Municipal Clerk Manual – Courts without JIS - Chapter 4 - Financial Procedures: Recommended Accounting Procedures For Municipal Divisions

Clerk Handbooks

Municipal Clerk Manual – Courts without JIS

		Section/Rule:	4.5
Subject:	Chapter 4 - Financial Procedures	Publication / Adopted Date:	October 2002
Topic:	Recommended Accounting Procedures For Municipal Divisions	Revised / Effective Date:	August 2018

Municipal Clerk Handbook
Courts without JIS
Chapter Four - Financial Procedures

4.5- Recommended Accounting Procedures for Municipal Divisions

References
Statutes: 479.080, 479.350, 479.353, 479.359, and Chapter 610
Supreme Court Rules: 37
Court Operating Rules: 4, 8, and 21
Publication Date: October 2002
Revised: March 2019

Introduction

The following recommendations describe minimum accounting procedures, records, and reports for the municipal divisions of the circuit court, and apply to manual and automated accounting systems. The recommendations are intended to assist the municipal divisions in bringing the financial operation of the court into compliance with statute and Generally Accepted Accounting Principles (GAAP). These latter principles are those upon which all financial operations and financial audits are based, both in the public and private sectors.

If you find that your current procedures differ from the procedures described in this section, before making any changes, we suggest you discuss the changes with your judge.

Accounting System

Establish an organized and efficient accounting system that insures accurate reporting of all transactions and provides sufficient documentation for audit purposes. A properly designed accounting system includes:

1. An efficient accumulation, recording, and reporting of all transactions;
2. Assignment of authority and responsibility;
3. Segregation of duties; and
4. Methods of detecting errors and fraud.

The recommended systems are a pegboard (one-write) system or a computer system. Both, if properly designed, provide for the most productive use of clerk time.

Include the following components in the court accounting system, regardless of whether it is a manual or automated system:

1. Pre-numbered receipts;
2. Pre-numbered checks;
3. A cash control record;
4. Case fee records;
5. Open items records;
6. Unpaid cost and fines records;
7. Investment records;
8. Monthly reconciliations; and
9. Monthly reports.

General Policies

1. Display the information the public will need to know when transacting financial business at a conspicuous location in the court office.

The following information is recommended for display:

1.1 The type of payments that will be accepted (e.g., no two party checks, cash only, etc.).

1.2 The receipt policy (e.g., a receipt will be issued for every payment).

1.3 The return check policy (e.g., all "insufficient funds" checks will be turned over to the authorities for prosecution)

1.4 "No Cash Stored on the Premises Overnight."

1.5 Sanctions that may be imposed for failure to pay court ordered fines and costs in full by the specified due date. (e.g., time payment fee, tax intercept through the Tax Offset Program, and possible collection efforts via the Debt Collection Program.)

1.6 All violations bureaus are required to display, "...the amount of fines and costs to be imposed for each violation" as stipulated by

Supreme Court Rule

37.49(d)

effective January 1, 1986.

2. Allow only bonded employees to receive, deposit, disburse, or handle money. The municipality should have a bond that covers the municipal court clerk as well as any other employees that received, deposit, disburse or handle court funds.

3. Assign a case number to each case when it is submitted to the court and tie each financial transaction to the applicable case number(s).

3.1 If a case number has not been assigned and cash is received (e.g., a bond posted before the case is filed) use another identifying number (e.g., the bond number).

3.2 Establish procedures to account for all cases filed to insure that no case files are lost (e.g., file all disposed case files in case number sequence).

4. Segregate when possible, the responsibility for receipting and disbursing payments from the responsibility for posting to the case fee records and reconciling the accounting records.

4.1 If there are more than two employees in the office, assign the responsibility for receipting and disbursing payments to one or more employees.

4.2 Assign a different employee the responsibility of posting to the case fee record and performing the monthly reconciliation.

4.3 Posting to the case fee record is simultaneous with completing the receipts and checks, assign the responsibility for performing the monthly reconciliations to an employee who is not responsible for receipting and disbursing payments.

