Systems and Procedures
A Division of The Office of Budget and Finance
A Division of The Office of Budget and Finance
Checks received by the University may be returned by the bank for several reasons. These returned checks can include student tuition payments or other student related charges as well as non-student related payments for goods and/or services provided by a business area.
For such occurrences, the Associate Vice President for Budget and Finance has authorized the assessment of specific fees. A $25.00 returned item fee will be assessed for returned checks that have been received for tuition and other charges which have been posted to the student account. For returned checks involving departmental charges for goods or services rendered, a $25.00 returned item fee may be assessed to the person issuing the check. All areas concerned must display a sign in a prominent location stating that a charge will be assessed for all returned checks.
The budget executive at each location receiving checks may waive the enforcement of these fees on an individual basis if, in their judgment, extenuating circumstances exist (such as a bank error). Likewise, if the budget executive feels that such a charge is not in the best interest of their administrative unit, they may choose not to assess a fee. At all University locations, it is the responsibility of the Financial Officer (FO) or Director of Finance & Business (hereafter referred to as FO) to ensure that the collection of monies, including the appropriate returned item fees, is pursued.
Good judgment should be exercised when applying this procedure, to assure that the cost of efforts toward payment recovery does not exceed the value of the returned- check fee and check amount. The ultimate responsibility for such judgments shall reside with the FO.
This procedure specifies the distribution of returned checks, reimbursement/securing payment, handling of uncollectible accounts, auditing and record retention associated with the processing of returned checks. This procedure applies to operations at both University Park and Non-University Park locations, unless otherwise stated.
NOTE: Certain areas are authorized to manage their own returned checks. Entities like the Bookstores, whose checks are made payable to Barnes & Noble, have checking accounts outside of Penn State and manage their own returned checks. Otherwise, Penn State checks for Student Account Tuition returned from the bank are processed by Bursar's Office at University Park and Non-Student returned checks are processed by Central Accounts Receivable (Central AR).
When a check deposited with a designated University banking institution is returned from the bank for any reason, the bank sends all returned checks to the Financial Reporting Department, which notes the General Ledger account number on the documentation received from the bank and forwards the documentation to the Bursar for Student Account Tuition checks or to Central AR for Non-Student related checks.
Central AR sends an email (Exhibit A) as well as a copy of the check to the appropriate location's contact person requesting the SIMBA GL#, IO# or Cost Center, Business Area, and Fund # if applicable of the returned checked. Once the requested information is received, Central AR will charge the department budget via Journal Entry. This process is typically completed once a month, usually on the last day of the month. The FO, in consultation with the budget executive, determines if the $25.00 returned check fee should be assessed or is forgiven (refer to "Waiver of Fees" below).
Upon receipt of the email containing the attached check copy, repayment procedures for the returned check will be pursued. If the returned check originated within the FO's immediate area, collection begins in that office. Otherwise, the endorsement on the back of the check is examined to determine which department or area originally accepted the check, and the check is routed to that area.
For returned checks involving student accounts, the Bursar's Office is responsible for collection. The payment posting in LionPATH will need to be reversed and a $25 returned item fee is charged to the student account, as stated in the Returned Item Memo (Exhibit B).
If local banks accept returned checks, the returned checks may be re-deposited. If checks cannot be re-deposited, or if checks are re-deposited and subsequently returned, the repayment process must be initiated with the check signer.
The Bursar's Office may first attempt to make email or phone contact with the student, informing them of the returned payment and to secure re-payment. If repeated attempts to establish contact fail, the use of written notification is used as the method of contact. A Returned Check Notice Student Account (Exhibit B) is prepared and forwarded to the check signer.
The originating department or FO may first attempt to make face- to-face or phone contact with the check signer to secure payment. If repeated attempts to establish personal or phone contact fail, the use of written notification is used as the method of contact. The department retains a copy of the completed notice. A copy of the notice shall be maintained in an alphabetical file, preferably near each sales area so that any additional sales to the individual are denied until full payment of the returned check and fee is received.
If a check remains unpaid for 30 days after the first notification, a Second Notice (Exhibit C) is prepared and forwarded to the check signer. A copy is given to the FO (if applicable). The department retains a copy.
If the check was written by a student, and the balance on the student account is past due, a financial hold is immediately placed on the student record which prevents future enrollment and issuance of transcripts or their diploma. Financial holds are subject to certain minimum dollar amounts (as established by the Associate Vice President for Budget and Finance), as well as to deadlines for processing requests. If the dollar amount involved (both the amount of the returned check and the fee) does not meet the minimum requirements, then the amount must be charged against the student's General Deposit.
For all non-student account returned checks, to clear the returned check, the check signer must submit the amount indicated on the "Total Due" line of the Returned Check Notice plus the $25 returned item fee (if applicable). This payment must be in the form of a check or money order made payable to The Pennsylvania State University. If there are two prior returned checks, then a certified check or money order, made payable to The Pennsylvania State University, must be used.
Upon repayment, a prenumbered receipt or other authorized receipt must be prepared and distributed per Policy FN01 Cash Revenues to acknowledge the repayment of the returned check amount and the fee. The prenumbered receipt must separately note the original payment check amount, the fee amount, and that payment is for a returned check.
The repayment is deposited in the appropriate University Depository in compliance with Policy FN01 Cash Revenues. The repayment should be the only item included in the deposit. DO NOT co-mingle with other deposits. The departmental cost object will be credited, as applicable:
The name of the person who originally signed the check, and the prenumbered receipt number issued are indicated in the text field of the Cash Deposit Journal Entry.
