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New York State Accounting System User Procedures Manual

Volume Name
CONTROLS AND SPECIAL PROCEDURES
Volume
XI
Date
10/13/05
Section Name
Sole Custody Accounts - Annual Reporting
Section
4.0600

 

Purpose and Objective

This section of the manual describes procedures required to report sole custody account balances and activity. The information is obtained from sole custody reports submitted by all account custodians each fiscal year as part of their Agency Financial Reporting responsibilities.

Actions Required

Beginning in 2000, the Bureau of Accounting Operations implemented a new web-based financial reporting application for all agencies to use in preparing their annual filing of sole custody bank account activity. Special instructions are provided to State agencies in March each year to permit secure access to the electronic database for sole custody accounts. These instructions also contain details about what constitutes a sole custody account and what information is required to be filed with the State Comptroller’s Office.

When the electronic reports are received by the Bureau of Accounting Operations- General Ledger Section, they are reviewed to determine that:

1. Each report is complete and accurate in all material respects, that transfers to State Treasury funds are properly noted and that no disbursements are made from the sole custody account without proper statutory authorization.

2. The composition of the closing balance is reported so that Investments, if any, are properly noted, for disclosure in the Cash and Investment footnote of the Comprehensive Annual Financial Report (See VIII-222). NOTE - All State deposits are required to be collateralized in accordance with Section 105 and Section 98a of New York State Finance Law. Securities pledged as collateral must be held at the State's Fiscal Agency JP Morgan Chase. The Cash Management Unit in the Office of the State Comptroller must approve all securities that are pledged and substituted for collateral.

3. All agency sole custody accounts are reported in both the Comptroller’s Annual Report to the Legislature on a Cash Basis and the GAAP financial reports. A file match of the reported accounts (filed through the websystem) to the inventory of bank accounts maintained by the Division of Pension, Investments and Cash Management is done each year, to ensure that all Sole Custody reports are accounted for. A check is also made to determine that a report is received for each account reported in the prior years.

4. A sample is selected (from all the reported filed each year) by the General Ledger Accounting Section and a request is made of the account custodian to provide additional information in support of the financial data provided in the sole custody report. For example, we may request a copy of the year-end bank statement and account reconciliation; list of outstanding checks (if any); a copy of the check register for the account indicating the check number, payee, date of issuance and amount; date and amount of funds transferred to State Treasury funds; etc.

The electronic reports are classified by fund type in Bureau Accounting Operations and summaries of the reports are prepared by fund type and agency. These reports include the beginning balance, total receipts, disbursements, and ending balance for all sole custody accounts within each fund group; composition of account balance at year-end; transfers to and from other sole custody accounts; investment types; and where appropriate, the State Treasury fund and account into which the sole custody moneys are ultimately transferred to. This financial information is necessary to satisfy the requirements outlined in State Finance Law and in accordance with GAAP.

NOTE: Since these annual report filings are required to complete the financial reporting of State funds/accounts which are audited, the OSC has a ‘zero tolerance’ for agency’s or facilities who fail to provide the requested information each year. Failure to file an annual sole custody report completely, accurately and on-time or provide additional information if requested to do so, will result in increasing the agency risk assessment used by State auditors to assess strength of agency internal controls, closure of the account and a report of material weakness will be sent to the agency Internal Control Officer.