the insufficient fund check to the owner.
When
collection for a returned check cannot be made
When money due from an insufficient
fund check cannot be collected, but a commodity has been distributed or service
has been performed, the agency will need to document this event so that the
information can be turned over to the State Claims Board for action. The proper way to submit a claim is described
next: (These instructions received from
State Claims Board)
The agency should submit a claim to the State Claims Board
requesting permission to write the amount off as an uncollectible debt.
Two
forms should be completed for this claim:
1)
Claim
form for injury or damage and
2)
Request
to write off uncollectible debt .
Since these claims go to the Legislature for approval and the
Legislature has been looking closer at write offs in recent years, it may be
beneficial for agencies to know that they need to provide detailed
documentation that shows they made every reasonable attempt to collect the
debt.
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