10.0 UNDELIVERABLE CHECKS

10.1 Undeliverable Vendor Checks

In the event a properly drawn check issued by the State remains in an agency's possession beyond 90 days from the date of issuance, after a diligent attempt to locate the payee has been unsuccessful, the following procedures will govern its disposition.

  1. Prepare an interdepartmental memorandum in duplicate addressed to the State Treasurer's Office. This memorandum shall contain:
    1. Expenditure batch number, check number, check date, amount and payee name.
    2. Explanation of why the check is being returned for transfer to suspense.
    3. A signed certification that the amount is proper and unpaid.
  2. Distribute as follows:
    1. Forward the original copy of the memorandum, with the check attached to:
Office of the State Treasurer
Account Reconciliation
55 Elm Street
Hartford, CT 06106
Attention: Check Administration
  1. Retain the duplicate copy of the memo and the check in your files. Please note that after five (5) years, the monies are transferred to unclaimed property.
  2. It is not necessary to send a copy to the Comptroller's Office.
  1. Claims for suspended vendor checks

    In the event a payee claims moneys previously transferred to suspense by the above method, refer to the State Treasurer's Office - Check Administration, 702-3115.

ACCOUNTING MANUAL 6-42 DECEMBER 1998

10.2 Requests from Asset Recovery Organizations (finders)

In recent years the Office of the State Comptroller and the Treasurer's Office have had increasing inquiries regarding outstanding vendor checks from asset recovery organizations (finders). The finder obtains the vendor check information from the Treasurer's Office under the Freedom of Information Statutes, specifically Section 1-15 (CGS). In addition to the vendor check listing, the Treasurer's Office provides an agency code listing and a telephone directory upon request. The standard letter to the finder will direct them to the individual agency responsible for the payment. Any requests for vendor check information must be submitted through the originating agency which processed the claim.

A. Outstanding Vendor Check List

The Treasurer's Office issues each agency a listing of outstanding vendor checks on or about September of each year. Please review this listing, especially the large dollar amounts; payments to other state agencies, towns or government entities, to diminish the requests from the finders. Every effort should be made to reduce the number of outstanding items.

B. Agency Internal Procedures

Agency internal procedures must be developed to handle inquiries from a finder. If a finder requests information, the following steps must be taken:

1. Files pertaining to the agency codes listed below may be exempt from review:

1502 - Claims Commission
1504 - Criminal Justice
7001 - Education*
7301 - University of Connecticut*
7302 - UConn Health Center*
7701-7709 - Community/Technical Colleges*
7802-7805 - State Universities*
9610 - Adjudicated Claims
9620 - Refunds of Taxes

* Only student refund claims may be exempt.

2. Social security numbers are confidential and must not be released or viewed by the finder.

3. If copies of the vendor invoices are requested, the information in two (2) above must be blocked out.

ACCOUNTING MANUAL 6-43 DECEMBER 1998

4. If a vendor check information form, CO-860, is completed on behalf of the finder, the agency must request that the power of attorney authorization be obtained from the payee.

Only a power of attorney with the original signature of the payee should be accepted by an agency. In the event that the payee is unable to sign due to death or incapacity, the power of attorney must be accompanied by evidence of the legal authority of the signer to act on behalf of the payee. A replacement check is not to be delivered or forwarded to anyone other than the payee unless proper authorization has been granted.

Each agency should submit the power of attorney to their Assistant Attorney General for review.

The Attorney General's Office will review and approve the legal sufficiency of the "Power of Attorney" that has been submitted to the agency. This approval must be obtained prior to the agency submitting the form CO-860.

The original payee should be notified, in writing, of any replacement checks given to a finder.

Each form CO-860 processed for a "finder request" should be so noted in the upper right corner.

C. Questions

Please direct questions as follows:

Treasurer's Procedures: Cash Management Unit (860) 702-3118

Comptroller's Procedures: Accounts Payable Division (860) 702-3409

ACCOUNTING MANUAL 6-44 DECEMBER 1998

11.0 REVENUE REFUND PROCEDURES

When all or a portion of a general fund revenue item must be refunded it is not recorded as a reduction of revenue but as an expenditure.

11.1 Unrestricted General Fund Refunds

The expenditure is charged against the appropriation 0-9605-002 Refund of Payments, which is a nonfunctional appropriation administered by the Comptroller. Listed below are the procedures for processing an unrestricted general fund refund:

  1. Prepare Invoice/Voucher for Goods or Services, Form CO-17 in duplicate, with required documentation, containing the following information:

    1. Deposit slip number and date
    2. Fund and standard revenue account credited
    3. Purpose for original deposit
    4. Reason for refund
    5. Statutory authority
      a) If no statutory reference is made the invoices will NOT be processed.
      b) Unless the agency has the statutory authority to issue refund payments, the appropriate statute is Section 4-37 of the Connecticut General Statutes which reads:
      "The Comptroller, upon application of any state department or commission, may draw an order upon the Treasurer in favor of any person equitably entitled to the refund of any money paid to the state, for the amount of such refund. Any such payments from the general fund shall be made from funds appropriated to the Comptroller for this purpose."