5. Establish all bank, investment and other court accounts in the name of the "XYZ Municipal Division”.

Change Fund

Establish a fund for making change.

1. Establish a change fund by following these steps:

1.1 Designate employees with primary and back-up responsibility for the change fund.

1.2 Determine the amount of money needed for the change fund, limiting the amount to $100.00 or less

1.3 Obtain the amount of money needed for the change fund from the city.

2. As needed, have the large currency in the change fund converted into coins and smaller currency.

3. Never allow the change fund to contain I.O.U.'s

4. Do not use the fund to cash checks or purchase supplies

5. Maintain the change fund at a constant amount

6. Reconcile the change fund daily or as each bank deposit is made.

6.1 Deduct the amount of money maintained in the change fund from the total cash on hand.

6.2 The amount remaining is the amount of money collected since the last bank deposit.

6.3 Reconcile this amount to the total of the receipts since the last bank deposit.

Payments Received

1. Establish a policy specifying the types of payments that will be accepted.

1.1 A policy of accepting only cash, money orders, certified checks, personal checks guaranteed by the bank, or debit and credit cards is suggested.

1.2 A local court rule or city ordinance is the most effective method of implementing such a policy.

2. Accept only those amounts authorized by statute and local court rule, when required.

3. Designate employees with primary and back-up responsibility for receiving payments and issuing receipts.

3.1 Limit the responsibility for receiving payments and issuing receipts to the employees designated.

4. Secure all cash and checks received in a location that is inaccessible to the public and allow access to authorized personnel only.

4.1 Keep the payments received locked in a place that is out of reach and out of sight of the public.

4.2 Restrictively endorse all checks immediately; "For Deposit Only To (Account Name)."

5. Establish procedures for payments received in the mail.

5.1 If there are two or more employees in the court office, designate one or more employees to open and sort the mail and to restrictively endorse all checks received; "For Deposit Only to (Court's Account Name)."

5.2 If possible, designate employees to perform the mail duty who are not responsible for receipting payments or posting to the accounting records.

6. Issue sequential pre-numbered receipts for all payments received.

6.1 Include the following information on each receipt:

6.1.1 Date;

6.1.2 Case number;

6.1.3 Name of person from whom the payment was received;

6.1.4 Amount received;

6.1.5 Type of payment (cash, check, etc.); and

6.1.6 Initials of person receiving the payment.

6.1.7 Court name

7. Manual paper receipts should only be issued as a back-up when the approved local automated system is unavailable or as authorized by the presiding judge of the circuit. (See: Supreme Court Operating Rule 4.53.2 which states: Courts using the approved statewide case management system or other approved local automated systems are to only issue manual receipts when the automated system is unavailable or as authorized by order of the presiding judge.)

7.1 Upon entering any such order, the presiding judge shall provide a copy of same to the office of state courts administrator.

7.2 Quarterly updates on the use of such orders shall be provided by the office of state courts administrator to the state judicial records committee.

8. Record all payments received immediately on the cash control record and on the individual case fee record:

9. Record the following information on the cash control records:

9.1 Date the payment was received;

9.2 Case number;

9.3 Name of the person making the payment;

9.4 Receipt number;

9.5 Type of payment;

9.6 Amount received.

10. Record the following information on the individual case fee record:

10.1 Date the payment was received;

10.2 Name of the person making the payment if other than the defendant;

10.3 Receipt number; and

10.4 Amount received

11. Retain all voided receipts. Do not destroy them.

11.1 Void receipts by writing "void" across the receipt. Keep these receipts in a voided receipts file or attach them to the cash control record for the month in which the receipt was voided.

12. Establish a method to account for all receipts issued.

12.1 Require that someone other than the person who issued the receipt review the accounting records to verify that the receipts are issued in sequence, recorded on the cash control record, and have actually been issued, voided, or are unused.

