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Viewing Administrative Procedure 8.740 Administrative Procedure 8.740



Title

Dishonored Checks

Header

Administrative Procedure Chapter 8, Business and Finance
Administrative Procedure AP 8.740, Dishonored Checks
Effective Date:  May 2015
Prior Dates Amended:  October 1995, January 1999, April 2006, July 2007    
Responsible Office: Office of the Vice President for Budget and Finance/Chief Financial Officer
Governing Board and/or Executive Policy: EP 1.102, Authority to Manage and Control the Operations of the Campus
Review Date:  August 2018

I. Purpose

To provide procedures for the processing of checks which have been returned unpaid by the maker's bank.  This procedure is based on Chapter 2010, Delinquent Financial Obligations, Hawai‘i Administrative Rules adopted by the University of Hawai‘i (UH) Board of Regents on December 12, 1974, and amended as of December 12, 2002; and Section 40-35.5, Hawai‘i Revised Statutes.

To assure that all dishonored checks are recorded properly in the University’s Kuali Financial System (KFS), makers of returned checks receive proper notification, and the dishonored check is repaid.

II. Definitions

A.  Dishonored check - A paper or electronic check, which the University has received and deposited, and is subsequently returned unpaid to the University by the maker's bank.  A dishonored check is a financial obligation due to the University and must be held for safekeeping until it is repaid by the student or maker.

B.  Sanctions - The range of penalties which the University may invoke if a dishonored check is not repaid.

C.  Service charge - An amount assessed by the State of Hawai‘i in accordance with §40-35.5 HRS for a check that is dishonored for any reason.  The service charge cannot be waived and is deposited to the State general fund.

III. Administrative Procedure

A.  Action to be taken when a check is dishonored and returned by the bank.

    1.  Treasury Office:

        a.  Identify the University department that originally accepted the check and the campus/department /fiscal administrator responsible for contacting the student or maker of the check to have the check repaid.  Note:  The standard UH Endorsement Stamp will usually indicate the name of the receiving department.

        b.  Upon receipt of a returned check for a non-student account payment, the UH Treasury Office will process a non‐check disbursement (ND) document in KFS. The ND is charged to the campus/department’s AR clearing account, object code 9239 and is routed to the campus/departmental fiscal administrator.

    2.  University Cashier’s Office upon receiving notice of a  dishonored check for student account transactions will:

        a.  Post the returned item and dishonored check fee to the account.

        b.  Place a financial hold on the account.

        c.  Notify the student of the dishonored check.

        d.  Maintain a chronological record of all collection efforts.

        e.  Post the payment to the account and clear the hold when the dishonored check is repaid.

Note:  Any dishonored check posted to a student account in the student information system shall be handled centrally by the University Cashier’s Office for processing, regardless of which campus originally accepted the payment.

    3.  Campus/department upon receiving notice of a  dishonored check and ND document in KFS workflow for non-student account transactions will:

        a.  Change the AR clearing account and object code on the ND to the appropriate account and object code.  Approve and route the ND in KFS to General Accounting and Loans Collection (GALC).

        b.  Create a Debit Memo (DM) invoice in KFS and route to Treasury.  Refer to KFS process documentation – DM Invoice Procedures.

        c.  Notify the maker of the check (see Attachment 1 for sample notification).

        d.  Maintain a chronological record of all collection efforts.

        e.  Prepare and process a Cash Control (CTRL) in KFS when the dishonored check is repaid.  Refer to KFS process documentation - DM Invoice Procedures. 

B.  Sanctions are imposed when a dishonored check is not repaid and the maker of the check and/or the student incurs a delinquent financial obligation with the University.  Sanctions are administered in accordance with A8.731, section 7.

C.  University departments reserve the right to refuse further check payments for any University receivable where three (3) or more checks have been returned for any reason.

IV. Delegation of Authority

There is no administrative specific delegation of authority.

V. Contact Information


VI. References

Chapter 20-10, Hawaii Administrative Rules, Delinquent Financial Obligations may be viewed at:  http://www.hawaii.edu/offices/bor/adminrules/chapter10.pdf

Section 40-35.5, Hawai‘i Revised Statutes may be viewed at:  http://www.capitol.hawaii.gov/hrscurrent/Vol01_Ch0001-0042F/HRS0040/HRS_0040-0035_0005.HTM

KFS process documentation – DM Invoice Procedures http://www.hawaii.edu/kualifinancial/docs/DM%20procedures.pdf

VII. Exhibits and Appendices

Attachment 1:  UH Bill and Notice of Dishonored Check

Approved

    Signed    
    Kalbert Young    
    May 07, 2015    
    Date    
    Vice President for Budget and Finance/Chief Financial Officer

Topics

finance; dishonored check; sanctions

Attachments