     

  2. Prepare a covering memorandum, attach invoices and forward to the Office of the State Comptroller, Business Office, 55 Elm Street, Hartford, Connecticut 06106.
  3. The approved invoices will then be processed for payment.
ACCOUNTING MANUAL 6-45 DECEMBER 1998

11.2 Restricted General Fund Refunds

When a restricted general fund revenue must be returned, in part or in whole, the agency prepares a normal batch list charging the particular account in which the restricted amounts are recorded.

11.3 Other Than General Fund Refunds

Refunds from funds other than the general fund are also charged as expenditures. The agency prepares a normal batch list, with adequate documentation, charging the fund concerned for the expenditures.

ACCOUNTING MANUAL 6-46 DECEMBER 1998

12.0 INTEREST EXPENSE FOR LATE PAYMENTS TO VENDORS

12.1 General Information

Sections 4a-71, 4a-72, 4a-73 and 4a-74 of the General Statutes requires that interest be paid to certain vendors when the State "fails to make timely payment." This act covers all contracts for "...public works, personal services, goods and services, equipment and travel.."

  1. Interest is calculated at one per cent (1%) per month on the amount due starting on the payment date specified in the contract or, if no date is specified, forty-five days from either receipt of a claim or receipt of the goods and services, whichever is later.
  2. Any amount of an interest penalty which remains unpaid at the end of any thirty day period shall be added to the principal amount of the debt and, thereafter, interest penalties accrue on that amount.
  3. Interest payments to public utilities accrued after June 5, 1975 shall be made after 60 days.

12.2 Exceptions to Prompt Payment Provisions (Section 4a-72 of the General Statutes)

The statute does not apply to the following:

  1. Interagency or intergovernmental transactions.
  2. Amounts payable to employee or prospective employees of state departments or agencies as reimbursement for expense.
  3. Contracts entered into on/or before October 1, 1984.
  4. Contracts related to highway or road construction, reconstruction, or maintenance.
  5. Claims, contracts, or projects that are to be paid for exclusively with federal funds.
  6. Claims subject to good faith dispute, if before the date of timely payment, notice of the dispute is sent by certified mail, personally delivered, or sent in accordance with any procedure in the contract.
ACCOUNTING MANUAL 6-47 DECEMBER 1998

"Good Faith Dispute" means a contention by the State that goods delivered or services rendered were:

  1. Of less quantity or quality than ordered or specified by contract,
  2. Faulty,
  3. Installed improperly, or
  4. Any other reason giving cause for the withholding of payment by the state until the dispute is settled.

12.3 Time Considerations

  1. Time Frame for Processing Claims

    All claims covered by Statute being processed for payment to vendors must be received by the Accounts Payable Division no later than ten (10) business days prior to the date the payment is due as specified within the contract or, if no date is specified, within thirty (30) days of receipt of a properly completed claim or receipt of goods and/or services, whichever is later.

  2. Timely Payment

    Payment is considered "timely" if:

    1. A check or warrant is mailed or delivered on the date specified in the contract documents, or, if no date is specified, within forty-five (45) days of receipt of a properly completed claim or receipt of goods and services, whichever is later.
    2. For any amount that is required to be withheld under State or Federal law, a check or warrant is mailed or delivered in the proper amount on the date the amount may be released under applicable law.
  3. Disputed Claims

    In the instances where a claim is filled out incorrectly or where there is any defect or impropriety in a claim submitted, the state department or agency shall contact the vendor within ten days. An error on the vendor's claim, if corrected within five business days of being so contacted and within the payment period as determined above, preserves the original due date of payment.

ACCOUNTING MANUAL 6-48 DECEMBER 1998

12.4 Processing Interest Payments

Interest payments must be processed within thirty days of receipt of vendor's statement.

  1. Commitment of Funds for Late Payment

    Section 4a-73 states: "Any state agency required to pay late payment penalties under section 4a-71 shall pay the penalties from funds designated for administrative costs of the agency receiving the public works, personal services, goods and services, equipment or travel. The penalties shall not be paid from other funds of the state."

    Therefore, encumber the necessary funds required to absorb the interest expense on Form CO-110, Requisition for Reservation of Funds from Reservation Number 5-28, "funds" designated for administrative costs.

    Expenditure object 05280 must be used to properly classify the portion of the expenditure related to interest.