Case Fee Record (479.350 and 479.353, RSMo)

1. When a case is disposed, review the case file to insure that all costs have been assessed and recorded on the case fee record.

1.1 A case fee record shows the costs accrued, the amounts collected, the amounts disbursed, and the balance held or due on the case. A case fee record includes the following:

1.1.1 Case number;

1.1.2 Defendant's name;

1.1.3 A list of each cost assessed;

1.1.4 A running balance of the total costs accrued;

1.1.5 Identification of the party requesting the service;

1.6 Date, amount, and description of each type of service;

1.1.7 Amounts collected, dates of collection, and receipt numbers;

1.1.8 Amounts disbursed;

1.1.9 Balance held on deposit or due on account;

1.1.10 Amounts of checks issued, to whom issued, date issued, and check numbers;

1.1.11 The total costs assessed;

1.1.12 The name of the party against whom costs are assessed; and

1.1.13 The date notice of amount due and other collection notices were sent.

1.2 When a case fee record is not required, record in the case file, the date, receipt number, and amount of the payment that satisfied the court costs and fine in full.

2. Establish and maintain a case fee record for each case filed. A case fee record is not required when fines are imposed and court costs are assessed, collected, and disbursed in one transaction on the cash control record.

Minor Traffic and Municipal Ordinance Violations (Sections 479.350 and 479.353, RSMo)

Minor traffic and municipal ordinance violations fine amount shall not exceed the following limits including court costs:

The court shall not assess a fine, if combined with the amount of court costs, totaling in excess of two hundred twenty five dollars (previously three hundred dollars) for minor traffic violations; and

§ For municipal ordinance violations committed within a 12 month period, the following amounts shall not be exceeded:

^st

violation - $200

^nd

violation - $275

^rd

violation - $ 350

^th

and subsequent violations - $450

The court shall not sentence a person to confinement, except for

any

violations involving alcohol or control substance, endangering the health or welfare of others, or eluding or giving false information to a law officer.

The court may not confine a person for failure to pay a fine unless nonpayment violates a condition of probation or unless due process as defined in Supreme Court Rule

37.65

is strictly followed by the court.

3. On each case fee record, record the date on which full payment for court costs is satisfied.

4. When all court costs are satisfied, file the case fee records with the case file or with all other disposed and paid-in-full case fee records.

Excess Revenues

Use the correct charge and accounting codes to easily identify amounts collected that are to be included in the municipality’s annual calculation of excess revenues.

Note: Effective August 28, 2016, fines, bond forfeitures and court costs for violations as defined in section RSMo 479.359 (original or amended) are the basis for calculation of the general revenues in excess of the statutory percentage. For fiscal years beginning on or after January 1, 2016, general revenues from these violations in excess of more than twenty percent of total general revenues shall be sent to the director of the Department of Revenue to be distributed to the schools of the county.

Disbursement Policies

1. Disburse all court costs in the same month the costs are collected. When the costs are paid in installments, apply the amounts collected to the costs in the order the costs were incurred.

2. Instruct the printer of your checks to include "Void Six Months after the Date of Issuance" on all checks.

2.1 Printing the expiration period on the checks encourages the payee to cash the check before it expires and reduces the number of outstanding checks.

3. When a check has not cleared the bank within six months, follow the procedures in the Outstanding Checks section.

Payments Disbursed

1. Use pre-numbered checks and establish a method to account for all checks issued.

1.1 Require someone other than the person issuing checks to review the accounting records to verify that the checks were issued in sequence and recorded on the cash control record.

2. Designate employees with primary and back-up responsibility for issuing checks.

2.1 Limit responsibility for issuing checks to as few individuals as possible.

2.2 If there are more than two employees in the office, assign one the responsibility for signing checks and the other the responsibility for issuing checks.

3. Designate employees with primary and back-up responsibility for signing checks.

3.1 Limit responsibility for signing checks to as few individuals as possible.

3.2 If there are more than two employees in the court office, assign one the responsibility for signing checks and the other the responsibility for issuing checks.

