Operations Flashcards
What are the common steps in Day 1 Paper Item Processing?
- Receipt
- Proof & Encoding
- Setup
- Capture/sort
- Reject Repair & Re-Entry
- Balancing
- Transit Dispatch
- Bulk File
- Settlement, Reconciliation, & Float Management
What is Receipt?
The physical movement of paper cash letters.
What controls are included in Receipt?
- Confirmation of Receipt
- Verification of source and control totals
- Hand off to Proof & Encoding
What is Proof & Encoding and the general steps?
Process that prepares unencoded deposits from various departments for the capture process.
* Encode amount and missing MICR info
* Balancing which may involve creating adjustments
What is Setup?
Process that reviews encoded work and adds control documents to prepare for capture.
What is Capture/Sort?
Process where the MICR line is mechanically read by various capture equipment to capture MICR info, segregate on-us items and control docs, and sort all other items by transit destination.
In which Day 1 process would you do any of the following steps?
* Remove and retain for Day 2 any customer paperwork, tapes, totals or other backup documentation.
* Match physical checks delivered to cash letter listing for accuracy.
* Identify settlement account and insert credit to the batch.
* Identify and seperate “Special sorts” from the workstream.
Setup
What types of items would be considered Special Sorts?
- Controlled Disbursement
- Lockbox
- “Special Handling” customer deposits
- Large dollar item review
What is the process where items that could not be processed in the initial capture are repaired to attempt to capture the MICR information in a subsequent process?
Reject Repair & Re-Entry
Why was the TIFF standard created?
To assist with interoperability across financial institutions.
ASC X9.100-181
Why was the X9 TR2-2005 developed?
To promote greater uniformity in the design and production of checks, which will improve processing and handling throughout the check processing system.
X9 TR-2:2005 - Understanding, Designing and Producing Checks
Under what conditions can a reclamation be initiated against the presenting bank?
- Check was presented for payment over a forged or unauthorized endorsement,
- When a benefit check was negotiated after the payee’s death, or
- When the check was materially altered
What is the time limit on reclamation action?
One year from the date the check was presented for payment if the payee is Deceased and One year & 180 calendar days if the payee is Not Deceased.
What is the presenting bank liable for if a reclamation is received?
The principal amount of the check; and if applicable, accrued interest, penalties, and administrative fees.
What are the 3 Reclamation status codes and what does each one mean?
A. Items at least 90 calendar days old.
B. Items for which a protest is being considered.
C. A reclamation and/or accrued interest , penalty charges, and adminstrative fees that have remained unpaid for at least 120 days after the reclamation date.
What is TCO?
Treasury Check Offset - a collection process whereby Fiscal Service directs the Federal Reserve Bank to offset credits for Treasury checks presented for payment by an institution that has an unpaid balance that is at least 120 days old and the debt was not collected through an administrative offset.
When must a financial institution pay or protest a reclamation by to avoid direct debit on their Federal Reserve master account?
Payment in full or a Protest must be submitted within 30 calendar days from the date of Notice of Direct Debit (U.S. Treasury Check Reclamation) to avoid direct debit on the 31st day.
If a protest is not substantiated and the reclamation has not been paid, when will the amount owed be debited from the financial institution’s master account?
5 calendar days after the protest is denied.
What are examples of unacceptable reclamation protests?
- received more than 60 days from reclamation date.
- includes no or insuffcient documentation to substantiate them
- that attempt to transfer liability from the bank to a prior indorser
- that are submitted to any person other than the bank to which reclamation was directed.
When does interest and other fees begin accruing on any unpaid reclamation?
- 61st day after notice date - interest begins accruing and adminstrative fees are charged
- 91st day after notice date - Penalties are charged.
What must be included in a reclamation protest?
A protest must raise a legal or factual question and include:
* a written statement (on the bank’s letterhead with check symbol and check serial number); and,
* supporting documentation that the bank is not liable for reclamation.
What is TOP?
Treasury Offset Program - Collection method in which the U.S. federal government withholds funds payable by the U.S. federal government to the financial institution, and applies the withheld funds to a debt owed.
What does X9.100-10 reference?
Paper for MICR documents
What does X9.100-20 reference?
Print and test specifications for magnetic ink printing (MICR)
What does X9.100-140 reference?
Image replacement document (IRD)
What does X9.100-111 reference?
Physical Check Endorsements
What does X9.100-160 reference?
Magnetic ink printing (MICR)
Part 1 - placement and location
Part 2 - EPC field use
What does X9.100-187 reference?
Electronic image exchange of check and image data
What does X9.100-188 reference?
Return reasons for check image exchange and IRDs
What does X9 TR 2 reference?
Understanding, Designing and Producing checks
What does X9 TR 6 reference?
Guide to quality MICR printing and evaluation
What does X9 TR 8 reference?
Check security
What does X9 TR 33 reference?
Check image quality assurance and processes
What does X9 TR 47 reference?
Universal companion document of X9.100-187
Clarifies how institutions should apply the standard
What does X9 TR 100 reference?
Organization of check-related payments standards
What are the flipping records?
25 - 31
26 - 32
28 - 35
33 (opt. aux/on-us)
