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MARICOPA COUNTY INTERNAL POLICY Policy Title: ELECTRONIC FUNDS TRANSFER (EFT) Policy Number: A2512 Current Adoption Date: 02-13-2019MM- DD-2023 Current Implementation Date: 02-13-2019MM- DD-2023 Approved by: BOARD OF SUPERVISORS Board Agenda Number: C-18-19-004-6-010 Original Adoption Date: 10-19-2011 I. PURPOSE To establish procedures and overall responsibilities regarding the appropriate usage of EFT payments made outside of the County’s Financial (Accounting) system which may include Automated Clearing House (ACH) or direct Wire Transfers. It is the County’s policy to limit the use of EFT payments whenever possible. Payments made through the County’s Financial (Accounting) System are referred to as Accounts Payable EFTs and are the preferred method. II. AUTHORITY Arizona Revised Statute §11-493.4 requires the County Treasurer’s Office (Treasurer’s Office) to disburse County money: 1) by warrant that is issued by the County Board of Supervisors and that is signed by the chairman and the clerk of the board, 2) by electronic transfer with written authorization from a person designated by the governing board, or 3) as provided by law. III. APPLICATION This Policy applies to all Maricopa County appointed departments as well as the Flood Control District of Maricopa County, the Maricopa County Library District, and the Maricopa County Stadium District (Special Districts). The Board of Supervisors is authorized to jointly adopt policies applying to the Special Districts under the Intergovernmental Agreement, C-06-18-393-6-00, approved on April 11, 2018. This policy also applies to employees of County elected and judicial branch offices unless the elected official has implemented a similar policy specific to his or her office. IV. DEFINITIONS A. Accounts Payable EFTACH: A method of paymentPayment by ACH (see B and D below) which serves as an alternative to to the issuance of a hard-copy warrant (check). and which is pProcessed by the Department of FinanceOffice of Budget and Finance, Accounts Payable DivisionUnit, in much the same manner as a warrant utilizing the Financial (Accounting) System. B. Automated Clearing House (ACH) – A method of EFT from the County to another entity (such as a vendor, bank, or other government agency). Unlike a direct bank-to-bank transfer (wire transfer), an ACH is processed through an Automated Clearing House from one bank to another. ACH transactions require 24-48 hours advance notice. ACH payments to vendors for goods or services can be initiated by Departments through the County’s Financial (Accounting) System or can be processed directly by the Treasurer’s Office. ACH is the preferred method of payment for all EFT payments requested by Departments as they are the least costly. ACH payments are assigned a settlement date, therefore, they can be initiated in advance of a specific pay date. For internal control purposes, County dual control procedures are required to initiate an ACH payment. B. Policy Title: ELECTRONIC FUNDS TRANSFER (EFT) Policy Number: A2512 Current Adoption Date: 02-13-2019MM- DD-2023 Page 2 of 7 C. Department – For the purpose of this policy, “Department” refers to any division of the County including elected and judicial branch offices and Special Districts. D. Electronic Funds Transfer (EFT) –The electronic exchange or transfer of money from one bank account to another, either within the same bank or different banks. There are various and different types of EFTs, but for purposes of this policy, EFTs will refer to electronic transfer of funds by ACH or Wire Transfer. E. Journal Voucher (JV): An internal County document used to process and record transactions in the County’s Financial (Accounting) System. The JV contains vital accounting string codes which are used to post to specific Funds, Departments, Units, Activities, Balance Sheet Accounts and/or Revenue/Expense object codes as indicated on the document. F. Wire Transfer – A method of EFT from the County to another entity (such as a vendor, bank, or other government agency). A wire transfer is made directly from one bank account to another bank account, either within the same bank or different banks, without passing through and automatic clearing house. Wire transfers are processed by the County Treasurer’s Office when same day credit of funds areis required. Wire transfers are the quickest and most costly method of money movement. For internal control