3.3 If there are more than two employees in the court office, it is recommended that a policy be established requiring the signature of the two employees on any check over $500.

Note

: When there is one clerk, the municipal judge may designate non-court personnel, such as the finance director or treasurer, to be a second signature on checks over $500, as long as their duties do not have a conflict or an apparent conflict of interest with SCR 37.04A, MOS #7.

4. Monitor the bank records to verify that only authorized individuals are on the bank's list of those authorized to sign checks. Notify the bank immediately of any changes in the list of those authorized.

5. Put all blank checks in a secured location that is accessible only to authorized personnel.

6. Disburse all amounts by check, properly supported by the necessary documents and accounted for in the accounting records.

6.1 Never pay in cash.

6.2 When a check is issued to pay a bill (e.g., sheriffs' fees or witness' fees), put the bill in the case file and cancel the bill by writing "paid" on it, the date paid, and the check number.

7. Distribute checks immediately.

7.1 Prepare checks only when payment is to be made and issue checks in numerical sequence.

8. Post all disbursements immediately on the case fee record and the cash control record.

9. On the cash control record for each check issued, post:

Date issued;

§ Case number;

§ To whom paid;

§ Check number; and

§ Check amount.

10. On the case fee record for each check issued, post:

Date issued;

§ To whom paid;

§ Check number; and

§ Check amount.

11. A breakdown of the court costs assessed and disbursed must be maintained for each case.

11.1 If you are currently using the general ledger system, continue recording the breakdown of costs as you have in the past.

11.2 If you are using a pegboard system, and are currently going back at the end of each month to write on the case fee record of each case the date, payee, check number, and amount for each cost disbursed, we recommend that you discontinue this practice. Since the breakdown of costs assessed is already on the case fee record, and the breakdown of the costs disbursed is on the pegboard cash control record, there is no reason to record the breakdown of the costs disbursed on the case fee record. Instead, post the disbursement of costs on the case fee record when the breakdown is recorded on the pegboard system. On the case fee record, write the approximate date disbursed (the last day of this month or the first day of next month), an "m" or some other code showing that disbursement is being made by the end of the month checks, and the total amount disbursed for the case at month end. Individual checks for one case must still be recorded on each case fee record (e.g., witness fees)

12. Retain all voided checks.

12.1 Write "void" across the check or cut off the signature line.

12.2 Place all voided checks in a "voided checks" file, attach the voided check to the corresponding check stub or attach the voided check to the cash control record page on which it is shown as voided.

13. Establish a method for issuing replacement checks.

13.1 If the court has been notified that a check that was issued cannot be located, follow the procedures below:

a. Examine the most recent bank reconciliation to verify that the check has not cleared the bank.

b. Check with the bank to verify that the check has not cleared the bank since the last bank statement.

c. Authorize the bank to stop payment on the check (see note below).

d. Write an explanation of why, when, and by whom the stop payment was ordered.

e. File the explanation in the void check file, attach the explanation to the corresponding check stub, or attach the explanation to the cash control record page on which the check is shown as voided.

13.2 Back the check out of all accounting records through the following procedures:

a. On the next available line of the current month's cash control record, write "Void Check No. ___" in the "Disbursed To" column and write the amount of the check as a negative entry in the "Check Amount" column.

b. Follow the procedure in (a) for the case fee record.

c. In the cash control record and case fee record for the month when the check was written, write "Void" and the date the check was backed out beside the original entries. In addition, write "Void" and the date the check was backed out beside the appropriate number on the most recent outstanding check list.

Note: If the bank charges the court for stopping payment on a check, require that the bank bill the court directly rather than deduct the charge from the checking account. Payment can then be made to the bank by the city in the same manner as any other operating expense.

13.3 If a replacement check is to be issued, follow the procedures below:

a. Issue a new check following the normal disbursement procedures.

b. Record the new check number on all accounting records beside the void check number.

