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New York State Accounting System User Procedures Manual

Volume Name
CONTROLS AND SPECIAL PROCEDURES
Volume
XI
Date
10/25/04
Section
 Agency Bank Accounts - Establishment and Closing
Section
4.0110
   

          This section of the manual sets forth the procedures to be followed by all State agencies in carrying out OSC's banking policy, especially as it relates to:

  1. The establishment of agency bank accounts;
  2. The designation of a bank as a depository for accounts which require normal banking services;
  3. Designation of depository banks for accounts requiring special banking services;
  4. Agency reporting requirements;
  5. The closing of agency bank accounts;
  6. Establishment of savings accounts.

STATUTORY AUTHORITY

          Section 106 of the State Finance Law requires that ALL monies received by any state officer or persons receiving moneys shall be deposited in a bank or trust company - as approved by the State ComptrollerThis approval is mandatory since the State Comptroller will arrange for payment of banking services and collateralization of accounts.

ESTABLISHING AGENCY BANK ACCOUNTS

Agency Responsibility

1. Request to establish a bank account

          Each agency must obtain authorization from OSC, Division of Pension Investment and Cash Management to establish a new bank account. An agency must request the establishment of such accounts in writing. To ensure that each new account is established consistent with the overall financial operation of the requesting agency, each request must be approved by the chief fiscal officer of the requesting agency or by a designee.

The request letter must include the following:

  1. Name and purpose of the account;
  2. Statutory reference where applicable;
  3. Justification for establishing the new account;
  4. Estimated initial balance;
  5. Estimated maximum balance anticipated on both a short-term and a long-term basis;
  6. A description of the flow of cash, e.g., "the cash will be held by the agency until disbursed", or "the cash will be transferred to the State Treasury";
  7. Address of the office making deposits and withdrawals;
  8. Name and title of official(s) in charge of the account;
  9. Name and location of a commercial bank where the agency wishes to open the account;
  10. The services anticipated to be provided by the bank.
  11. Affirmation that the account custodian understands the need for and has implemented internal controls necessary to protect State assets - including monthly bank to book reconciliation's.

All correspondence concerning agency bank accounts should be sent to:

NYS Office of the State Comptroller
Division of Pension Investment and Cash Management
Cash Management Unit

110 State Street - 14th Floor
Albany, New York 12236

2. Banking Services

          Unless specifically approved by OSC, an agency shall not request a bank to provide any service in conjunction with a State bank account, except the following:

    1. Standard bank checks - prenumbered and imprinted with appropriate identification;
    2. Deposit slips;
    3. Monthly statements;
    4. Provision for prompt availability of all deposits.

          All requests for banking services, other than those outlined above must be justified by the requesting agency. This requirement includes services for new accounts and changes to services for existing accounts.

          As discussed further below, depository banks for accounts for which special banking services have been requested, such as lock box processing, account reconciliation, messenger service or other similar services, will generally be selected by competitive bidding. Therefore, the requesting agency should allow a period of time commensurate with the complexity of the services to be provided between the request for the establishment of the account and the date that the account is planned to be opened.

Office of the State Comptroller Responsibility

1. Evaluation of request

          Upon receipt of the agency's formal request, OSC will evaluate the request to determine if the establishment of the account is consistent with all relevant rules, regulations and statutes and to determine if the account is necessary for its operations. If an agency has requested approval for special banking services, such services will be analyzed to determine if they are justified on a cost benefit basis. All questions with respect to an agency's request will be promptly communicated by OSC to the letter of request's signator.

2. Designation of Depository Banks/Authorization to Establish New Account

          Where an account will not require special banking services, OSC will advise the requesting agency of its findings and, if the request is approved, will designate a depository for the account and establish, pursuant to Section 106 of the State Finance Law, the initial level of collateral to secure monies deposited into the account. A designation letter will be sent to the State depository authorizing the establishment of the bank account. A copy of the designation letter will also be sent to the requesting agency. The requesting agency will be responsible for notifying the bank to open the account. Once the account is opened, the State agency must notify OSC, Division of Pension Investment and Cash Management, of the new account number.

           Where an account requires special services or if the cost of the account exceeds the statutory level for bidding services as outlined in the Procurement and Disbursement Guidelines G-182, Banking Services Contracts and Payments, OSC will require that a depository bank for such account be selected by competitive bidding. If OSC determines that a depository bank should be selected by competitive bidding, the requesting department will be required to prepare, in cooperation with OSC, a request for proposal detailing the services to be provided by a bank. Bank proposals will be evaluated on the basis of the total cost to the State and the ability of the bank to perform such services. OSC will determine the mandatory requirements that banks must meet to be eligible to participate in the bidding.

3. Bank Compensation

          OSC is responsible for determining the amount of compensation a bank should receive for services related to State accounts. State agencies may not enter into any agreement with any bank for the payment of compensation for bank services unless such payment is required by law or is expressly approved by OSC.

4. Banking Support Services

         The Division of Pension Investment and Cash Management will assist State agencies with banking related problems. Such assistance includes providing current information about the various types of services which banks provide.

         The Division also maintains a computer based inventory of all State bank accounts. A listing of bank accounts for each agency is available upon request.

Agency Reporting Requirements          

1. Monthly Statement of Balances

       To comply with Section 107 of the State Finance Law, the Department of Taxation and Finance requires each agency to submit a monthly statement reporting the name of the bank account and the month end book balance, no later than five calendar days after the close of the month. The preferred method of reporting data and balances is by e-mail to (case sensitive):

Treasury-State Register Reporting@tax.state.ny.us

Questions concerning this reporting process may be address to:

Mr. William Bloodgood

Department of Taxation and Finance

Division of the Treasury

Phone: 518-474-5472

Fax: 518-486-9829

 

2. Collateral Procedures

          OSC is responsible for the maintenance of collateral held in escrow with the State's fiscal agent to secure all New York State deposits. OSC relies on the State official responsible for their agency accounts to notify OSC when new accounts are opened, if unusually high balances are in existing accounts or accounts are closed. The individual agency officials share the responsibility for ensuring the funds in their custody remain fully secured.

3. Confirmation of Bank Services

          OSC requires State depositories to provide OSC's Division of Pension Investment and Cash Management with monthly bank account analyses detailing the services the bank provides for each State account. 

SAVINGS ACCOUNTS

          No State agency should establish an interest bearing bank account without the expressed approval of OSC. The purpose of this restriction is to ensure that all State money that is available for investment is invested in a comprehensive manner by OSC, as required by law. In addition, since State bank accounts are not charged directly for the cost of the banking services, the State depository uses the interest earned on the balances in the accounts to offset banking costs.

UNOFFICIAL ACCOUNTS

          Any bank account established by State employees for unofficial business, e.g., coffee funds, goodwill funds, party funds, etc., should not include the names of either the State of New York or a State agency in the title of the account.

CASH ADVANCE CHECKING ACCOUNTS

          Agencies must use one consolidated checking account to account for cash advances. Agencies using more than one checking account for this purpose should close all existing cash advance checking accounts and establish one cash advance checking account entitled "AGENCY ADVANCE ACCOUNT". (Option: Change the title of one existing checking account to "AGENCY ADVANCE ACCOUNT" and close all remaining accounts.) Agencies that have facilities at multiple locations, may with the approval of OSC, have more that one advance account.

AGENCY RESPONSIBILITY FOR CLOSING BANK ACCOUNTS

          Any bank accounts which are no longer needed by a State agency should be closed expeditiously. The Division of Pension Investment and Cash Management Unit must be notified within 10 days of such action.