purposes, County dual control procedures are required to initiate a wire transfer. F. A. Background Under normal circumstances, expenditures should be paid by using the County’s Financial (Accounting) System thereby recording the transaction(s) directly to the general ledger. Such payments are made by Accounts Payable EFT or warrant, depending upon vendor registration selections. Utilizing the Financial (Accounting) System is the preferred method of recording transactions as this facilitates: 1. Automatic tracking and reporting of transactions, as further defined below, 2. Auditing of transactions by internal and external auditors, 3. Uses existing and established internal controls over the accounts payable process, and 4. Provides a greater level of transparency. Financial (Accounting) System – automatic tracking and reporting of transactions include, but are not limited to: 1. Grant expenditure transactions are tracked for Federal and State grant reporting purposes including the annual reporting under the Schedule of Expenditures for Federal Awards (SEFA). 2. Capital expenditure transactions are tracked for Construction in Progress and the Capitalization of Capital Facilities and Capital Projects. 3. Contractual expenditures are tracked to ensure compliance with the contract award. 4. Facilitates the request for public record requests as the transactions and supporting documentation are posted to the Financial (Accounting) System and imaged in OnBase. 5. Transactions posted to the Financial (Accounting) System ensure proper annual reporting of IRS Form 1099 (Misc. Income), as applicable. EFTs processed by the Treasurer’s Office, as opposed to those processed through the County’s Financial (Accounting) System, are posted by Departments to the Financial (Accounting) System by Journal Voucher (JV) which may not capture all the information as required above. V. POLICY Policy Title: ELECTRONIC FUNDS TRANSFER (EFT) Policy Number: A2512 Current Adoption Date: 02-13-2019MM- DD-2023 Page 3 of 7 A. EFT payments (ACH or Wire transfers) processed directly from the Treasurer’s Office should be limited whenever possible. Under normal circumstances, expenditures should be paid by using the accounts payable process within the County’s Financial (Accounting) System. Accounts Payable EFTs ACHs are the County’s preferred method for processing EFT payments as they utilize the County’s Financial (Accounting) System to record the transaction(s) directly to the County’s general ledger. Such payments are easily processed by the Department of Finance, Accounts Payable Division, so long as the vendor registration is properly established in the accounting system. and Accounts Payable EFTs facilitate: A. 1. Immediate posting of the transaction to the general ledger in the County’s Financial System, 1.2. The auditing of transactions by internal and external auditors, 2.3. The use of existing/established internal controls over the accounts payable process, 3.4. A greater level of transparency, and 4.5. Automatic tracking and reporting of transactions, such as: a. Tracking of grant expenditure transactions for Federal and State grant reporting purposes including the annual reporting under the Schedule of Expenditures for Federal Awards (SEFA). b. Tracking of capital expenditure transactions for Construction in Progress and the capitalization of Capital Facilities and Capital Projects. c. Tracking of contractual expenditures to ensure compliance with contract awards. d. Easier management of public record requests as the transactions and supporting documentation are posted to the Financial (Accounting) System and imaged in the system. e.d. Proper annual reporting of IRS Form 1099, (Misc. Income), when applicable. B. By contrast, EFT EFT payment requests processed directly through the Treasurer’s Office are not automatically recorded in the County’s Financial (Accounting) System and require the processing of a separate journal voucher in order for the transaction to be properly reflected in the general ledger. This process can result in timing differences between the Treasurer’s system and the County’s Financial System. In addition, transactions posted by journal voucher do not automatically post to the applicable vendor or contract and may not properly capture all the information required as outlined above. Therefore, when choosing to process an EFT payment directly through the Treasurer’s Office, Departments should bear in mind that these transactions should: 1. be infrequent in nature, 2. require immediate and/or guaranteed funds, 3. and generallygenerally, carry a negative consequence if payment is not made by a certain date. 3. C. Examples of some EFTEFT payments transactions which may be processed directly by the Treasurer’s Office include, but are not limited to, the following: 1. Debt service payments for long-term obligations. Policy Title: ELECTRONIC FUNDS TRANSFER (EFT) Policy Number: A2512 Current Adoption Date: 02-13-2019MM- DD-2023 Page 4 of 7 2. Payments to escrow agent/title company for the purchase of real property. 