Bank Deposits

1. Identify all bank accounts maintained by the court.

2. Establish all bank, investment and other court accounts in the name of the " XYZ Municipal Division.”

3. Keep the signature cards for all bank and investment accounts current.

3.1 Notify the bank immediately of any changes in the list of employees included on the signature cards.

4. Keep a list of all checking, investment, and other bank accounts which include the name and address of the banking institution, the account number, the account name, the rate of interest, and the names of those authorized to sign checks.

5. Maintain agreements (with your banks) to provide collateral for amounts exceeding the $100,000 FDIC insured amount.

5.1 Bank accounts should be monitored to verify that all daily balances exceeding the $100,000 FDIC- insured amount are covered by bank collateral. If the balance ever exceeds the amount covered by the bank collateral the bank will need to be contacted and the collateral pledged will need to be increased.

5.2 Verify that all securities pledged as collateral by the bank are held by a disinterested bank.

6. Deposit all monies in the same form as received. Deposit should be made each day the total receipts exceeds $100.

6.1 Depositing daily protects against loss or theft and increases the interest earned.

6.2 Prohibit cashing personal checks or issuing I.O.U.s.

6.3 Do not use monies received by the court to pay for expenses or supplies.

6.4 Deposit all monies in the same form in which they were received; e.g., checks, bills, coins.

6.5. If due to unavoidable circumstances receipts must be kept overnight, secure the receipts in a vault or safe.

7. Establish a method whereby all payments deposited can be identified to the individual case fee record and the cash control record.

7.1 Maintain a monthly record of the individual receipts included in each deposit. The cash control journal is adequate if it shows the total of each deposit, the date of each deposit, and the individual payments received that are included in each deposit.

Uncollected Costs and Fines

1. Establish procedures to identify cases where costs and fines due to the court remain unpaid.

1.1 Monitor the cases where costs and fines due to the court remain unpaid in a separate file; or:

1.1.1 Placing in a separate file all case fee records where costs and fines due to the court remain unpaid; or

1.1.2 Placing a clip on the case fee records where costs and fines due to the court remain unpaid.

2. Follow installment payment policies established by the judge.

2.1 If the judge authorized installment payments, record the payment schedule on the case fee record and monitor the payment due dates.

Open Items

1. Establish procedures so the case number and amount can be identified for all case fee records with amounts on deposit.

2. Prepare and retain a monthly record of the open items and at least annually identify the balances held in trust for each case number.

2.1 The monthly record of open items is the balance in each case that is held in trust and a total of these balances. The monthly record can be on adding machine tape.

2.2 On December 31, or at the end of your municipal’s fiscal year, a detailed record of open items must be prepared that identifies the balances held in trust for each case number.

3. Verify monthly that the total dollar amount on the record of open items agrees with the reconciled bank balance.

4. Establish procedures whereby all open items are reviewed for inactive disposed cases which still have a balance due the court.

4.1 If it is probable that the amount due on these cases will not be collected, prorate the amount collected following the procedures below: (Attorney General's Opinion #26 dated 1-24-75)

4.1.1 Total all costs accrued to the case.

4.1.2 Total all payments received for the case.

4.1.3 Divide the total of all payments received by the total of all costs accrued to obtain the percentage paid.

4.1.4 Multiply each cost accrued by the percentage paid to determine the portion of each to disburse.

4.1.5 Total the portion of each cost to be disbursed to verify that the total to be disbursed equals the total of all payments received.

4.1.6 Record on the case fee record the balance due for each cost.

If the total of the proration does not equal the total costs and fines due, the defendant is still liable for the unpaid amount.

Reconciliation

1. Reconcile and balance all accounting records at least monthly to verify that all receipts and disbursements are documented properly.

