Accounting for Cheques

Stale Cheques

• If cheques remain in the unpresented cheque list for more than 3 months, the Accounting Head must attempt to locate the payees and have their cheques presented before they become stale.
• The Accounting Head shall review the unpresented cheque list and determine whether a replacement cheque should be issued for cheques that are stale.
• If a replacement cheque is not required, the Accounting Head shall clear the stale cheque using either of the two adjusting entries:

DR Drawings Account (or Bank ledger account)

CR Expenditure Account

(to clear cheques issued in the current year that have become stale)

DR Drawings Account (or Bank ledger account)

CR RFA – Recoveries of Overpayments in Previous Yeas

(to clear cheques issued from previous year that have become stale)

Replacement Cheques

• If a replacement cheque is issued, the accounts officer shall prepare a payment voucher listing the following details:
• cheque number, amount and date of the cheque being replaced;
• circumstances under which the replacement cheque is required.

• The unpresented cheque number shall be cancelled from the unpresented cheque list with a note stating that it is being replaced. The replacement cheque number should be entered on the unpresented cheque list.
• The number of the replacement cheque should also be entered in the cashbook with the amount omitted.

Lost or Destroyed Cheques

· If a payee loses or destroys his/her cheque and requests for a replacement, the Accounting Head may authorise that a replacement cheque be issued after obtaining a Statutory Declaration.

• If the accounts officer or any other officer loses a cheque, he/she must prepare a report to the Accounting Head. The matter shall be dealt with in accordance with Part 14 of the Manual.

Dishonoured Cheques

• Where the bank dishonours a cheque, it shall be the responsibility of the revenue collector (or other receiving officer) to recover the amount of the cheque and the dishonour fee.
• The revenue collector must provide the Accounting Head with an explanation in writing stating reasons for accepting the cheque and the attempts that have been made toward recovery.
• If the Accounting Head finds that the cheque should not have been accepted because it was not properly completed or was a personal cheque, and that the amount cannot be recovered within 2 months of being dishonoured, the Accounting Head shall recommend that disciplinary or surcharge action be taken.

• Surcharge action shall be initiated in accordance with Part 11 of the Finance Instructions.
• To account for the dishonoured cheque, a journal voucher shall be raised adjusting the following accounts:

DR RFA – Dishonoured Cheques

CR Drawings Account

(to account for cheques received and dishonoured by the bank)

The dishonoured cheque shall not be returned to the payer until the amount can be recovered at which point, the following adjustment shall be made:

DR IDC – Department

CR RFA – Dishonoured Cheques

(to account for recovery of dishonoured cheque amount)