3. Payments requiring same-day settlement. D. To ensure proper internal controls and segregation of duties, the following policies apply for EFTs processed directly through the Treasurer’s Office: 1. All Treasurer EFT requests must be approved and initiated by the Office of Budget and Finance. a. Departments that wish to request a payment via Treasurer’s direct EFT, must contact the Office of Budget and Finance. b. The Office of Budget and Finance will review the transaction to determine that an EFT processed directly by the Treasurer’s Office is necessary and will submit the request on behalf of the requesting Department. c. The Treasurer’s Office will only accept EFT requests submitted by the Office of Budget and Finance. 2. All Treasurer EFT requests must have two signatures consisting of individuals approved by the Board as identified in E.1.c. below. 3. All Treasurer EFT requests must adhere to policies outlined in paragraph E. below. D.E. When requesting EFTs directly through the Treasurer’s Office, Departments the Office of Budget and Finance must: 1. Obtain Board of Supervisors’ (Board) authorization and approval to initiate and request payments from the Treasurer’s Office on an annual basis. This is achieved by submitting a Board Agenda item which, at minimum, must contain the following information: a. A formal request for approval and a description of the purpose(s) and frequency of the EFTs, b. The annual dollar amount(s) or range(s) (if the exact amount is unknown) of the EFTs, c. Identification of the individuals who are authorized by the DepartmentOffice of Budget and Finance to initiate Treasurer’s Office EFTs. Authorized individuals may include the Assistant County Manager, Chief Financial Officer Director, Office of Budget and Finance Deputy Director, Manager, or other individuals as identified by the Chief Financial Officer deemed to have the capacity to authorize the transaction, and d. The number of authorized individuals needed to initiate or approve the Department’s EFT request. At a minimum, two authorized individuals are required. 2. Notify the Treasurer’s Office of the individuals authorized to submit wire transfer requests on behalf of the County. a. Upon receipt of Board approval, the Office of Budget and Finance will submit the Board- approved agenda to the Treasurer’s Office, notifying the Treasurer of the individuals authorized to submit wire transfer requests. 2.3. Wire transfer requests must be submitted submit the following to the Treasurer’s Office (items may be scanned and sent via email as designated by the Treasurer, provide 24-hour notice, and include the following:to wire.transfer@mail.maricopa.gov): Policy Title: ELECTRONIC FUNDS TRANSFER (EFT) Policy Number: A2512 Current Adoption Date: 02-13-2019MM- DD-2023 Page 5 of 7 a. Board agenda item approving and authorizing the Department and individuals initiating EFTs, b.a. An original documentMemo prepared on Department Office of Budget and Finance letterhead requesting the EFT and signed by the two authorized individuals as outlined in the Board- approved addenda. The wire transfer request memo must and including include the following information: i. EFT due date and amount, ii. Treasurer Fund monies are to be transferred from, iii. Description and purpose of the transfer, iv. Supporting documentation and authorization for the transfer including, Ddepartment responsible for the expenditure, vendor invoice, statement, support, Board agenda, as applicable,etc. i. indicating the amount and due date and v. EFT instructions necessary to process the transaction including: (a) ABA (b) Bank Name (c) Account Number (d) Account Name (e) Transaction Reference (f) Attention to name ii. . (i.e., bank account information, etc.) c.b. If the items mentioned in 2a and 2boutlined above are not properly approved and complete, the Treasurer reserves the right to deny EFT payment. Additionally, the Treasurer’s Office requires 24-hour advance notice for processing of EFT wire payments. 