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Approved by Board of Commissioners: December 16, 2025 ACH (Automated Clearing House) and Electronic Transactions Policy PURPOSE: The purpose of this policy is to authorize and regulate electronic transactions of public funds by Otsego County and to establish the procedures and internal controls necessary to carry out the policy. AUTHORITY: The Otsego County Board of Commissioners. APPLICATION: This policy shall govern the use of electronic transactions and automated clearing house (ACH) arrangements for Otsego County. RESPONSIBILITY: The County Treasurer shall be responsible for the implementation and administration of this policy. DEFINITION(S): 1. Electronic Funds Transfer (EFT) means all electronic payments. ACH transaction means an electronic payment, debit, or credit transfer processed through an automated clearing house. 2. Automated Clearing House (ACH) means a national or governmental organization that has the authority to process electronic payments, including, but not limited to, the National Automated Clearing House Association and the Federal Reserve System. 3. ACH Arrangement means an agreement between the originator of an electronic transaction and the receiver of an electronic transaction. ADMINISTRATIVE PROCEDURES: The County Treasurer is designated as Otsego County’s Electronic Transfer Officer (ETO) and is responsible for administering and assuring compliance with this policy. POLICY: 1. Authority to enter into ACH Agreements and Electronic Transfer of Public Funds: The County Treasurer may enter into ACH Agreements, as provided by PA 738 of 2002, effective December 30, 2002. Applicable definitions in the act shall apply. An ACH arrangement under PA 738 of 2002 is not subject to the Revised Municipal Finance Act, ---PAGE BREAK--- Approved by Board of Commissioners: December 16, 2025 2001 PA 34, MCL 141.2101 to 141.2821, or to provisions of law or charter concerning the issuance of debt. 2. Responsibility for ACH Agreements: The County Treasurer or his/her designated employee shall be responsible for the establishment of ACH agreements, including payment approval, accounting and generally overseeing compliance with the ACH policy. The Finance Director or his/her designated staff shall submit to the Otsego County Board of Commissioners documentation by the normal expenditure approval procedures detailing the goods and services purchased, the cost of the goods or services, the date of the payment and the department levels serviced by payment. This report shall be contained in the electronic general ledger system. 3. Internal Accounting Controls to Monitor Use of ACH Transactions: 3.1. The Treasurer shall notify the responsible parties of those accounts to be paid by ACH or electronic transfers. Vendors to be paid via ACH or EFT shall be set up in the accounts payable and/or payroll modules of the current accounting software being used. ACH and EFT payments shall be recorded in the current accounting software being used. 3.2. An ACH enrollment form shall be on file with the Otsego County Treasurer and Financial Director, or an employee designated by either party for all vendors to be paid by ACH transaction. The County Treasurer is responsible for obtaining proper authorization for debiting and crediting any customer, vendor or payer account via ACH and EFT, in accordance with NACHA rules. All vendor authorizations will be retained for two years following termination or revocation of the authorization. 3.3. Upon receipt of an invoice for payment for accounts paid by ACH or EFT, the responsible parties shall approve payment and notify the Treasurer of the date of debit to the County accounts. Otsego County will not enter into any automatic recurring ACH or EFT arrangements. These payments shall be included on the report of payments to the Otsego County Board of Commissioners. All other invoices approved by the responsible parties and payable by ACH or EFT may be paid in that manner if deemed in the best interest of Otsego County Treasurer, e.g. to avoid a late fee. 3.4. For payment of State and Federal payroll taxes, the Finance Department shall initiate payment to the proper authority using the EFTPS and State program. Proper paperwork will then be submitted to the Treasurer’s Office to ensure funds are available for payment. 3.5. For deposits from State, County, and/or Federal authorities, and from third- party payments processors, e.g. (banks, vendors), the Treasurer shall obtain the amount of the deposit and shall send an advice to the responsible parties for accounting records. ---PAGE BREAK--- Approved by Board of Commissioners: December 16, 2025 3.6 All invoices shall be held by the responsible parties along with copies of the payment advices. 3.7 Transfer of funds between County entities such as component units and Road Commission as well as employee payroll deductions, withholding tax payments and MERS are excluded from Board of Commissioners approval. However, those transactions can be summarized separately by their Finance Directors or their designated staff if requested. Transfer of funds for County employee payroll deductions, withholding tax payments and MERS are excluded from Board of Commissioners approval. However, those transactions can be summarized separately by the Finance Director or his/her designated staff if requested. Transfers between County accounts are excluded from Board of Commissioners approval but can be summarized separately by the County Treasurer if requested. 3.8 The County Treasurer shall verify all funds prior to any disbursement of funds using electronic transfer method. No vendor (payee) shall be allowed to automatically withdraw funds from County accounts to pay for purchases prior to the County approval process. 3.9 The Finance Director or his/her designated staff is responsible for ensuring that ACH or EFT payments are lawful expenditures of County funds and comply with legislatively approved budgets. The County Treasurer or his/her designated staff will be responsible for accounts payable vendor payment notifications. 3.10 The County Treasurer is responsible for establishing and maintaining adequate reconciliation procedures which include timely resolutions of all material reconciling items. 3.11 The County Treasurer is responsible for ensuring that Treasurer’s Office staff responsible for ACH and EFT activities have the necessary training and knowledge required to effectively perform their duties. EFFECTIVE DATE: This policy does not affect the validity of any ACH arrangements entered into by Otsego County before the effective date of Public Act 738 of 2002 (December 30, 2002) ADOPTED: December 16, 2025 ---PAGE BREAK--- Otsego County ACH Transaction Enrollment Form Payee Information: Please print clearly Name on Invoice: Address: City, State, Zip: Contact Name: Phone Number: Email Address: Account Number: Bank Information: Bank Name: Bank Address: Bank Phone Number: Name on the Account: Account Routing Account Type: Checking Savings I certify that the information provided on this form is correct, and I hereby authorize the Otsego County to electronically deposit payments to the bank account designated above. You are also authorizing Otsego County to initiate corrections/reversals if an incorrect payment was processed. It is my responsibility to notify Otsego County Treasurer immediately if I/we become aware of any changes in status or banking information. Account changes must be reported to the Otsego County Treasurer thirty (30) days prior to the actual change. This order will remain in effect until submission in writing to the Otsego County Treasurer. Name(s): Please print Title Authorized Signature Date: Please return completed form via email: [EMAIL REDACTED] or mail to: Otsego County Treasurer 225 W Main Street Gaylord, MI 49735 Approved