HomeMy WebLinkAboutAPPROVAL re Jefferson County Electronic Funds Transfer JEFFERSON COUNTY
BOARD OF COUNTY COMMISSIONERS
CONSENT AGENDA REQUEST
TO: Board of County Commissioners
FROM: Mark McCauley, County Administrator
DATE: September 3, 2024
SUBJECT: Request for Board Approval, re: Jefferson County Electronic Funds
Transfer(EFT) Policy
STATEMENT OF ISSUE:
Stewardship of the county's financial resources is a core responsibility of the county in general and of
leadership in particular. The county needs to have internal controls in place to protect against errors
and fraud. An area of significant risk is the transfer of funds using electronic means. Large sums can
be transferred easily which is why the use of electronic fund transfers deserves special consideration
when the county is evaluating the sufficiency of its internal controls.
ANALYSIS:
Stacie Prada,the County Treasurer, who oversees county banking recently convened an EFT Policy
Workgroup to help develop a comprehensive, county-wide policy regarding EFT's. The group was
comprised of financial staff from across the county. The purpose of the group was to craft a uniform
policy for EFT's to be adhered to by all county departments and elected offices. The policy is
designed to ensure consistency, enhance the effectiveness of the county's internal controls and
prevent financial loss.
The work of the EFT Policy Workgroup is complete and their proposed policy is attached for
consideration by the Board of County Commissioners.
FISCAL IMPACT:
This request has no fiscal impact. It does, however, increase the county's confidence that EFT's will
be properly and uniformly administered and free from errors and fraud.
RECOMMENDATION:
That the Board of County Commissioners approve and adopt the attached EFT policy.
REVIEWED BY:
Mark McCauley ounty Administrator Dat
JEFFERSON COUNTY
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Electronic Fund Transfers (EFT) Policy
Adopted September _, 2024
Jefferson County
Electronic Fund Transfers (EFT) Policy
Table of Content,
1. Purpose and Scope 3
2. Definitions 3
3. Internal Control Requirements 3
4. Types of Payments made via EFT: 4
5. Training 4
6. Electronic Funds Transfer (EFT) — Disbursement 4
6.1. EFT Disbursement Record-Keeping: 4
6.2. Origination of ACH File(s): 5
6.3. Authorizations. 5
6.4. Transaction Advices: 5
6.5. Cancellation of Transactions: 6
6.6. Cut-off Times and Close Outs 6
6.7. Funding outbound ACH transactions: 6
6.8. Returns 6
7. Electronic Funds Transfer (EFT) — Receipts 7
7.1. Reporting of inbound ACH transactions: 7
8. Reconciliation 8
9. Paying Banking Services Invoices: 8
10. Signatures and Approvals 8
11. Forms 8
12. References 9
Jefferson County Electronic Fund Transfer (EFT) Policy September 2024 Page 12 of 9
1. Purpose and Scope
1.1. Jefferson County makes payments to vendors and employees by electronic funds transfers
and receives funds from various parties as a routine business practice.All such payments
must be properly authorized and executed to reduce the risk of erroneous or fraudulent
transactions.
2. Definitions
2.1. Electronic funds transfer(EFT) refers to both deposits to bank account and disbursements
from a bank account by means of wire, direct deposit,ACH or other electronic means.
2.2. Automated Clearing House (ACH) -A nationwide payment and collection system that
provides for the electronic distribution and settlement of funds.Although the term
Electronic Fund Transfer (EFT) is technically more inclusive than the term ACH,the term
EFT is often used synonymously with ACH and Wire Transfer.Wire transfers execute
directly between two accounts,as opposed to a clearinghouse,so they process more
quickly,but they are more expensive.
2.3. National Automated Clearing House Association (NACHA) - is the steward of the
electronic system that connects all U.S.bank accounts and facilitates the movement of
money among them.
3. Internal Control Requirements
To protect EFT transactions from internal or external threats,the following controls will be
adhered to:
3.1. Implementation of bank offered security measures to prevent unauthorized
individuals from initiating or modifying a transfer,i.e.,use of positive pay.
3.2. Each user initiating or approving bank transactions must have separate bank User IDs.
3.3. Separate users must initiate and authorize electronic transactions.
3.4. Use of pre-established templates for specific transaction types and specific accounts may
be authorized in advance by the Jefferson County Treasurer or their designee. New
templates must be initiated by one user and authorized by the Jefferson County
Treasurer or their designee.
