Thefts and embezzlements can occur when employees responsible for receiving checks on behalf of a public entity bring a check made out to the entity to the local bank and cash it, taking the money.
To reduce this risk, the back side of all checks received by a public entity should be stamped “For Deposit Only” as soon as they are received. In addition, a public entity should instruct their financial institution in writing not to cash checks made payable to the public entity.
Finally, money needed to replenish petty cash or to increase change funds should be paid out of a public entity’s general fund, rather than by cashing checks the entity received for other purposes.
Date this Avoiding Pitfall was most recently published: 05/17/2013