CHAPTER 3: OTHER ADMINISTRATIVE REGULATIONS

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SUBSECTION 4.3.6.2
RECEIPTS

4.3.6.2.1

Purpose

Effective Date:

August 1, 1996

This section contains the policies, regulations, and procedures regarding the timing and mechanisms for receipting moneys owed to the state.

4.3.6.2.2

Receipt Policy

Effective Date:

August 1, 1996

4.3.6.2.2.a

An agency’s receipt process should:

Ensure the most efficient and earliest collection possible;

Support efficient aggregation and concentration of deposits;

Minimize costs of collection; and,

Collect interest on late payments when it is cost efficient to do so.

4.3.6.2.2.b

For general accounting policies and procedures on receipts and Accounts Receivables, refer to Sections 2.2.2 and 2.2.4.3.

4.3.6.2.2c

For internal control procedures on receipts, refer to Subsection 6.2.2.1.1.

4.3.6.2.3

Federal Receipts

Effective Date:

August 1, 1996

4.3.6.2.3.a

Drawdowns under a federal/state grant agreement per the Cash Management Improvement Act (CMIA) are intended to be interest neutral between the state and the federal government. Basic procedures for this type of receipts are:

The Office of Financial Management (OFM) negotiates the state’s CMIA contract with the federal treasury with the assistance of all affected state agencies.

OFM notifies an agency when a program(s) must be included in the agreement and works with the agency to develop the drawdown methods to be included in the state’s CMIA agreement.

Any agency program(s) covered under this agreement requires drawdowns to conform to the techniques developed and described in the CMIA agreement for that program(s).

Generally, conformance with the CMIA agreement assures that the state is not owed, or due, any federal interest payments on its drawdowns. Each agency must certify to OFM that programs covered by the CMIA conform to the drawdown methods described in the agreement. OFM requests this information in December of each year.

In cases where interest is owed, or due, under the CMIA contract, agencies should calculate and document interest owing or due. Agencies should ensure that interest calculations are auditable.

The interest rate to be used is the annualized rate equal to the average equivalent yield of 13-week Treasury Bills auctioned during the state’s fiscal year and is provided to the state by the federal government.

Direct costs of implementing the CMIA agreement are reimbursable by the federal government. Direct costs are those costs necessary for the development and maintenance of clearance patterns and calculation of interest liabilities. Agencies must maintain documentation to substantiate claims for direct costs. Direct costs in excess of $50,000 are not eligible for reimbursement, unless the agency can justify that without incurring such costs, it would not be able to develop clearance patterns or calculate interest.

Amendments to the CMIA agreement may be proposed by either the state or the federal government at any time during the duration of the contract. Agencies should notify OFM immediately when the agencies’ clearance patterns or drawdown techniques do not correspond to the program’s activities. OFM certifies, with affected agencies’ concurrence, every five years that clearance patterns correspond to a program’s clearance activities.

4.3.6.2.3.b

Draws of moneys under the federal regulations governing program(s) not covered under the state’s CMIA agreement are as follows:

Draw federal funds as close as possible to when the underlying disbursement is made by the Office of State Treasurer (OST) or the local bank.

Draw federal funds at the earliest date allowed by the federal program or regulations.

4.3.6.2.3.c

Acceptable receipt mechanisms are:

Electronic Funds Transfer (EFT) through various services such as, ACH (Automated Clearing House), SmartLink, PROCOM+, Automated Standard Application for Payments (ASAP), FedWire, and any method allowed by the CMIA agreement.

FedWire is the least preferable method of accepting federal moneys because of its high cost. This method should only be used in cases where other wire services are unavailable, or when the federal program mandates its use.

Draw requests should reflect the timing required by the receipt mechanism used.

Refer to Subsection 4.3.8.1.3 for accounting policies and procedures on federal funds.

4.3.6.2.4

Non Federal Receipts

Effective Date:

August 1, 1996

There are a variety of acceptable methods for receipting non federal moneys owed to the state. OFM approval is required for accepting credit, debit card or other electronic and technological means to receive moneys as required in Subsection 4.3.6.4. Acceptable nonfederal receipt mechanisms are as follows:

4.3.6.2.4.a

Mail or over-the-counter receipts collected by an agency.

4.3.6.2.4.b

Journal Vouchers (JVs) received as payment of interagency and interfund transactions.

