Systems and Procedures
A Division of The Corporate Controller's Office
IN

Procedure CR2067 - Processing Foreign Currency Drafts

CR2067 - PROCESSING FOREIGN CURRENCY DRAFTS

Policy Steward facilitating procedure: Associate Vice President for Finance and Corporate Controller

Table of Contents:


GENERAL:

Periodically, University departments will purchase goods/services, or take part in functions which require payment in foreign currency. To assist the University in complying with this requirement, the Wells Fargo Bank offers Wells Fargo Foreign Exchange, an automated on-line access system which utilizes web-based technology to provide Accounting Operations with direct access to financial information and transaction capabilities maintained by the Wells Fargo Bank. The draft service enables Wells Fargo to receive authorized “International Draft Notices” from Accounting Operations, debit the University’s bank account, and provide credit capability to the bank account of a designated foreign bank where the draft may be presented for payment.

The Assistant Treasurer and Manager, Financial Reporting and Cash Management act as the “Security Administrators,” thereby controlling the access to and use of the draft service. Access will be limited to the Accounting Operations Staff, Treasury Staff, and Financial Reporting. Access to the draft service is controlled by the entry of a “User Id,” password, and a bank-issued token. Bank tokens are ordered and managed by the Security Administrators. No other individuals may have access to this system without formal authorization by the Security Administrators. The Director-Accounting Operations will insure that the following University policies are complied with, as applicable, in the processing of foreign currency draft requests:

Beyond the guidelines specified by University policy and this procedure, users of the system will be advised of, and required to adhere to all the terms, conditions, and instructions specified in (1) the licensing agreement with Wells Fargo and (2) the “Wells Fargo User’s Guide.”

Departments requesting payment in foreign currency will be charged an amount to cover the cost of drafts, service costs, etc. This charge will be assessed via Journal Voucher entry by Accounting Operations.

The following documents the procedure to be followed when handling and processing foreign currency drafts.

PROCEDURE:

REQUESTING PAYMENTS IN FOREIGN CURRENCY

General

Requests for payments in foreign currency will be made at the same time that the requesting area completes either a Special Request for Check, Receiving Report, or Partial Receiving Report (Applied Research Lab [ARL] or Hershey Medical Center only), or an eBuy+ transaction (as applicable), in accordance with the GURU instructions for these forms. Purchasing Services will notify Accounting Operations, via email, of an eBuy+ purchase requiring payment in foreign currency. In the description section of the applicable form, areas must specify that they are requesting payment in a particular foreign currency type.

NOTE: IBIS forms may NOT be used to request payments in foreign currency, being that the IBIS system cannot generate checks in Foreign Currencies.

Additional Processing for Requests Made Via Receiving Report/Partial Receiving Report

For foreign currency drafts being requested on a Receiving Report or Partial Receiving Report, ARL or Hershey Medical Center must adjust the original CENTRAL encumbrance on their budget (which occurred when the original Purchase Order was processed) once the foreign vendor is paid. (This is necessary because foreign currency drafts do not flow through the normal A/P system). To accomplish this, a Purchase Order Change Form must be processed per GURU instructions. The Purchase Order Change Form may be submitted either at the time the foreign currency draft is requested (i.e., submitted with the Receiving Report/Partial Receiving Report), or after the foreign currency draft is generated by Accounting Operations, as discussed in “Central Encumbrance Closing, Receiving Reports.”

PROCESSING OF FOREIGN CURRENCY PAYMENT REQUESTS

PAYMENT REQUEST HANDLING

General

Control and accountability have been incorporated into this process by establishing an appropriate separation of duties, as various functions must be performed by different individuals.

Reports/Partial Receiving Reports requiring foreign currency payment will be routed to Accounting Operations for processing. Purchasing Services will notify Accounting Operations, via email, of an eBuy+ purchase requiring payment in foreign currency. The Manager-Accounting Controls locates the purchase order transaction within the eBuy+ systems and prints all relevant documentation.

All pertinent information will be entered into the Wells Fargo Foreign Exchange to create the foreign draft. A different member of the Accounting Operations staff will verify the information entered. Any discrepancies will be examined and rectified. When the information is corrected, the currency rate will be requested and the transaction will be approved. This action transmits the draft information to Wells Fargo.

The Wells Fargo Foreign Exchange Settlement function will indicate when the drafts can be printed. When indicated, blank drafts are loaded into the printer and the drafts are printed.

Once transmitted; the Manager-Accounting Control will provide the grand U.S. dollar total of drafts being issued to the Corporate Controller’s Office Treasury Staff, to ensure that the designated University account (G/L 0106) is adequately funded.

Final Processing

The Manager-Accounting Control will match the appropriate foreign currency draft (Exhibit "A") with its corresponding Special Request for Check, Receiving Report/Partial Receiving Report (and accompanying support documents), or eBuy+ transaction documentation.

The TOP two (2) portions of the draft will be separated from the rest of the draft, matched with the corresponding invoice/registration form and any other “remittance advice” required by the vendor, and will be processed per the instructions on the applicable Special Request for Check, Receiving Report/Partial Receiving Report, or eBuy+ transaction documentation (either mail, or “hold and notify” someone in the requesting department). The BOTTOM portion of the draft is the “department” copy, to be filed with the corresponding support documents, and ultimately forwarded to Accounting Files for processing as described in “Archiving.”

