Reconciliation Function

Outbound ACH Transactions

• Bank of America is the required Originating Depository Financial Institution (ODFI) which processes the outgoing ACH credit file on behalf of the participant.
• The participant has a dedicated stand-alone settlement account which must be funded with “immediately available funds” by the participant on the settlement date.
• On settlement date (effective date denoted on the ACH file), Bank of America debits the settlement account, based upon the ACH file transmitted to the bank, either directly or via CPS.
• In the case of a participant having funds on deposit with the State Treasurer, the participant uses DST’s Core Banking System to have funds wired into the settlement bank account, using the Funds Transfer feature (Electronic Warrant).
• In the case of a community college or LEA, the funding is generally done with a combination of the unit's local bank check and a State warrant. Since banks consider State warrants "next day funds," it is permissible for the warrants to be deposited one banking day prior to the settlement date. The State Treasurer's publication entitled, "Banking Services Handbook," should be referenced (pages 44-45).
• Bank of America Cash Pro is the tool used to access the account activity.
• In addition to Bank of America Cash Pro access, hard copy bank statements are normally sent directly to the participant at month-end, to assist in reconcilement.
• It is the participant’s responsibility to reconcile the bank account statement to ensure that there are no unauthorized or erroneous transactions.
• ACH Returns (payments sent out which bounce due to wrong bank account info, “account closed,” etc.) are credited back to the settlement account. A separate Returns Account is not need for outbound transactions. Bank of America Cash Pro is the tool used to retrieve a daily “ACH Returns Report.”
• The credit balance in the settlement account created by Returns can be cleared by a number of ways: 1) The bank can be requested to remit the funds to the participant by "official check" or by a "book transfer;" or 2) the funds can be used to fund a subsequent outgoing ACH Credit file.
• “Notifications of Change” (NOC) are received by Bank of America for any payments that were sent with the wrong bank account information for the payee. The NOCs are contained on the ACH Returns Report viewed through Bank of America Cash Pro.
• ACH Origination Reports are also available through Bank of America Cash Pro. This report lists all transactions contained on an ACH file submitted to Bank of America.

Inbound ACH Transactions

• There are two types of inbound transactions (collections). One is where the participant initiates an “ACH debit” against a payor’s account by creating an ACH debit file and transmitting it to Bank of America, which then submits the debit though the banking system. The other is where the payor initiates an “ACH credit” through its own bank and submits the payment to the participant’s account at Bank of America.
• Bank of America is the required Originating Depository Financial Institution (ODFI) which processes the ACH debit file on behalf of the participant. While Bank of America is the depository for the receipt of ACH credits submitted by payors, the payor can use his bank of choice as the ODFI.
• In the case of a participant having funds on deposit with the State Treasurer, a dedicated settlement bank account is established to facilitate the receipt of inbound payments. The account is established as a Zero Balance Account (ZBA), with the balance in the account being swept to a DST bank account at the close of the banking day. The deposit must then be certified on CMCS.
• In the case of a participant not required to “bank” with the State Treasurer, the account for inbound payments does not necessarily have to be a Zero Balance Account (ZBA).
• In the case of a State agency, where the settlement account is a ZBA account that sweeps to a DST bank account, a separate Returns Account is established at Bank of America, for which ACH debit Returns funds are debited against, as specified in special instructions associated with the settlement ZBA account. It is the responsibility of the participant to clear any deficit balances in the Returns Account timely.
• Bank of America Cash Pro is the tool used to access the account activity, in both a settlement account and a Returns account.
• In addition to Bank of America Cash Pro access, hard copy bank statements are normally sent directly to the participant at month-end, to assist in reconcilement - for both the settlement account and the returns account.
• It is the participant’s responsibility to reconcile the bank account statements to ensure that there are no unauthorized or erroneous transactions.

Reconciliation Tools - Online Systems

• Bank of America Cash Pro - Web-based system provided by Bank of America Bank allowing the participant banking at Bank of America to view settlement activity and ACH returns activity in the bank settlement account(s). 
• Cash Management Control System (CMCS) - System provided by OSC to State agencies to report deposits to its CIT bank account (for inbound transactions). Amounts reported are to be the total of the amount swept, as viewed on Bank of America Cash Pro.
• Core Banking System - System provided by DST allowing State agencies to view their CIT bank account activity (for inbound transactions), which reflects both: 1) the daily amount swept to the State Treasurer's bank account; and 2) the daily amount certified by the agency on CMCS to its CIT bank account. The system is also used (in the case of outbound transactions) to initiate Electronic Warrants through the Funds Transfer feature, to fund outgoing ACH credit files.

Most Commonly Used Reconciliation Reports

System

Report

Wachovia Connection

Previous Day Transaction Report

Wachovia Connection

EFT Advice Report (Same day - ACH)

Wachovia Connection

Interim Account Statement

Wachovia Connection

ACH Origination Report

Wachovia Connection

ACH Returns Report

DST Core Banking

Account Activity (CIT bank account - Inbound)

DST Core Banking

Unmatched CIT/CMCS View (Inbound)

DST Core Banking

Account Activity (Disbursing/STIF - Outbound)

DST Core Banking

View Funds Transfer (Outbound)

CMCS

Display List of Deposits - AK24 (Inbound)

Reconciliation Responsibilities of Participant

• Verify that the batch total amount of an ACH file transmitted to Bank of America is the amount that Bank of America either debits or credits to the bank settlement account.
• Verify that the posting dates of transactions to the Bank of America settlement account correspond to the effective date of the ACH file, to ensure timely funding or reporting.
• Perform a reconcilement between internally-generated reports for ACH files transmitted, to transaction reports received from CPS (if Common Payment Service is used).
• For inbound transactions, perform a reconcilement between the amount of the daily sweep from the participant’s settlement bank account to the DST bank account, as viewed on Bank of America Cash Pro, to amount certified on CMCS, as viewed on DST’s Core Banking System (certified to the CIT bank account).
• For outbound transactions, perform a reconcilement between the amount remitted to the settlement bank account, as viewed on Bank of America Cash Pro, to the amount of the Electronic Warrant, as viewed on DST’s Core Banking System.
• Perform a reconcilement between ACH Returns reflected on Bank of America Cash Pro to the amounts debited/credited to the settlement or Returns account.
• Perform a monthly reconcilement of the monthly bank statement for the settlement account to ascertain that there are no unaccounted for transactions. (In the case of a ZBA account for inbound transactions, the balance will always be zero at the close of each day.)
• Perform a monthly reconcilement of the monthly bank statement of the Returns account to ascertain that there are no unaccounted for transactions.
• Verify the accuracy of the monthly Bank of America invoice before payment (unless fees are paid by DST).