1.1 Perform the following reconciliations at least monthly and retain a copy of each reconciliation in the court's records:

1.1.1 Balance the cash control record/general ledger.

1.1.2 Reconcile the receipts with the deposits.

1.1.3 Prepare a bank reconciliation.

1.1.4 Reconcile the record of open items with all bank accounts and cash balances.

2. Retain the following for each bank account:

2.1 A copy of the bank reconciliation;

2.2 The record of outstanding checks;

2.3 The record of deposits in transit;

2.4 The bank statements;

2.5 The cancelled checks;

2.6 The cancelled deposit tickets; and

2.7 The bank issued debit and credit memos.

Interest Earned on Court Accounts

There is no statutory authority for a municipal court to retain interest earned on the bank account; therefore, any interest earned on the account should be turned over to the city treasury.

Outstanding Checks

Investigate all checks outstanding for more than six months.

Below are suggested procedures to follow if checks are outstanding more than six months.

1. Send a letter to the payee's last known address advising the payee that check number ___, issued to him/her, has not been cashed and, if the payee does not cash the check or contact the clerk within 30 days, payment will be stopped.

2. If the payee responds and has lost the check, reissue the check.

3. If the payee cannot be located, follow the procedures for remitting the funds to the Missouri State Treasurer’s Office - Unclaimed Property Division (See Section 4.4 Unclaimed Funds).

Bonds

1. Require all agencies accepting cash or securities as bond to use court approved bond forms

1.1 Issue pre-numbered receipts for all bond monies or securities accepted

1.2 Remit the cash or securities collected to the clerk of the court on the next working day

2. Issue a receipt for all bond monies transmitted to the court by other agencies and deposit the monies in a court bank account.

2.1 If the monies from more than one bond are remitted on the same day and a detailed listing of the individual bond amounts and a total amount remitted accompanies the dollars remitted, only one receipt for the total amount received is necessary.

2.2 Post the receipt number on the detailed listing of the individual bond amounts.

3. Disburse bond monies by check and only upon order of the court.

Monthly Reporting

1. Submit a report of disbursements to the city at least monthly.

1.1

Chapter

479

RSMo requires the court to submit to the municipality a list of all cases heard during the preceding month. Within the first 10 days of every month, the court must submit to the municipality a list of all cases heard or tried during the preceding month. However, Court Operating Rule

4.29

allows the municipal division to submit the Municipal Division Summary Report Form to fulfill this requirement.

1.2 If the municipal division continues to provide a list and a case on that list is closed under Chapter

610

RSMo, the court should not include the name of the defendant in the monthly report. Closed cases are those that are nolle prossed, those that are dismissed, and those in which the defendant is found not guilty or there is a suspended imposition of sentence in which the related probation was completed successfully. For these cases, the court should provide the case numbers and outcomes of the case, but black out or leave off the defendant’s name.

1.3 The clerk should also turn over all fines for the preceding month to the municipal treasurer within the first 10 days of the following month. (Section

479.080

RSMo)

2. Submit the Fees to the Department of Revenue

2.1 Report the amount of funds being disbursed each month for Crime Victims Compensation Fund and Clerk Fees if applicable on the City Fees Form 4583. A separate check should be issued for each fee.

2.2 If the number of cases paid in full is readily available, the court should note this on the form.

2.3 This form should be mailed to the Department of Revenue by the 20

^th

of each month for the collections of the previous month.

2.4 The City Fees Form 4583 can be obtained from the Missouri Department of Revenue website:

https://dor.mo.gov/forms/4583.pdf

Retention and Destruction of Records

Retain accounting records in accordance with Supreme Court Operating Rule 8.

Accounting records include:

1. Account ledgers;
2. Bank statements and reconciliations;
3. Cancelled and voided checks;
4. Check registers;
5. Deposit slips;
6. Fee bills;
7. Monthly reports of fees or fines;
8. Copies of the receipts;
9. Receipt and disbursement control journals;
10. Cancelled vouchers, warrants, requisition and purchase orders, and other similar records that reflect financial transactions of the court.

If a new judge assumes office, retain all accounting records created since the last audit until an audit of the accounting records has been performed.