  2. Vendor Billing Statement for Interest Charges

    1. The vendor must submit interest charges on a separate invoice, form CO-17, which should indicate that the payment represents interest on prior late payment; identify the original procurement document or contract.
    2. The agency must submit the invoice on a separate batch list in which all documents are signed by the agency head or deputy; no other signatures will be accepted. Prior to processing this invoice for payment, however, the agency must complete the following verifications:

      a) The agency must retrieve the original source document and verify the time frames for which the interest charge is being made by the vendor.

      b) The verification process must include obtaining the date the check was mailed to the vendor. This information may be obtained from the Accounts Payable Division by submitting Form CO-860, Request for Vendor Check Information. Please indicate on Form CO-860 under "Reason for Request" Section that this request is in reference to interest charged on late payments and that the date the check was mailed to the vendor is required and not the "check Date".

ACCOUNTING MANUAL 6-49 DECEMBER 1998

13.0 CANCELLING VENDOR CHECKS

Cancellations are processed on Form CO-790, Vendor Check Cancellation. (Refer to Section Refer to Section 16.14 - 16.15 and Exhibit 6.14 - 6.15 for form completion). The CO-790 is restricted to one check cancellation per form regardless of how the original payment was made. A CO-790L may be used only when there is only one account coding line.

Due to the changes in the vendor bank accounts, the State Treasurer requires separate batches (CO-790's, CO-790L's, and CO-19's be submitted for each different bank.)

  1. Checks dated December 31, 1992 or earlier - Fleet Bank
  2. Checks dated January 1, 1993 through December 31, 1995 - Shawmut Bank (currently Fleet Bank)
  3. Checks dated January 1, 1996 and later - Bank of Boston

13.1 Check Cancellation

Check cancellations must be submitted in batches with an Expenditure Batch Header, Form CO-19, attached as the cover sheet. The batch number must begin with the 90,000 series each fiscal year.

13.2 Mailing Address

Complete the CO-790 in triplicate; all coding must be the same as the original payment's coding. Forward the Comptroller's copy and the Treasurer's copy with the check(s) being cancelled to:

Office of the State Comptroller
Accounts Payable Division
55 Elm Street
Hartford, CT 06106

13.3 Completing SSN or FEIN

Enter the Social Security, Federal Employer Identification Number, town number, or exception code along with 2 digit suffix on the CO-790, as entered on the original CO-17, in the appropriate block.

ACCOUNTING MANUAL 6-50 DECEMBER 1998

13.4 Checks Must be Stamped "Cancelled"

Checks submitted for cancellations must be marked or stamped "Cancelled" so they are not negotiable.

13.5 Explanation Section

An explanation must be given for each cancelled check. Duplicate payments and overpayments must be explained on form CO-790S, Vendor Check Cancellation Statement. (Refer to Section 16.6 and Exhibit 6.6 for form completion)

13.6 Money Returned to Unencumbered

Money is returned to the unencumbered balance for current year cancellations and must be recommitted before another expenditure document is submitted.

13.7 Cancelling Checks From Different Fiscal Years

Separate batches are required for different fiscal year transactions.

When a continuing appropriation is affected the funds are returned to the unencumbered.

Non-continuing appropriations funds are put in the general fund. The posting of the document will NOT appear on any appropriation ledger reports.

13.8 Timely Processing

Checks should not be accumulated. To maintain proper balance in all State accounts, checks must be submitted for cancellation as soon as possible from the date it has been determined that payment is not to be made.

13.9 Unclaimed Checks

Unclaimed checks, if still valid obligations of the State, are not to be cancelled but are to be escheated.

13.10 Vendor Check Cancellation List, CO-790L (Refer to Section 16.14 and Exhibit 6.14 for form completion)

Vendor Check Cancellation List, CO-790L must be attached to a covering Vendor Check Cancellation Register, CO-790 with all applicable sections completed. Cancelled vendor checks can be grouped if they were issued from the same expenditure batch list.

ACCOUNTING MANUAL 6-51 DECEMBER 1998

13.11 Cancellation of Duplicate or Overpayment Vendor Checks (Refer to Section 16.16 and Exhibit 6.16 for form completion)

If the check being cancelled is a duplicate or overpayment, the completion of form CO-790S, Vendor Check Cancellation Statement is mandatory. It must be signed by either the agency head or deputy. No other signatures will be accepted. DUPLICATE AND OVERPAYMENTS REQUIRE YOUR FISCAL CONTROL AND ATTENTION.