3.4. Upon completion of EFT wire transfer payment, Departments responsible for the expenditure must prepare and process a corresponding journal voucher (JV) to recognize the transaction in the County’s Financial (Accounting) System. The JV must be processed in the same accounting period as the EFT. It is critical that accurate and complete information be provided within the JV document to ensure that tracking and reporting processes are not compromised. VI. EXAMPLES THE FOLLOWING EXAMPLES ARE FOR REFERENCE ONLY AND NOT CONSIDERED PART OF THE EFT POLICY. AS SUCH, THE EXAMPLE OF AGENDA ITEM LANGUAGE MAY BE PERIODICALLY UPDATED WITHOUT BOARD APPROVAL. A. Example of Annual Board Agenda Item for Frequent EFT Requests Pursuant to Electronic Fund Transfer Policy (A2512), the <insert Department Name> is requesting authorization to have the Treasurer’s Office process Electronic Funds Transfers for the annual Debt Service payments due to the Trustee in the amount of $XX million in Fiscal Year 20XX. The payments have been budgeted. The debt service payments are typically due on January 1st and Policy Title: ELECTRONIC FUNDS TRANSFER (EFT) Policy Number: A2512 Current Adoption Date: 02-13-2019MM- DD-2023 Page 6 of 7 July 1st of each fiscal year. <insert Department name> request for authorization to the Treasurer’s Office will come from the Chief Financial Officer, <insert authorized personnel>, and the Deputy Finance Director, <insert authorized personnel>. Debt Service payments require guaranteed funds. The Department will prepare a corresponding journal voucher to record the EFT transaction on the County’s Financial (Accounting) System in the same accounting period as the EFT. B. Example of Board Agenda Item for a Single/One-time EFT Request Pursuant to Electronic Fund Transfer Policy (A251), the <insert Department name> is requesting authorization to have the Treasurer’s Office process an Electronic Funds Transfer for $XX million as an escrow payment to the trustee for the purchase of real property <insert description>. The payment has been budgeted. It is anticipated that the escrow payment will be paid in December 20XX. Departmental request for authorization to the Treasurer’s Office will come from the Chief Financial Officer, <insert authorized personnel>, and the Deputy Finance Director, <insert authorized personnel>. Escrow agent requires guaranteed funds. The Department will prepare a corresponding journal voucher to record the EFT transaction on the County’s Financial (Accounting) System in the same accounting period as the EFT. C. The Board Action may require additional information depending upon the action being requested. D. Example of Departmental Letter Requesting a Treasurer’s Office ACH/Wire Transfer Letter to be put on Departmental Letterhead DATE: December XX, 20XX TO: Maricopa County Treasurer - <insert name of personnel responsible> FROM: <Department Authorized Individual(s) as approved by the Board of Supervisors> SUBJECT: Request for ACH/Wire Transfer (Department to indicate transaction type) Per the attached Board approved agenda, I am requesting that you process an (ACH/Wire Transfer) payment for $XX,XXX.XX due on (date required). The payment is for (identify purpose of payment). Also attached is the (invoice, statement, letter or other form of communication) as support for the payment. Listed below are the EFT transfer instructions for the outgoing payment. Name of Bank, Trust Agent, etc. ABA #: (Bank Routing Number) Account Name: Account Number: Reference/Description: used for tracking purposes For accounting purposes, monies will come from Treasurer’s Fund 3X-XXX-000. Policy Title: ELECTRONIC FUNDS TRANSFER (EFT) Policy Number: A2512 Current Adoption Date: 02-13-2019MM- DD-2023 Page 7 of 7 (Treasurer Fund represents the Fund in which the expenditure will be paid from) Please call (Department Contact) at (602) 506-XXXX if you have any questions. Revision History Version Revision Date Description of Revision 1 10-/19-/2011 Initial version. (C-18-12-014-6-00, C-18-12-015-6-00, C-18-12-016-6-00, C- 18-12-017-6-00) 2 02-/13-/2019 Review, update language, and cite authority. Update to current policy formatting. (C-18-19-004-6-00) 3 MM-DD-2023 Update and clarify language to improve internal controls over direct wire transfers and limit authorized departments to OBF only. (C-18-19-004-6-01)