Banking Services Procedure

Purpose statement

This procedure defines the process for the appointment of bankers, use and management of banking services and bank account reconciliation for the Town of Oakville (town).

Scope

This procedure applies to all banking transactions which take place by town departments and staff and local boards of the town for which the town provides banking services.

Procedure

Appointment of bankers

The appointment of bankers shall be determined by a request for proposal (RFP) and confirmed by Council resolution. A banking by-law shall be in effect to identify bankers and designated signing officers for the signing of cheques, electronic transfers, bank account set up, and investments.

An informal annual review and a formal five year cost/benefit review on all banking services will be completed in order to measure the cost effectiveness of the services. Financial Operations shall issue an RFP if:

1. The annual review process conducted by the Financial Operations department reveals serious deficiencies in banking services;
2. Where, in the opinion of the Treasurer or Deputy Treasurer, the banker requests a significant change to the terms of providing banking services, as contained in the original adopted banking proposal, which would result in an increase in the cost of such services to the Town, or;
3. Where market conditions have changed which would cause staff to question the competitiveness of the current contract.

The Banking by-law shall be amended to reflect any changes resulting from an RFP.

Banking signing authority

Municipal Act, Section 287 states that a municipality may provide that the signatures on a cheque of the municipality be mechanically or electronically reproduced.

The town must have a current by-law which reflects all positions that may sign on behalf of the Treasurer and head of council.  The town’s by-law reflects the positions that can sign for either party, no one position is designated signing authority for both the Treasurer and head of council. The resolution and by-law must be signed and sealed with the Corporate seal and filed with the town bankers.

The following transactions must be signed by two signing officers:

1. All cheques issued by the town:
   1. Cheques under $50,000 may be signed utilizing electronic signatories;
   2. Cheques over $50,000 must be hand signed by two signatories.
2. Rental and access to safety deposit box.
3. Electronic transfers of funds to external parties through wire or banking tools – greater than $50,000.
4. Annual debt payments.
5. Investments.
6. Setting up of new bank accounts.

The following transactions must be signed by one signing officer:

1. Request for corrections resulting from on line payments – reversal of duplicate payments.
2. Credit card merchant numbers, online banking access.

Bank account management

The Manager, Accounting Operations shall ensure the needs of departments are met as it relates to the establishment of bank accounts.

1. All primary bank accounts shall be set up with the banker appointed by the town.
2. Any accounts not set up with the banker appointed by the town must be in accordance with the Banking by-law.
3. The set up or closing of bank accounts may be requested by departments but is subject to the approval of the Manager, Accounting Operations and signed off by the signing officers, as defined in the Banking by-law.
4. New accounts will only be set up if there is a business reason to do so.
5. New account numbers for accepting eligible payment cards as per the cash handling procedure must be approved by the Manager, Accounting Operations.

Banking deposits and transfers

The Deputy Treasurer shall use every secure means possible to ensure receipts are deposited promptly to maximize interest income and reduce the risk of unsecured funds.

1. All funds shall be centrally counted and deposited within the centralized cashier function at town hall or at Transit (for transit and parking related deposits).
2. An armoured car service shall transport Town Hall, Transit and Parking cash receipts safely and daily to the central processing depot of the town’s banker. Electronic deposit technology (if applicable) or daily courier service shall be utilized to provide cheques to the central processing bank to ensure same day deposits.
3. Funds may also be electronically transferred between bank accounts or to purchase investments with approval from the signing officers.

All town staff responsible for collecting revenue shall ensure they understand and follow all procedures relating to cash handling and ensure all deposits are submitted daily to the Revenue and Tax division. Any alternative method of making deposits must be approved by the Manager, Accounting Operations.

Bank account reconciliation

All bank accounts will be reconciled centrally by the Corporate Banking Analyst on a monthly basis.  Reconciliation shall be done in accordance with the following process:

1. Reconcile cashed cheques weekly in the Corporate Information System (CIS) utilizing the banking system and/or other cash management tools. The town also uses the banking system to ensure the legitimacy of the cheque being presented before it is cashed.
2. A transaction detail of each bank account will be generated from the CIS general ledger and reconciled against the bank statements provided by the town bankers.
3. Any items not reconciled shall be followed up with source documents within the following month and staff shall ensure controls have not been compromised.
4. Any fraudulent items or irreconcilable items will be brought to the attention of the Manager, Accounting Operations immediately.
5. The Manager, Accounting Operations will take immediate action notifying bankers, internal audit or police in the case of fraudulent activities, and follow up on departments or staff who are not complying with deposit procedures.
6. The Manager, Accounting Operations will sign off on all monthly reconciliations
7. Outstanding cheques which have become stale dated will be followed up quarterly, to ensure that payment is received by vendors.
8. Outstanding, stale dated cheques, for which no response is received from the vendor, will be held for two years in a separate CIS account and then transferred to corporate revenue.

Payment options for revenue sources

There are various payment options available for departments to utilize to ensure the town goods and services are paid for and properly receipted:

1. Cash and cheques.
2. Certified cheques and bank drafts/money orders.
3. Payment card services from the town’s approved payment card provider.  Depending on the nature of and reason for the payment, these could be received in person, via telephone, or online.  .
4. Third party credit card payment services (property tax payments only).
5. Electronic transfers inclusive of online banking tools.
6. Centralized invoicing (in accordance with accounts receivable procedure).

Consideration of payment types must be done in consultation with the Manager, Accounting Services. The following factors will be considered:

1. Payment terms must be linked with service delivery;
2. Revenue volumes must be considered to minimize costs of payment options and administration;
3. The costs of credit cards and associated terminals; these will be charged to the department(s) utilizing the device;
4. Utilization of the town’s payment card service provider;
5. The security of payments to ensure that PCI standards are met; and
6. Revenue reporting must be timely, meet with accounting standards, and satisfy internal reporting deadlines.

Definitions

Banking system: systems provided by the banker which record banking transaction detail, provide statements, and allow access to information.  It also includes any anti-fraud programs which match the information of a Town of Oakville cheque to the information on cheques cashed against the town’s bank account(s).

CIS: Oakville’s Corporate Information System which holds all financial transactions

Responsibilities

The following are responsible for:

Departments:

Ensuring compliance with these procedures and that revenue is collected and deposited in a timely manner. Consulting with the Manager, Accounting Operations on new revenue sources and appropriate payment options.

Financial Operations department:

Providing depositing, reconciling, and internal control services as it relates to all banking functions and approving payment options for revenue sources.

Bankers:

Ensuring services are provided and advising the town when procedures, terms of contract, controls or improper signing authority are compromised, or when there is any indication of fraudulent activity.