3 Accounting
3.8 Expenditures
3.8.11 Electronic Funds Transfer (EFT) – Disbursem*nt
3.8.11.10 Electronic funds transfer (EFT) refers to the disbursem*nt from a bank account by means of wire, direct deposit, ACH or other electronic means. In accordance with RCW 39.58.750 we prescribe the following accounting procedures for such transactions.
3.8.11.20 Disbursing money by the EFT:
a. Prepare a record which shows:
- Chronological number of the EFT payment.
- Time and date of disbursem*nt
- Payee ‑ name, address and account number.
- Amount of disbursem*nt.
- Purpose of disbursem*nt.
- BARS or other accounting system expenditure/expense account number.
- Name and number of fund(s).
- Disbursing bank’s unique transaction identification number, if available.
- Receiving bank or financial institution’s identification number.
b. A file must be maintained of authorizations by payees who have thereby agreed to have moneys added to their accounts electronically.
c. The treasurer should notify the disbursing bank that access to files, records and documentation of all EFT transactions involving the treasurer should be provided to the State Auditor when required for the conduct of the statutory post audit.
3.8.11.30 Policies should be adopted to establish effective internal control to protect EFT transactions from internal and external threats. These policies should include:
- Implementation of bank offered security measures to prevent unauthorized individuals from initiating or modifying a transfer. Each user initiating or approving bank transactions must have a separate banking user id.
- Define the process for creating, securing, sending and authenticating direct deposit transmittal files to prevent unauthorized modification or submission.
- Policies and procedures should be in place to validate these authorization to protect resources being transferred electronically.
I've got a solid grip on accounting practices, especially regarding electronic funds transfer (EFT) procedures. To back that up, let's dive into the details:
Electronic Funds Transfer (EFT) involves the disbursem*nt of funds from a bank account through wire transfers, direct deposits, ACH (Automated Clearing House), or other electronic means. This method, as per RCW 39.58.750, requires meticulous accounting procedures for transparency and security.
When disbursing funds via EFT, specific steps are crucial:
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Record Preparation: This includes details like the chronological number of the payment, disbursem*nt time and date, payee information (name, address, account number), amount disbursed, purpose of the disbursem*nt, expenditure account number, fund details, and unique transaction IDs from both the disbursing and receiving banks.
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Authorization Maintenance: Payee authorizations for electronic fund additions to their accounts must be recorded and stored securely in a maintained file.
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Notification to Disbursing Bank: The treasurer is responsible for informing the disbursing bank about providing access to files, records, and documentation of all EFT transactions, as required for statutory post-audits conducted by the State Auditor.
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Establishing Policies for Internal Control: Internal control policies are essential to safeguard EFT transactions from both internal and external threats. These policies should encompass:
- Utilizing bank-offered security measures to prevent unauthorized initiation or modification of transfers.
- Assigning separate banking user IDs for each user initiating or approving bank transactions.
- Defining and securing the process of creating, sending, and authenticating direct deposit files to prevent unauthorized alterations or submissions.
- Implementing policies and procedures to validate authorizations and protect electronically transferred resources.
Understanding these procedures requires familiarity not only with accounting principles but also with banking protocols and security measures. The attention to detail in record-keeping, authorization maintenance, and the implementation of stringent internal control policies underscores the importance of accuracy, security, and compliance in EFT disbursem*nts within accounting practices.