Central Encumbrance Closing, Receiving Reports

If a department did not previously submit (as discussed in “Additional Processing for Requests Made via Receiving Report/Partial Receiving Report”), a Purchase Order Change Form must now be processed, per GURU instructions, to close the Purchase Order and reduce the central encumbrance for this transaction on their department budget. (As stated earlier, this is necessary because foreign currency drafts do not flow through the normal A/P system).

Voided Transaction

If a department decides to cancel their request for a foreign currency draft, they must notify the Manager-Accounting Control, via phone call or email, of their desire to do so. If such a request is received by the Manager after it has been entered into the system, but PRIOR TO REQUESTING A RATE, the Manager-Accounting Control will record the date and individual requesting the cancellation on the applicable Special Request for Check, Receiving Report/Partial Receiving Report, or eBuy+ transaction documentation. The “Awaiting Approval” will be accessed, and the VOID option will be selected to prevent further processing on the draft system. If a draft HAS ALREADY BEEN PRINTED, the Manager-Accounting Control will mark the draft “VOID,” initial and date the draft. The voided draft will be forwarded to Wells Fargo so they may cancel and credit our account.

The Manager-Accounting Control will notify Purchasing Services (applicable Purchasing Clerk) for voided transactions involving Receiving Reports/Partial Receiving Reports, so that the appropriate adjustments can be made to Purchasing Department records, if/as needed.

SUMMARY REPORTING, RECORDING OF CHARGES AND ACCOUNTABILITY

Summary Reporting

At the end of each day that drafts are issued for payment, the Manager-Accounting Controls will access “Manage Drafts” at the “settlements” menu of the draft system. This information will be copied to an excel spreadsheet to create a Drafts Report. The currency used and the US dollar amount will be recorded on this report along with the foreign draft number. The Drafts Report will serve as the permanent record for all foreign currency drafts generated. The original report will be retained by the Manager-Accounting Control, pending entry of the associated charges and credits to departmental budgets and general ledger accounts (see “Recording Charges and Credits”).

Recording Charges and Credits

Using the Drafts Report, the Manager-Accounting Control will prepare a Journal Voucher Control (JVCN) each week to charge/credit the appropriate accounts, as follows (ALL ENTRIES IN U.S. DOLLARS):

DEBIT: Department Budget for amount of draft and Accounting Operations fee.
CREDIT: General Ledger Account 0106 for amount of draft and Budget 00-001-33, Fund 1001, Object Code 0035 for Accounting Operations equipment/processing costs.

Copies of each Journal Voucher will be sent to Financial Reporting (to facilitate bank account reconciliation).

STOP PAYMENTS

If a department determines that it is necessary to stop payment on a foreign currency draft after it has already been mailed and accounting entries have been processed, the Manager-Accounting Control will notify Wells Fargo, at which time a stop payment will be placed on the draft. Purchasing Services and Financial Reporting will be notified, if/as applicable, after the stop payment has been accomplished. Accounting Operations will subsequently prepare a Journal Voucher, reversing both the original charge to the department and credit to General Ledger Account 0106 for the amount of the draft, as previously recorded in “Recording Charges and Credits.” However, the original charges/credits assessed for the Wells Fargo and Accounting Operations fees will NOT be reversed. A copy of the Journal Voucher will be forwarded to Financial Reporting for bank account reconciliation purposes.

ARCHIVING

After the “Summary Reporting” and “Recording Charges and Credits” processes occur, copies of Special Requests for Check, Receiving Report or Partial Receiving Report, or eBuy+ transaction documentation (as applicable), as well as the “department” copy of the approved foreign currency draft, and all other corresponding documentation will be forwarded to Accounting Files for scanning and archiving. This is done annually. Documents are held by the Manager-Accounting Control in a “Completed” file until the documents are scanned/archived.

AUDIT COORDINATION - FINANCIAL AND PROCEDURAL

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, as well as performing an annual audit that is submitted to the Assistant Controller.

RECORD RETENTION, DISPOSITION AND DESTRUCTION:

Record retention must be managed in accordance with Policy AD35 - University Archives and Records Management, and records schedules approved by the Records Management Advisory Committee, Office of General Counsel, and Office of the President. These retention requirements are the University's retention criteria, either derived or based upon federal, state, and local statute or regulations, industry standards, and business needs. Retention beyond recommended time periods require justifiable reasons and warrant review by the Records Management Officer or designee. All documents must be maintained in such a manner so as to provide ease of access for review, and to provide a suitable audit trail for all transactions.

Upon expiration of a stated period of time, documents must be discarded and/or destroyed, unless permission granted by Records Management Officer or designee to retain the records. Archival records created more than 20 years prior to the current date must be reviewed before destruction. Units should also contact the University Archivist before discarding any document which may be of permanent or historical value to the University. To safeguard the privacy of individuals, documents that contain salary information, personally identifiable information (PII), or student records must also be shredded. See Policy AD53 - Privacy Policy and AD22 - Health Insurance Portability and Accountability Act for additional information regarding privacy and the protection of an individual's personal information. For documents that must be shredded, departments may arrange for Blue Bag service by contacting the Blue/White Shredding Program of the Office of Physical Plant. Exceptions to the practice are as follows:

Additional questions may be directed to the University Archivist or the Records Management Officer.

EXHIBITS:

CONTACT INFORMATION:

For questions, additional detail, or to request changes to this procedure, please contact the Director of Accounting Operations.

CROSS REFERENCES:


Procedure Status:

Date Approved: 5/22/15

Most recent changes:

Revision History: