HomeMy WebLinkAboutElectronic Banking Policy TOWN OF ITHACA
ELECTRONIC BANKING POLICY
I. PURPOSE
The Town Board recognizes the use of various electronic banking transactions as a faster, easier,
and more efficient substitute for paper transactions. Electronic banking uses computer and
electronic technology to streamline the processing and recording of receipts and disbursements,
while reducing thecost of processing these transactions. Receipts, disbursements, and transfers in
proper circumstances canbe processed via electronic funds transfer (EFT) services, whether
transferring funds from a savings to achecking account at the same bank or making a payment to
a vendor's bank across the country. Internal controls, such as written policies and procedures,
authorizations, segregation of duties and monitoring, however, are still important in the new
technological world.
The Town Board shall authorize the Finance and Human Resource Offices to engage in electronic
banking in accordance with all applicable laws and regulations including General Municipal Law
Section 5-a authorizing the use of electronic or wire transfers and in conformity with the guidelines
established by this policy.
The Town Board also recognizes that most banking institutions no longer provide cancelled paper
checksto their customers, but instead offer an electronic image obtained online or on a CD. As
such, the Town Board authorizes the acceptance of these electronic images in lieu of cancelled
checks as required by statute.
II. SCOPE/SERVICES
Electronic banking activities will be used for,but not limited, to the following:
1. Online banking services (reviewing account balances, retrieving bank
statements, downloading copies of cancelled checks, making stop payment
orders, etc.)
2. Check fraud prevention services (Positive Pay—Tompkins Community Bank)
3. Electronic depositing of checks received
4. Pre-authorized debit payments
5. ACH vendor payments
6. ACH payroll direct deposit
7. ACH Water& Sewer automatic payments
8. EFT or wire transfers
9. Electronic Federal Tax Payment System (EFTPS)
10. Electronic State Tax Payment System (Prompt Tax)
Adopted 2022-05-23 Page 1 of 3
Online Banking Services are recognized as standard practice and procedure for maintaining an
effective cash management program. Access to any of the Town's online bank accounts will be
managed by the Finance Officer to allow other users restricted access as necessary for banking
functions as needed. The Finance Officer will utilize a separate, limited access account for daily
online banking. The super user/admin account will be reserved for account administration
purposes. (Examples of daily online banking functions include monitoring account balances,
positive pay functions, retrieving copies of cancelled checks, etc. Examples of account
administration would be adding authorized users, adding/deleting permissions, adding wire
beneficiaries, etc).
Check Fraud Prevention Services — To help protect against the threat of check fraud, a file of all
Accounts Payable cash disbursement payments made by paper checks will be uploaded to the
bank's positive pay system. This process provides details about checks the Town has written ad
compares that information to checks being processed to the bank for payment. The Town is
notified by the bank of any exceptions by 8:00 a.m., these exceptions will be decisioned by the
Finance Officer or Bookkeeper by noon. The benefits include reducing the risk of check fraud by
providing the Town with the ability to monitor and control checks presented against any Town
account so only authorized items are paid.
Electronic Funds Transfers (EFT's) and wire payments can only be initiated by the Finance
Officer, Human Resource Manager, or Bookkeeper. All EFT's and wire payments require dual
authorization by either the Human Resource Manager, Bookkeeper, or Finance Officer. An email
and text will be sent by the bank notifying the Human Resource Manager,Bookkeeper and Finance
Officer that there is a payment pending approval. Someone (other than the initiator) must log in
to Treasury Management before 3:00 p.m. to authorize the payment. The recording of such
transactions will be captured manually by the Bookkeeper using journal entries. Dual approvals
are required for any transaction with an end recipient not a Town of Ithaca account or in a different
financial institution. Electronic wire transfers to foreign banks are not enabled in Treasury
Management.
ACH Vendor Payments are authorized by the Finance Officer or the Human Resource Officer
after standard payment process recording through the abstract cycle and auditing process.
Recording of ACH vendor payments will be the responsibility of the Bookkeeper through the
standard posting of cash disbursements journal(s). All payments made through this process are
subject to the same claims audit process as exists currently with paper drawn checks. Releases of
payments are made by the Finance Officer only after the completion of the approval and claims
auditprocess.
Pre-authorized ACH Payments are authorized by the Human Resource Manager and/or
Bookkeeper and are restricted to payroll related deduction payments to authorized third party
administrators of the Town. Any such ACH payments must be taken from the payroll bank
account. All ACH payments require dual authorization by either the Human Resource Manager,
Bookkeeper, or Finance Officer. Recording of such transactions will be by the Bookkeeper using
journal entries.
Adopted 2022-05-23 Page 2 of 3
Revenue Collection
1. Electronic Deposit of Checks by means of utilizing a secure remote deposit device
(provided by the bank) for checks received are authorized as delegated by the Finance
Officer. The use of a remote deposit capture device helps improve security, efficiency, and
cost effectiveness of making deposits. Recording of such deposits will be the responsibility
of the Bookkeeper through the standard posting of the cash receipts journal. The Clerk's
office will provide a monthly cash receipt report with the Supervisor's payment.
2. Electronic payments received from customers are acceptable and will be recorded by the
Bookkeeper through the regular cash receipts transaction journal. Automatic ACH
payments for Water and Sewer invoices will be authorized in writing by the customer.
III. SAFEGUARDS AND BEST PRACTICES
All banking transactions for the Town will be conducted on a Town computer with a secure
internet connection. Town computers employ two-factor authentication and password complexity
requirements.
Employees will:
• Type the bank's website address into the internet browser's address bar every time because
email and search engine links may not be secure.
• Check that the session is secure before undertaking any online banking.
• Log out of all banking websites and close the browser window.
• Erase the web browser cache,temporary internet files,cookies and history after each online
banking session so that if the system is compromised, that information will not be on the
system to be stolen by an attacker or malware program.
• Never access the bank's website from a public computer, unprotected mobile device or
public WIFI (i.e. Starbucks, hotel, etc).
• Always use the Town's virtual private network (VPN) when accessing the bank while
working offsite.
IV. MONITORING
The Finance Officer is responsible for implementing adequate internal controls for each of the
electronic banking methods utilized. An effective internal control system includes, but is not
limited to, segregation of duties, proper authorization, monitoring bank accounts daily for
unauthorized or suspicious activity, and adequate documentation for all electronic transactions.
Adopted 2022-05-23 Page 3 of 3