Stale Cheques Procedures

Introduction

1.1  Valid cheques drawn by the University that remain unpresented after 15 months are regarded as stale and will be transferred from the general ledger bank account into a stale cheque holding liability account.

1.2  The Unclaimed Moneys Act 1891 does not apply to Flinders University.

Risks associated with recording stale cheques are:

• Presentation of a stale cheque after a replacement cheque has been issued.
• Cheques that have been regarded as stale may be presented by the bank causing an imbalance between the bank and general ledger.
  

Controls

Controls in place to minimise the risks are:

• Daily reconciliation between bank and general ledger will identify any imbalances within 24 hours of presentation at the Bank.
• Stale cheques are listed in detail so that payments can be readily identified.
• A transaction note will be added behind the $RF on the student system to record the student refund cheques listed in the stale cheque account (refer 4.2).
• The Bank will dishonour/reimburse any stale cheque presented on the Flinders University operating account if it is identified as a duplicated payment by the Accounts Supervisor (or nominee).(refer 4.6).
• A stop payment instruction is advised to the bank before a replacement cheque is issued.
  

Procedures

4.1 At the end of each financial year, the Accounts Supervisor (or nominee) will process a stale cheque clearing run in the finance system to identify the total value of stale cheques >15 months old. This amount will then be transferred from the general ledger bank account to the stale cheque holding liability account (105-0002-7253-000-0-01).

4.2 After the stale cheque clearing run, the Accounts Supervisor (or nominee) will send a copy of the report to the Student Financial Services (SFS) area. SFS staff will then add a transaction note behind the $RF on the student system to record that the University is holding a payment in the stale cheque account.

4.3 At the end of each financial year, the balance in the stale cheque holding account will be assessed by the Accounts Supervisor (or nominee) to determine if the amount is a liability or revenue. If revenue, the balance will then be transferred to the appropriate income account.

4.4 Cheques may be reissued from the stale cheque bank account when a Payee requests a replacement cheque. The procedures under these circumstances are:

• The original (stale) cheque is returned to the University to prevent future requests and to take the cheque out of circulation. Where the original cheque is unable to be returned the University will advise the Bank to renew the “stop-payment” status.
• No replacement cheque will be issued until after the stop payment request has been processed by the bank. Confirmation of the stop payment will be faxed from the ANZ Bank to Flinders University within one working day.
• The Finance system is checked to ensure that the replacement request is valid.
• Details on the Finance system are corrected to transfer the funds from the stale cheque bank account to be available to create a new cheque from the system.
• A replacement payment is made on the next payment run and sent to the payee at their current address.

4.5 Payments may also be made from the stale cheque bank account when a stale cheque is presented at the Bank, the bank accepts the cheque and the University accepts the payment. The procedures under these circumstances are:

• The Finance system is checked to ensure the payment is valid and the funds are available in the stale cheque bank account.
• The Finance system is corrected to transfer the funds from the stale cheque bank account and available for payment.
• A manual clearing payment is made on the Finance system to show that the payment was cleared on the day it was presented at the Bank.
• The original cheque number can not be used again as it has been voided so the document number on the manual clearing payment is the date of presentation eg 050805 (5th August 2005).
• Where the bank has accepted a stale cheque to be deposited and the University (after an investigation) does not accept the payment then the Bank will be directed to reverse the transaction and has agreed to wear any loss that arises as a result.

4.6 All stale cheques presented on the Flinders University operating account will be identified, investigated and actioned as part of the daily bank reconciliation. One of the following options will be taken:

• The stale cheque will be accepted as a presented cheque if the creditor is listed in the University’s stale cheque account and no replacement cheque has been issued.
• The Accounts Supervisor (or nominee) will contact the ANZ Bank on campus, within 24 hours of presentation, to notify staff that the cheque will be dishonoured as it is stale and a replacement cheque has been reissued to the creditor. The creditor will incur the dishonour fee as well as the cancellation of funds.
• The Accounts Supervisor (or nominee) will contact the ANZ Bank on campus, within five working days, to notify staff that the University can not honour the cheque as it is stale and has been reissued to the creditor. The Bank will incur all costs associated with the transaction.
• The University will honour any stale cheque that has been presented on the University operating account, if no notification has been given to staff at the ANZ Bank on campus after five working days.

4.7 If an amount still remains in the stale cheque account after a period of 5 years from the date of issue of the cheque, the University may elect to reverse the transaction to which the cheque relates. The Accounts Supervisor will liaise with the Tax Accountant for the appropriate action for allocation of the GST.

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