Integrated CSU Administrative Manual

CSU POLICY

Section:  GENERAL ACCOUNTING

Section 3000 Policies

Policy Number:  3250.02

Policy Title: Disposition of Unclaimed Negotiable Instruments

Policy Effective Date: May 23, 2013

Last Revision Date: May 23, 2013
(see revision history)

POLICY OBJECTIVE

It is the policy of the CSU that unclaimed negotiable instruments remain the property of the payee. This document provides direction for the treatment of unclaimed negotiable instruments that cannot be returned to the rightful owner. Each campus must prepare written procedures to implement this policy.


POLICY STATEMENT

Title 5 Sections 42375 and 42376 of the California Code of Regulations, designates and authorizes each CSU President to provide for the care, restitution, sale, or destruction of unclaimed, lost, or abandoned property in the possession of the university. In the context
of this policy, unclaimed property includes unclaimed negotiable instruments. Unclaimed negotiable instruments are defined as:

  • Checks that have been delivered but remain uncashed by the payee.
  • Checks that have been returned to the university and the payee cannot be located.

100 General

Campuses should make every effort to contact the payee of an outstanding check. See “Guidelines” section of this policy for sample communications.

When unclaimed negotiable instruments, excluding payroll warrants, have expired, they remain the property of the CSU and will be escheated. The escheated amounts will be recorded as liabilities. For instructions on the escheatment process, see the Legal Manual, Section 2.10.2 Escheat Process at http://www.calstate.edu/SFSR/Y-E-R_Instructions/2011-2012/LegalManual/CH_02/2.10_Accounts_Payable_FINAL.pdf.

After at least a three month period following escheatment, campuses must periodically identify amounts that will not be claimed by owners and reduce the amount of their liability accordingly. Amounts relieved from the campus’ liability become the responsibility of the Executive Vice Chancellor/Chief Financial Officer (EVC/CFO) or the campus CFO. Sufficient records and funds must be retained to honor future claims.
 
All funds resulting from the escheatment process are not to be used for student scholarships or loans to students. See Section 300 and 400 for treatment of Student Financial Aid.

200 Payroll Warrants

    1. Undelivered payroll warrants, issued by the State Controller’s Office (SCO), should be returned to the campus main cashier. Prior to the lapse of the specified expiration period indicated on the check (usually 90 days), campuses should deposit the undelivered payroll warrants into the campus Wells Fargo bank account and record as an escheatment liability.
    2. Delivered but uncashed payroll warrants, issued by the SCO, remain in the control of the SCO. The SCO will reflect these as outstanding items on the bank reconciliations. After the payroll warrant expires, the SCO will cancel the check and record it as an escheat liability. Campuses will be notified by the SCO of this action and should record the escheatment transactions according to Legal Manual, Section 2.15.1 Escheated Payroll Warrants at http://www.calstate.edu/SFSR/Y-E-R_Instructions/2011-2012/LegalManual/CH_02/2.10_Accounts_Payable_FINAL.pdf.

 

300 Grants and Contracts Awards

Unclaimed negotiable instruments originating as payments from all externally funded awards (i.e. Federal, State, Local or Privately Funded grants and contracts) are an exception to the escheatment process and should be returned to their funding source as required by the federal government or sponsor guidelines. If the sponsor guidelines do not provide direction, then refer to Section 100, General.

400 Student Financial Aid

Payments originating from student financial aid funds (i.e. SUG, Pell, ACG/SMART grants) are an exception to the escheatment process and should be cancelled and the funds returned to the originating student grant or loan fund. For Federal Work Study (FWS) payroll disbursements, the federal portion must be returned to the source. However, for the treatment of the nonfederal portion of the FWS payroll disbursement, refer to Section 200, Payroll Warrants.

500 Electronic Deposits

Undelivered direct deposit advices should be voided and reissued in the form of a check or contact the payee for further instructions.

600 Pre-2007 Unclaimed Negotiable Instruments

Unclaimed negotiable instruments issued before fiscal year 2007 were funded by the state and therefore must be returned to the SCO. In order for a pre-2007 escheated unclaimed negotiable instrument to be reissued, the legislative process must be followed. For instructions on the legislative process see the SCO’s website at:  http://www.sco.ca.gov/upd_rptg.html

700 Records Retention Requirements

Campuses must maintain records of unclaimed negotiable instruments and be prepared to reissue payment when a valid claim is presented.

 

Benjamin F. Quillian
Executive Vice-Chancellor/Chief Financial Officer

Approved: May 23, 2013

 

APPLICABILITY AND AREAS OF RESPONSIBILITY

 

REVISION HISTORY

 

RESOURCES AND REFERENCE MATERIALS

Useful Guidelines:

Legal Manual Section 2.10.2 and 2.10.3 (http://www.calstate.edu/SFSR/Workshops/index.shtml)

Related Principles:

GASB Statements 27, 31

Sound Business Practices:

 

Laws, State Codes, Regulations and Mandates:

    • California Civil Code - Section 2080.8
    • California Education Code 89720-89725.1
    • Title 5 - Sections 42375 California Code of Regulations
    • Title 5 - Section 42376 California Code of Regulations
    • California Unclaimed Property Law and Regulations
    • Executive Order 1000

    COGNIZANT OFFICE(S)

    CO Manager:

    Ms. Jean Gill
    Assistant Controller - Financial Services
    CSU Office of the Chancellor
    jgill@calstate.edu


    Subject Expert:

    Ms. Lauri Reilly
    Accounts Payable Manager
    CSU Office of the Chancellor
    lreilly@calstate.edu

    Mr. Ben Hylton
    Manager Accounting
    Humboldt State University
    ben.hylton@humboldt.edu

    Ms. Laverne Simmons-Barnett
    Director of Accounting Services
    CSU Sacramento
    barnettlw@csus.edu


    Affinity Group:

    Accounts Payable Managers

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