3.5. The process for creating,securing,sending,and authenticatingdirect deposit
transmittal files to prevent unauthorized modification or submission is
documented below.
3.6. Adherence to the Jefferson County computer policies and procedures to protect
computers and computing processes used for EFTs from computer malware.
3.7. Regardless of payment method,i.e.,wire transfer,ACH or paper warrant(check),
employees shall adhere to the authorization and processing requirements as set out
in policy or procedures manual.
3.8. Changes to employee direct deposit must be processed using the Authorization
Agreement for Direct Deposits (ACH Credits) with a voided check attached or an
account verification form from the employee's financial institution. Under no
circumstances will account changes be authorized by telephone or email.
Jefferson County Electronic Fund Transfer (EFT) Policy September 2024 Page 13 of 9
3.9. Changes to vendor ACH accounts must be processed usingthe Vender ACH Payment
authorization form. Under no circumstances will account changes be authorized by
telephone or email.
3.10. All EFT transactions will use available bank notifications. For example,wires and
ACH transaction notifications will be sent by email to other bank account signers.
4. Types of Payments made via EFT:
4.1. Vendor Payments: In its normal course of business,the Jefferson County Auditor's Office,
Financial Services Department,and the Jefferson County Treasurer's Office may remit
the following types of vendor payments via ACH:Vendor Payments, Employee
Reimbursements, routine payments to the State Agencies and Taxing Districts.
4.2. Wire Transfers: In its normal course of business,the Jefferson County Treasurer
transfers or receives by wire funds for investment purchases and redemptions,
bond proceeds and payments.
4.3. Customer Direct Debit: In its normal course of business,the Jefferson County
Treasurer's Office allows customers the option of to direct the county department to
directly debit their bank account to make their payments.
4.4. For Vendors and employees being paid by paper warrant(check),the county shall
adhere to the requirements for payment approvals and accounts payable
documentation and processing as instructed by the Jefferson County Auditor or other
applicable laws.
4.4.1.With very few exceptions,checks issued to suppliers should only be delivered to the
Vendors by United States mail or its equivalent. Payroll checks may be delivered to
the employee or picked up by the employee from the Jefferson County Financial
Services Department. Exceptions must be documented and authorized by the
Jefferson County Auditor. Under no circumstances is a warrant (check) to be
mailed earlier than the dated date of the check.
5. Training
5.1. To ensure consistent compliance with procedures,employees tasked with processing,
reconciling and record-keeping will train in the proper procedures and internal
controls prior to conducting these functions.
6. Electronic Funds Transfer (EFT) - Disbursement
6.1. EFT Disbursement Record-Keeping:
6.1.1.Transaction records will include:
6.1.1.1. Chronological number of EFT payment.
6.1.1.2. Time and date of disbursement
6.1.1.3. Payee - name, address,and account number
6.1.1.4. Amountofdisbursement
6.1.1.5. Purpose of disbursement
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6.1.1.6. BARS or other accounting system expenditure/expense account number
6.1.1.7. Name and fund number
6.1.1.8. Disbursing bank's unique transaction identificationnumber
6.1.1.9. Receiving bank or financial institution's identification number
6.1.2.A file must be maintained of authorizations by payees who have thereby agreed to
have moneys added to their accounts electronically.
6.1.3.TheJefferson County Treasurer should notify the disbursing banks that access to
files,records and documentation of all EFT transactions should be provided to the
State Auditor when required for the conduct of the annual audit
6.2.Origination of ACH File(s):
6.2.1.ACH File Database: Jefferson County creates ACH files from the MUNIS
Financial System,which are downloaded in the proper ACH format.
6.2.2.Transmission: Several options are available to transmit the file to the AC H
originating bank, either through a gateway provider, or directly to the bank.
Jefferson County generates and transmits payroll,employee reimbursement or
supplier payments files via Treasurers designated financial institution.
6.2.3.Retention:ACH and EFT data files are required to be maintained for six years after
the end of the fiscal year(per Local Government Records Retention Manual).
6.3.Authorizations:
6.3.1.All employees whose net pay is to be directly deposited must complete an
Authorization Agreement for Direct Deposits (ACH Credits). This form is
submitted to the Auditor's Financial Services Department and must include a
deposit slip for a Savings Account or a voided check for a Checking Account. In
lieu of a deposit slip or voided check, the employee may provide an account
verification form from the employee's financial institution indicating the routing
number and account number.
6.3.2.The authorization form shall provide the employee with the ability to change
bank account information. Employees should notify the Payroll Office
immediately but no later than ten business days prior to the pay date for closed
or compromised accounts.
