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MARICOPA COUNTY INTERNAL POLICY Policy Number: A2512 Current Adoption Date: 02-13-2019 Policy Title: ELECTRONIC FUNDS TRANSFER (EFT) Current Implementation Date: 02-13-2019 Board Agenda Number: C-18-19-004-6-00 Approved by: BOARD OF SUPERVISORS 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 system which may include Automated Clearing House (ACH) or direct Wire Transfers 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 ACH: Payment by ACH (see B and D below) as an alternative to a hard-copy warrant (check). Processed by the Office of Budget and Finance, Accounts Payable Unit, in the same manner as a warrant utilizing the Financial System. B. Automated Clearing House (ACH) – A method of EFT from the County to another entity (such as a vendor, bank, or other government). 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 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. 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. Policy Number: A2512 Policy Title: ELECTRONIC FUNDS TRANSFER (EFT) Current Adoption Date: 02-13-2019 Page 2 of 4 E. Journal Voucher (JV): An internal County document used to process and record transactions in the County’s Financial System. 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 is required. Wire transfers are the quickest and most costly method of money movement. V. POLICY 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 System. Accounts Payable ACHs are the County’s preferred method for processing EFT payments as they utilize the County’s Financial System to record the transaction(s) directly to the County’s general ledger and facilitate: 1. Immediate posting of the transaction to the general ledger in the County’s Financial System, 2. The auditing of transactions by internal and external auditors, 3. The use of existing/established internal controls over the accounts payable process, 4. A greater level of transparency, and 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. Proper annual reporting of IRS Form 1099, when applicable. B. By contrast, EFT requests processed directly through the Treasurer’s Office are not automatically recorded in the County’s Financial System and require the processing of a separate journal voucher 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 generally, carry a negative consequence if payment is not made by a certain date. C. Examples of EFT payments which may be processed directly by the Treasurer’s Office include, but are not limited to, the following: Policy Number: A2512 Policy Title: ELECTRONIC FUNDS TRANSFER (EFT) Current Adoption Date: 02-13-2019 Page 3 of 4 1. Debt service payments for long-term obligations. 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. E. When requesting EFTs directly through the Treasurer’s Office, 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 Office of Budget and Finance to initiate Treasurer’s Office EFTs. Authorized individuals may include the Assistant County Manager, Chief Financial Officer, Office of Budget and Finance Deputy Director, 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 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. 3. Wire transfer requests must be submitted to the Treasurer’s Office via email as designated by the Treasurer, provide 24-hour notice, and include the following: Policy Number: A2512 Policy Title: ELECTRONIC FUNDS TRANSFER (EFT) Current Adoption Date: 02-13-2019 Page 4 of 4 a. Memo prepared on 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 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, department responsible for the expenditure, vendor invoice, statement, support, Board agenda, as applicable, 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 b. If the items outlined above are not properly approved and complete, the Treasurer reserves the right to deny EFT payment. 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 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. 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)