4.3.6.2.4.c

EFT from the payor to the state.

These transfers use various electronic services such as ACH and transfer moneys from the payor financial institution to the state treasurer’s bank, or agency local bank account.

For treasury and treasury trust accounts, agencies must inform OST as early as practical, which in no case should be less than 24 hours before the transmission of an EFT to state accounts.

For internal control procedures on receipts by EFT, refer to Subsection 6.2.2.1.11.

4.3.6.2.4.d

Lock Box operations are arrangements with a financial institution where payors send moneys owed to the state directly to the financial institution for processing.

The financial institution processes the payment, credits the moneys to the agency’s account, and sends this information to the agency.

Optional accounting or other services, such as electronic feed of payor information from the financial institution to the agency are an acceptable part of the lockbox process. The costs of any optional accounting or other services are considered expenditures/expenses rather than reductions in revenue.

4.3.6.2.4.e

Credit or Debit Cards.

This receipt mechanism applies to acceptance of credit or debit cards for goods and services. The decision to accept credit or debit cards requires that agencies present a business case to OFM to justify the cost of this type of receipt to the state.

Agencies are to account within their agencies for the discount fee and other banking costs associated with credit or debit card acceptances. Such information may be available in the Agency Financial Reporting System (AFRS), agency unique system, or separate subsidiary records. Agencies operating in appropriated funds are to record the costs associated with credit and debit card acceptances as expenditures.

The costs of any optional accounting services, such as electronic data feed of client information, are considered expenditures/expenses.

4.3.6.2.4.f

Debt Offset.

Debt offset is a process where moneys owed to the state are offset against moneys owed by the state.

This receipt mechanism requires a written agreement between the state and the payor. Both the state and the payor must agree in writing that a routine process of netting of the amount owed and the amount due is acceptable to both parties. This written agreement is necessary to avoid liabilities that could be incurred by the state in disputed billings. The written agreement is not required when agencies are exercising collection powers granted by statute.

4.3.6.2.4.g

Electronic Data Interchange (EDI).

EDI also known as Electronic Commerce is an electronic exchange of information rather than a receipting process. This mechanism can be used to feed optional accounting or other information electronically between the agency and a financial institution or the payor. This process can be used in conjunction with credit or debit card acceptance or any other form of electronic receipting mechanism to eliminate rekeying information or to streamline processes.

Return to CHAPTER 3: OTHER ADMINISTRATIVE REGULATIONS

4.3.6.2.2.a	An agency’s receipt process should:
	Ensure the most efficient and earliest collection possible;
	Support efficient aggregation and concentration of deposits;
	Minimize costs of collection; and,
	Collect interest on late payments when it is cost efficient to do so.
4.3.6.2.2.b	For general accounting policies and procedures on receipts and Accounts Receivables, refer to Sections 2.2.2 and 2.2.4.3.
4.3.6.2.2c	For internal control procedures on receipts, refer to Subsection 6.2.2.1.1.