6.3.3.Retention of authorization forms will be maintained until superseded and
released from all audits.
6.3.4.Jefferson County does not allow telephone or email initiated entries or change
authorizations.
6.4.Transaction Advices:
6.4.1.Participating employees are provided either an electronic or hard copy Direct
Deposit Advice (paystub) on the payroll pay date, specifying details of the
employee's gross pay, tax withholdings,statutory and voluntary deductions, net
pay,and other information.
6.4.2.Vendors being paid by ACH credit will be advised of the payment via email or through
vendor required methods.
Jefferson County Electronic Fund Transfer (EFT) Policy September 2024 Page 15 of 9
6.5.Cancellation of Transactions:
6.5.1.If it is learned that a supplier or employee does not have a right to payment or the
payment amount is more than the amount due to the Vendor/employee, then the
payment is to be cancelled.Action to take will depend upon where the payment is
in the timeline of the transaction.
6.5.2.If the ACH file has not been transmitted to the county's bankbutthe payment
process has been finalized,staff will void the batch to remove the incorrect
payment.
6.5.3.If the ACH file has not been transmitted to county's bank and the ACH process
has begun,staff will remove the incorrect payment prior to finalizing the
batch.
6.5.4.If the ACH file has already been transmitted to county's bank, staff would
contact and complete the county's bank ACH Service request for item
delete/reversal and provide to the bank either by email or via other forms of
transmission as required by the bank.
6.6.Cut-off Times and Close Outs
6.6.1.The following cutoff times are established for ACH file transmissions:
6.6.2.The ACH file auto-generate at the conclusion of the payroll process is scheduled to
transmit one (1)banking day prior to the payroll issue/check date.
6.6.3.The ACH file transmission for suppliers is generated one (1) banking day prior to
issue/check date.
6.7. Funding outbound ACH transactions:
6.7.1.Funding of ACH files is deemed a critical function that must be performed
accurately and timely, in order to avoid the overdrawing of the direct deposit
bank account.
6.7.2.The ACH settlement account(s) which accommodates the funding of outbound ACH
transactions for Payroll and outbound ACH Vendor transactions is funded via a bank
account transfer from the Treasurer's Main Checking account.
6.7.3.Funding of ACH/EFT transactions must occur for settlement no later than one (1)
banking day in advance of the payroll issue/check date or the supplier issue/check
date.
6.7.4.Funding of the settlement account(s) will be made in writing by the Auditor's
payroll staff and directed to the Jefferson County Treasurer's office with
prescribed information and emailed to TreasurerAccountant@co.jefferson.wa.us,
6.8. Returns
6.8.1.In the case of outbound transactions for Vendor and payroll payments, returns
will be credited back to the direct deposit bank account from which the funds
were originally disbursed.
6.8.2.Returned items are monitored daily.Any returned items are forwarded to the
appropriate Financial Services employee (Payroll for Direct Deposit and AP for all
other ACH payments),to be researched and either voided or reissued as appropriate.
A second Auditor's Office Department employee will review all such returns and
Jefferson County Electronic Fund Transfer (EFT) Policy September 2024 Page 16 of 9
their related dispositions.
7. Electronic Funds Transfer (EFT) - Receipts
7.1. Reporting of inbound ACH transactions:
7.1.1.The settlement bank account with accommodates the receipt of inbound ACH
transactions is the Treasurer's Main Checking Account.
7.1.2.The county treasurer receives notices from the Office of the State Treasurer (OST)
about two (2) days prior to receipt.The funds are recorded in various funds and
revenue accounts as outlined in the notice and the payment is posted as a
miscellaneous receipt as part of the daily control drawer batch.
7.1.3.The county treasurer receives ACH payments from various entities (state, federal,
billing companies, etc..) on behalf of county departments and junior taxing districts.
County Departments and Junior Taxing Districts are required to email or deliver a
transmittal form or a general billing invoices identifying the proper fund and BARS
for the payments.The treasurer's staff reconciles the transmittal forms to the
payments received,and the payment is posted using a miscellaneous receipt as part
of the daily control drawer batch.
7.1.4.The county treasurer receives ACH/WIRE notice and a payment file from several
mortgage processing companies for the payment of property taxes (due 4/30&
10/31).The payment file is reconciled to the payment received and payments are
posted as part of the daily cashiering batch.
7.1.5.The county treasurer receives ACH payments via the county's third-party vendor for
credit/debit card payments made online or in person to various departments (e.g.
