Operating Procedure

Title: CHECK STOCK CONTROL Number: 30-008

Effective Date: June 1, 1987Page 1 of 4

Revision Date: April 2, 1990

I.PURPOSE

To ensure adequate check stock inventory is available and secure. To eliminate potential risk in handling and storing blank check stock.

II.SCOPE

This policy/procedure applies to all departments storing, using, monitoring and handling check stock.

III.DEFINITION

  1. Departmental Check Stock Custodian – Individual responsible for ensuring that the company check stock control guidelines are followed in his/her department.

B.Check Stock – This policy/procedure specifically addresses Payroll, Accounts Payable and Claims Check Inventory.

VI.POLICY

  1. Guidelines
  1. Check stock inventory (unused, blank checks) is stored at a secure facility accessible to authorized individuals. Additional automated Accounts Payable and Payroll Checks are stored at a second location to ensure availability of inventory at all times. Check stock, by type, is stored by the following departments at the following locations.

Type of CheckDepartment/LocationCustodian

Accounts Payable – manualMIS 11W. 42ndDirector of MIS

Accounts Payable – automatedMIS 11W. 42ndDirector of MIS

Payroll – AutomatedMIS 11 W. 42ndDirector of MIS

Add’l Accounts Payable - automatedRevenue Accounting NHAss’t Manager of Ticket Stock

Add’l Payroll – automatedRevenue Accounting NHAss’t Manager of Ticket Stock

Claim ChecksClaims347 MadisonAss’t Director, Legal Claims

Accounts Payable – manualAccounts Payable – 347Ass’tDirector,Accounts Payable

Payroll – manualPayroll347Manager, Payroll

  1. Check stock inventory and usage is monitored monthly by the Treasury Department. Treasury reorders check stock when inventory reaches designated level months projected supply. All requisitions, purchase orders, packing slips, receiving documents and other documents pertinent to check reorders are maintained by the Treasury Department.
  1. Treasury does not have physical access to the blank check stock (automated or manual) at any location.
  1. All checks are issued in ascending numerical sequence. Spoiled checks, checks used for printing alignment or checks used for bank testing must be voided, destroyed and logged as such. When destroying checks, actual check numbers must be verified and listed on the destruction log.
  1. Responsibilities
  1. The Departmental Check Stock Custodian is responsible for ensuring this policy/procedure is adhered to by his/her department.
  1. The Departmental Check Stock Custodian is responsible for notifying Treasury and Internal Audit of any discrepancy in check stock inventory.
  1. The Departmental Check Stock Custodian is responsible for receiving shipments of check reorders. The receipt of shipments includes verifying check numbers and quantity included in the shipment.
  1. The Treasury Department is responsible for monitoring check usage, inventory levels, and reordering checks.
  1. The Internal Audit Department is responsible for conducting periodic audits of the actual check stock.
  1. Each area maintaining check stock is responsible for departmental procedures concerning control and safeguarding of the check stock, including security logs identifying individuals, times and dates of visitors to the storage facility. Additionally, a contact list of names/phone numbers to be contacted in the instance of an emergency situation should be maintained in each area.
  1. Administration
  1. Administration and interpretation of this policy/procedure is the responsibility of the Vice President, Finance & Administration.
  1. Any exceptions to this policy/procedure must be approved by the President.

IV.PROCEDURES

  1. Inventory Management

Check stock inventory must be monitored monthly to ensure there is an adequate supply of checks to handle projected usage and there are no discrepancies in the actual on hand inventory. Inventory Management is the responsibility of the Treasury Department with input from the Departmental Check Stock Custodians regarding usage and actual on hand inventory. Listed below are responsible persons and actions taken.

Departmental Check Stock Custodian:

  1. Maintain a check usage/inventory log.
  1. Enter beginning and ending sequence numbers of all checks used on log.
  1. Indicate purpose checks are being used for (e.g., bank testing, payroll 9/14/89, etc.). Initial log when completed.
  1. On the last business day of the month, check on hand inventory against the usage log. Identify any discrepancies.
  1. Forward log to Treasury.
Treasury Department Supervisor – Cash Management:
  1. Treasury maintains a usage log throughout the month based on the number of checks signed for each particular type and department.
  1. At month end, compares Treasury usage log with Departmental Check Stock Custodians’ Check Usage Log.
  1. Investigates and resolves any discrepancies in actual on hand inventory vs. recorded inventory.
  1. Issues a monthly report identifying on hand quantity, previous month’s usage, projected usage and approximate requisition/reorder date.
  1. Reordering

When actual on hand inventory levels reach a three month supply, Treasury reorders checks based on projected usage.

Treasury:

  1. When inventory log, at New Haven, reaches designated on hand supply, prepare check reorder requisitions for reorder of checks.

Departmental Check Stock Custodian:

  1. Receives shipment, verifies check numbers (beginning/ending) and quantity. Signs and dates receiving document.
  1. Forwards a copy of the receiving document to the supervisor, cash management.
  1. For automated check supplies (both Payroll and Accounts Payable) void designated amount of checks of the shipment required for testing. Forward the voided checks to Treasury with the copy of the receiving document. Note: these voided checks are used for bank testing. The amount varies between 100 and 200 items.
  1. Update Usage/Inventory logs with quantity and check numbers received. Include voided checks on Usage/Inventory log, indicating void/bank testing in purpose column.

Treasury Supervisor – Cash Management:

  1. Coordinate microencoding test of voided checks.
  1. Notify check printer/vendor of any problems with the checks.
  1. Update Treasury inventory logs with information from receiving document including voided checks so identified.
  1. Emergencies/Disasters

In the event the check stock at MIS is destroyed or depleted by unforeseen circumstances, Treasury must immediately requisition/reorder checks. So that there is no interruption in Payroll/Accounts Payable Processing, the additional supply or a portion of the supply stored in New Haven must be shipped to MIS (11 W. 42nd Street) as soon as it is safely possible.

MIS:

  1. Notify Treasury and Revenue Accounting of emergency situation. Contact identified individuals on emergency contact list. Note: destruction of checks by fire, flood, etc. must be reported to Internal Audit as well.
  1. Request Revenue Accounting forward additional check stock to MIS.

Revenue Accounting:

  1. Forward check stock via PRA employee to MIS. Include transmittal identifying quantity and check numbers.
  1. Forward inventory/usage log to Treasury indicating quantity and check numbers sent to MIS.

MIS:

  1. Confirm receipt of checks, verify quantity and check numbers via transmittal form.

Treasury:

6.Reorder according to procedures in Section B.

This procedure sets forth only guidelines and does not constitute a contract, express or implied. Metro-North expressly reserves the right to change or cancel this procedure at its sole discretion at any time.

Approved:G. Firnhaber, Executive Vice President, 4/19/90

P. Stangl, President, 4/20/90