4.3.6.2.3.a	Drawdowns under a federal/state grant agreement per the Cash Management Improvement Act (CMIA) are intended to be interest neutral between the state and the federal government. Basic procedures for this type of receipts are:
	The Office of Financial Management (OFM) negotiates the state’s CMIA contract with the federal treasury with the assistance of all affected state agencies.
	OFM notifies an agency when a program(s) must be included in the agreement and works with the agency to develop the drawdown methods to be included in the state’s CMIA agreement.
	Any agency program(s) covered under this agreement requires drawdowns to conform to the techniques developed and described in the CMIA agreement for that program(s).
	Generally, conformance with the CMIA agreement assures that the state is not owed, or due, any federal interest payments on its drawdowns. Each agency must certify to OFM that programs covered by the CMIA conform to the drawdown methods described in the agreement. OFM requests this information in December of each year.
	In cases where interest is owed, or due, under the CMIA contract, agencies should calculate and document interest owing or due. Agencies should ensure that interest calculations are auditable. The interest rate to be used is the annualized rate equal to the average equivalent yield of 13-week Treasury Bills auctioned during the state’s fiscal year and is provided to the state by the federal government.
	Direct costs of implementing the CMIA agreement are reimbursable by the federal government. Direct costs are those costs necessary for the development and maintenance of clearance patterns and calculation of interest liabilities. Agencies must maintain documentation to substantiate claims for direct costs. Direct costs in excess of $50,000 are not eligible for reimbursement, unless the agency can justify that without incurring such costs, it would not be able to develop clearance patterns or calculate interest.
	Amendments to the CMIA agreement may be proposed by either the state or the federal government at any time during the duration of the contract. Agencies should notify OFM immediately when the agencies’ clearance patterns or drawdown techniques do not correspond to the program’s activities. OFM certifies, with affected agencies’ concurrence, every five years that clearance patterns correspond to a program’s clearance activities.
4.3.6.2.3.b	Draws of moneys under the federal regulations governing program(s) not covered under the state’s CMIA agreement are as follows:
	Draw federal funds as close as possible to when the underlying disbursement is made by the Office of State Treasurer (OST) or the local bank.
	Draw federal funds at the earliest date allowed by the federal program or regulations.
4.3.6.2.3.c	Acceptable receipt mechanisms are:
	Electronic Funds Transfer (EFT) through various services such as, ACH (Automated Clearing House), SmartLink, PROCOM+, Automated Standard Application for Payments (ASAP), FedWire, and any method allowed by the CMIA agreement.
	FedWire is the least preferable method of accepting federal moneys because of its high cost. This method should only be used in cases where other wire services are unavailable, or when the federal program mandates its use.
	Draw requests should reflect the timing required by the receipt mechanism used.
	Refer to Subsection 4.3.8.1.3 for accounting policies and procedures on federal funds.

	There are a variety of acceptable methods for receipting non federal moneys owed to the state. OFM approval is required for accepting credit, debit card or other electronic and technological means to receive moneys as required in Subsection 4.3.6.4. Acceptable nonfederal receipt mechanisms are as follows:
4.3.6.2.4.a	Mail or over-the-counter receipts collected by an agency.
4.3.6.2.4.b	Journal Vouchers (JVs) received as payment of interagency and interfund transactions.
4.3.6.2.4.c	EFT from the payor to the state.
	These transfers use various electronic services such as ACH and transfer moneys from the payor financial institution to the state treasurer’s bank, or agency local bank account.
	For treasury and treasury trust accounts, agencies must inform OST as early as practical, which in no case should be less than 24 hours before the transmission of an EFT to state accounts.
	For internal control procedures on receipts by EFT, refer to Subsection 6.2.2.1.11.
4.3.6.2.4.d	Lock Box operations are arrangements with a financial institution where payors send moneys owed to the state directly to the financial institution for processing.
	The financial institution processes the payment, credits the moneys to the agency’s account, and sends this information to the agency.
	Optional accounting or other services, such as electronic feed of payor information from the financial institution to the agency are an acceptable part of the lockbox process. The costs of any optional accounting or other services are considered expenditures/expenses rather than reductions in revenue.
4.3.6.2.4.e	Credit or Debit Cards.
	This receipt mechanism applies to acceptance of credit or debit cards for goods and services. The decision to accept credit or debit cards requires that agencies present a business case to OFM to justify the cost of this type of receipt to the state.
	Agencies are to account within their agencies for the discount fee and other banking costs associated with credit or debit card acceptances. Such information may be available in the Agency Financial Reporting System (AFRS), agency unique system, or separate subsidiary records. Agencies operating in appropriated funds are to record the costs associated with credit and debit card acceptances as expenditures.
	The costs of any optional accounting services, such as electronic data feed of client information, are considered expenditures/expenses.
4.3.6.2.4.f	Debt Offset.
	Debt offset is a process where moneys owed to the state are offset against moneys owed by the state. This receipt mechanism requires a written agreement between the state and the payor. Both the state and the payor must agree in writing that a routine process of netting of the amount owed and the amount due is acceptable to both parties. This written agreement is necessary to avoid liabilities that could be incurred by the state in disputed billings. The written agreement is not required when agencies are exercising collection powers granted by statute.
4.3.6.2.4.g	Electronic Data Interchange (EDI).
	EDI also known as Electronic Commerce is an electronic exchange of information rather than a receipting process. This mechanism can be used to feed optional accounting or other information electronically between the agency and a financial institution or the payor. This process can be used in conjunction with credit or debit card acceptance or any other form of electronic receipting mechanism to eliminate rekeying information or to streamline processes.