Point&Pay,). Authorized staff access the vendor portal website, and reports are
reconciled to the payment received. County Departments and Junior Taxing Districts
are responsible for reconciling and emailing a transmittal form to
TreasurerAccountant@co.jefferson.wa.us,and payments are posted as part daily
control drawer batch. The County Treasurer receives payment files via email,that
are then reconciled to the payment received and posted as part of the daily control
drawer batch.
7.1.6.County offices receive EFT receipts from third-party vendors (e.g. District Court and
Clerk's Offices) for credit/debit card payments made online or in person.Authorized
staff access the vendor portal website, and reports are
p is a e reconciled to the payment
received.
7.1.7.Bank Transfers are done by some special purpose districts and county departments
with depository bank accounts.County Departments and Junior Taxing Districts are
required to obtain prior approval by the County Treasurer for authority and bank
permissions to conduct these transactions.
7.1.8.Unidentified ACH/Wire payments are those payments received into the
Treasurer's Main Checking Account where the County Treasurer has not
received a transmittal form to appropriately receipt the funds. These funds are
posted by miscellaneous receipt to the Treasurer's Suspense Holding Fund as
Jefferson County Electronic Fund Transfer (EFT) Policy September 2024 Page 17 of 9
part of the daily control drawer batch. Unidentified funds are held until
identified by the appropriate county department or junior taxing district. The
Treasurer's Office will include an Unidentified Funds Report with monthly reports
to the county departments and junior taxing district for resolution. Once the
funds are identified by a transmittal form,the funds are transferred out of the
Treasurer's Suspense holding account and receipted via miscellaneous receipt to
the appropriate fund and BARS and posted as part of the daily control drawer.
7.1.9.Payors and Vendors regularly require completion of EFT forms to pay Jefferson
County and districts electronically. Those forms shall be signed by one of the
signers on the account where deposits will be made.
8. Reconciliation
8.1. All Bank Statements shall be reconciled monthly as part of a global reconciliation.
8.2. All bank reconciliations are performed in accordance with BARS Manual standards.
Currently BARS Manual Section 3.1.9
8.3. Completed bank reconciliations where possible should be reviewed by second
reviewer, supervisor/manager as part of the monthly reconciliation process.
Completed bank reconciliations should be date stamped,and initialed,by all parties.
8.4. All completed bank reconciliations are required to be provided to the Auditor's Office
monthly and annual reconciliation information to the County Treasurer's Office at
TreasurerAccountant@co.jefferson.wa.us for compilation of the State Auditor's Schedule
06.
8.5. All outstanding items are reconciled prior to the succeeding month. Unclaimed checks
are reported to the state each year per state regulations.
9. Paying Banking Services Invoices:
9.1. All invoices for banking services received shall be paid in a timely manner, in
accordance with established county procedures for accounts payable.
9.2. Responsibility for inspecting the invoices received and approving payment is that of
the Office overseeing the bank account and forwarding to AP for audit and warrant
issuance.
9.3. If fees are paid automatically in a bank account, invoices shall be vouchered to go
through the normal AP process and be deposited to said bank account.
10. Signatures and Approvals
10.1.The US Federal ESIGN Act of 2000 gives the same legal protections to online signing
as to traditional pen and paper signing.
11. Forms
11.1. Vendor ACH Payment Authorization Form
11.2. Authorization Agreement for Direct Deposits (ACH Credits).
11.3. Bank Account and Depository Approval Form
Jefferson County Electronic Fund Transfer (EFT) Policy September 2024 Page 18 of 9
12. References
12.1.Jefferson County Network, Internet, Intranet, E-mail,and Voice Mail Use Policy, Resolution
No. 17-98.
12.2.RCW 39.58.750 Receipt,disbursement,or transfer of public funds by wire or other
electronic communication means authorized.
12.3. BARS Manual Section 3.8.11- Electronic Funds Transfers - Disbursement provides
accounting procedures and recommended internal controls to safeguard local
government resources when utilizing EFT.
12.4. BARS Manual Section 3.6.6 - Electronic Funds Transfers- Receipts provides accounting
procedures and recommended internal controls to safeguard local government resources
when utilizing EFT.
12.5. BARS Manual Section 3.1.9- Bank Reconciliations provides guidance regarding
appropriate bank reconciliation practices.
12.6. DOL Agency Account VLO, dated January 1, 2024
12.7.RCW 36.48.010 Depositaries to be designated by treasurer
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