The Cash Deposit Journal Entry document number is recorded on the original bank- validated deposit slip. Refer to Procedure FN2005 Depositing Cash Revenues. Notations to the Returned Check Notice Non-Student Accounts are completed, to include the date paid, the amount paid, the prenumbered receipt number, and the Cash Deposit Journal Entry document number. A photocopy of the Returned Check Notice is made and forwarded to the FO, if applicable. The original is retained by the department and placed in a closed file.
For repayment of returned checks involving student accounts, a payment of the "Total Due" amount plus the $25 returned item fee must be sent to replace the returned check. This payment must be in the form of a check or money order made payable to The Pennsylvania State University. If there are two prior returned checks from the same student, then a certified check or money order, made payable to The Pennsylvania State University, must be used.
The repayment is deposited in the appropriate University Depository in compliance with Policy FN01 Cash Revenues. The student account will be credited, as applicable:
Notations to the Returned Check Notice Student Accounts (Exhibit B) are completed, to include the date paid, the amount paid, and the LionPATH posting information
If there is no justifiable reason, the check signer should be assessed the amount indicated on the "Total Due" line of the Returned Check Notice Student Account (Exhibit B) or Returned Check Notice Non-Student Accounts, which includes any fees. If, however, a returned check and/or fee are forgiven, the budget executive must document this waiver in a signed memo or note written directly on the Returned Check Notice (Exhibit B or the communication send the check signer). The FO receives a copy of all documentation indicating such action. Returned item fee waivers involving the student account are documented in LionPATH.
Any returned check outstanding for 30 days after the second notice should be afforded special attention. Phone calls, a personal letter, or a collection agency must be considered as the next appropriate step for check signers in this situation. If the originating department is managing the matter, the FO must be notified of the originating department's action.
If a returned check is determined to be uncollectible after all reasonable means of collection have been attempted, the FO has the ultimate authority and responsibility to terminate pursuance of the matter. If such action is taken, the FO must document this termination (such as a signed note written directly on the Second Notice (Exhibit C)) and forward a copy of the notice to the department involved with the returned check. No further action is necessary, since, as was previously discussed, all adjustments for accounting purposes have already been made.
Violation of a financial policy and/or procedures should be reported to your supervisor, your Human Resources representative, unit manager, and/or office responsible for the policy and/or procedure. Where those resources are inadequate, you may choose to make an anonymous report through the Penn State University hotline by calling 1-800-560-1637.
On a periodic basis, an examination is made by the Financial Officer of the outstanding returned checks of the various departments or areas under their purview for problems which may require closer scrutiny. If, as a result of such a review, the Financial Officer finds that a check signer(s) has an unacceptable number of returned checks, they will alert their departments to refuse services to the check signer(s) until the problem is resolved.
The Financial Officer is responsible for ensuring that procedures pertaining to the accountability and safeguarding of all cash receipts, cash funds, and other assets are established and followed in accordance with approved University policies and procedures. Regular audits relating to advances, cash, travel, equipment accountability, and other expenditures provide a means to protect University assets. The Financial Officer is responsible for working with Internal Audit when audits are being performed in the administrative area. Audits relating to sponsored activities or other audits performed by external auditors may also be performed. The Financial Officer would also be responsible for collaborating with the external auditor and/or a central university office related to these procedures.
University Records must be retained and managed in accordance with Policy AD35 University Archives and Records Management and the University's Records Retention Schedules that have been approved by the Records Management Advisory Committee (RMAC), the Office of General Counsel, and Senior Vice President and Chief of Staff. These Records Retention Schedules are derived from - or based upon - federal, state, and local statutes or regulations (i.e.; Federal Acquisition Regulations, the OMB Uniform Guidance, Internal Revenue Service, and other regulations governing the auditability and retention of financial records), University Policy, industry standards, and business needs. All University Records must be maintained in such a manner to provide ease of access, establish a suitable audit trail for all transactions, and to be reviewed prior to disposition.
University Records and Transitory/Disposable Records are defined below. See Policy AD35, Definition of Terms for additional information.
Upon completion of the retention period, University Records must be disposed of via secure destruction or transfer to University Archives, unless an exception to the disposition process set forth below applies. In many cases, retention periods and disposition methods may be generally determined by comparing the type of record (i.e., reports, correspondence, etc.) to similar records series with known retention periods listed on the Records Retention Schedule. If the disposition method for University Records states "Review by Archives" on the Records Retention Schedule, the Unit responsible for those records should consult the University Archivist for a final determination of disposition. For University Records that must be securely destroyed, units may arrange for shredding services by either contacting the Blue/White Shredding Program or the Inactive Records Center (IRC).
Exceptions to the disposition process are as follows:
To safeguard the privacy of individuals, records that contain Personally Identifiable Information (PII), as defined in University Policy AD53 Privacy Policy, or student records, as defined in University Policy AD11 Confidentiality of Student Records, must be securely destroyed beyond recovery. For additional information regarding privacy and the protection of an individual's personal information, see Policy AD53 Privacy Policy.
Additional questions may be directed to the Office of Records Management.
For questions or additional details, please contact the Bursar’s Office for student related check issues or the Office of Central Accounts Receivable for non-student related check issues.
To request changes to this procedure, please contact the Office of Systems & Procedures by submitting a GURU Technical Support Request Form.