Committee weighs bank 'payee positive pay' and controls for department-held fiduciary accounts

County finance officials discussed expanding check-fraud controls, including payee positive-pay services through the county’s bank, and the difficulty of applying those controls to smaller departmental trust or fiduciary accounts that are not fully integrated with the county’s financial systems.

Mike, a consultant from 3 Plus 1, advised that payee-name verification can be effective but urged the county to monitor what percentage of the portfolio is in callable instruments and to be thoughtful about how controls are applied across all accounts. Treasurer Jen White and audit staff discussed how many small accounts — park campground fees, clerk trust funds, prisoner trust accounts and others — are managed at the department level and may not be set up in the county’s financial system, which complicates automated positive-pay matching.

The committee discussed practical implementation questions, including whether departments could manually submit positive-pay files to the bank when their systems cannot generate automated files. A 3 Plus 1 representative noted an operational pitfall: some checks contain two-line payee names (for example, “John and Jane Smith”), and banks will reject an item if the payee file does not include both lines.

Committee members also discussed costs. The bank’s payee-positive-pay product appeared to charge a monthly or per-account fee plus per-item costs; staff said it appears to be itemized and could be charged per account. The treasurer’s office said some departments might have to pay the fee if the accounts are not county-managed funds. The auditor’s office emphasized segregation-of-duties and timely reconciliation as essential internal controls, especially in departments with small staffs or where the same employee both issues and reconciles checks.

Ending: The treasurer’s office will continue discussions with US Bank and 3 Plus 1 to scope the work, estimate ongoing costs, and determine the staffing and system changes required to implement payee positive-pay across county and department-held accounts.