13.12 Vendor Check Cancellation Statement, CO-790S

Form CO-790S, Vendor Check Cancellation Statement requires a detailed explanation and should include the following:

a) What procedures were used to verify that the billed or invoiced goods and/or services were unpaid prior to filing claim?

b) Was the payment based upon a vendor's billing statement (no payments should be made from a vendor's statement)?

c) Was an original vendor invoice used to authorize payment (CO-17)? (The original vendor's invoice must be utilized in the preparation of a batch list. A duplicate vendor's invoice or statement should not be used in lieu of original.)

d) What controls have been established to prevent a recurrence of this type of situation?

e) Will the assistance of the Comptroller's Policy Service Division be required in establishing procedures for an effective internal control system?

13.13 Paperless Agencies Vendor Check Cancellation Batches

For present fiscal year checks or non-lapsing funds:

a) Agency processes Batch through SAAAS or CAS II.

b) Submit VALID BATCH to the Comptroller's Office, Accounts Payable Division to be cancelled. (Refer to Section 16.14 for form completion)

ACCOUNTING MANUAL 6-52 DECEMBER 1998

Old Fiscal Year Lapsing Fund Checks:

a) Prepare a manual CO-790, CO-790L, and CO-19. (DO NOT ENTER ONTO SAAAS OR CAS II.)

b) Submit Batch to the Comptroller's Office, Accounts Payable Division to be cancelled against prior Fiscal Year Lapsed Funds.

When processing checks from different banks refer to Section 13.0. Section 13.1 to 13.12 also applies to paperless agencies for completion.

14.0 REQUEST FOR VENDOR INFORMATION, CO-860 AND VENDOR CHECK INFORMATION REQUEST LISTING, CO-860L

14.1 Purpose of the Form (Refer to Section 16.13 and Exhibit 6.13 for form completion)

Form CO-860 is a notification to the Office of the State Treasurer of a purported non-issuance/non-receipt of a vendor check. Use this form in lieu of memos or telephone calls.

Form CO-860L is a request to the Office of the State Treasurer for check information as part of an audit agency records. This form should only be utilized by federal, state and municipal auditors. Form CO-860L is designed as an attachment to Form CO-860 and replaces the listing of information in Agency section "A", boxes 6-15. When attaching a request on a CO-860L, Section "A", of the original CO-860 should contain only the words "see attached CO-860L."

14.2 Time Interval Before Submission

No request for vendor check information will be processed unless there is at least a three week interval between the date of the original check and the date of the request.

Claims are processed by the Office of the State Treasurer within a six to eight day (business day) period. An additional three to five days should be allowed for delivery of the replacement check (three weeks).

Agencies should notify vendors that if the original check is received by the vendor it must be returned to the agency. The original check can be distinguished from the replacement check by examining the check for the word "REPLACEMENT"

ACCOUNTING MANUAL 6-53 DECEMBER 1998

If the check stub does NOT state REPLACEMENT the vendor must hold the check and contact the agency. That check is the original item, a STOP PAYMENT HAS BEEN PLACED AGAINST IT. If the vendor presents it for payment THAT CHECK WILL BE RETURNED to the vendor UNPAID.

The vendor will incur bank charges for this transaction for which the STATE IS NOT LIABLE.

14.3 Processing of Requests

The state agencies will furnish the required data under section "A" and forward the request to the Office of the State Treasurer. The Office of the State Treasurer will indicate under section "C" the action taken.

  1. If the check has been cashed, the original request and a double-sided copy of the check will be returned to the agency.
  2. If the check is still outstanding, a stop payment will automatically be issued and the date noted.

    The request will be returned to the Office of the State Comptroller, Check Reconciliation section for completion of section "A". A replacement check will be issued and the original request will be returned to the agency with a record of all the completed transactions.

14.4 Recovery of the Original Issued Check

In the event the original check is returned to the agency after the replacement check is issued:

  1. Return the check to the Office of the Treasurer, Cash Management Division, Check Administration, 55 Elm Street, Hartford, CT 06106.
  2. The check should be stamped VOID unless it already has been stamped "STOP PAYMENT."
    NOTE: These checks are not to be cancelled.
  3. Include a copy of the original completed CO-860/CO-860L indicating the items being transmitted.
ACCOUNTING MANUAL 6-54 DECEMBER 1998

14.5 Inquiries Regarding Disposition of Request

All inquiries should be directed to the Office of the State Treasurer, Cash Management Division, Check Administration Area.

In the event that a second request is transmitted, the procedure outlined below should be followed:

  1. A photocopy of the original request should be made and stamped second request.
  2. At no time should the requested information be transposed on to a new form and a new request number issued.
  3. A memorandum accompanied by the second request should be addressed and forwarded to the Office of the State Treasurer, Cash Management Division, Attention: Supervisor, Check Administration Area, justifying the need for a second request.
ACCOUNTING MANUAL 6-55 DECEMBER 1998

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