Oregon State Treasury

Ted Wheeler OREGON STATE TREASURER

Fraud / Security

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FRAUD COLLECTION

Occasionally state checks/warrants are forged and cashed.  Agencies are responsible to identify and process forged items for collection in a timely manner.  Agencies process forged items for collection through Treasury.  Treasury tracks forged checks/warrants using a database program and classifies forgeries in the following categories:

Because time is of the essence, the issuing agency must act as soon as possible after discovery of these items in order to expedite recovery of funds.  The costs associated with collection efforts on forged checks/warrants occasionally outweigh the monies that are collected.  Agencies should consider adopting a threshold for collection on checks/warrants whereby items below the threshold are written off.  

Altered Check/Warrant

Typically, checks/warrants are altered either by changing the payee's name, the amount of the check, or both.  Typically checks/warrants are altered using erasers, tape, chemical solvents, or knives to lift the information.  Safety paper and toner grip are security features designed to make any alterations apparent to someone cashing the check/warrant.  For more information on processing altered items, see Cash Management Manual Section X.

Counterfeit Check/Warrant

A counterfeit check/warrant is an “unauthorized” check/warrant which was cashed as an original.  Counterfeit items can be produced a number of ways. If you receive checks back, you should inspect those items that are stripped to verify immediately if you have a counterfeit item. Counterfeit checks/warrants are covered under the UCCs as “unauthorized signatures”.  For more information on processing a counterfeit check/warrant, see Cash Management Manual Section X.

Deceased Payee

If a check/warrant is cashed after the payee's death, and it is 180 days or less since the item was negotiated, there is specific information that should be sent to Treasury.  See Cash Management Manual Section X.

Forged Check/Warrant 

A forged check is one with an endorsement made without the express, implied, or apparent authority of the person whose name is signed.  Refer to Cash Management Manual Section X for more information on handling these items.

Lack of Endorsement 

Checks/warrants lacking endorsements are ones with no endorsement or ones not endorsed by all payees (when there are two or more payees).  It must be no more than 180 days since the item was negotiated.  For more information see Cash Management Manual Section X

Time Periods for Reporting Forgeries 

The UCCs speak to contributory negligence on forged signatures or alterations of negotiable instruments.  If an agency fails to exercise “ordinary care” in the issuance of a check/warrant and this contributes to an alteration of the check or someone forges the signature, the State cannot assess payment against a person who, in good faith, pays the check/warrant.  Ordinary care means observance of commercial standards prevailing in the area and applies to all parties (including all banks) in the check/warrant issuance and collection process.  For more information see Cash Management Manual Section X.

Controls Over Check Issuance

Since the UCCs specifically address ordinary care and contributory negligence, it is absolutely essential that agencies exercise due diligence in its control over the check issuance process.  

Treasury has issued policy 02.18.02  which specifies required controls for agency issuance of checks.  Further, agencies should be familiar with and comply with the internal control procedures outlined in DAS Oregon Accounting Manual Chapter 10 .

If you have any questions, please contact the Banking Section at (503) 378-4633

 

 

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