Section 1-401 : Minimum Accounting Standards
Arizona Revised Statutes AnnotatedCode of Judicial AdministrationEffective: April 10, 2024
Effective: April 10, 2024
AZ ST Code of Jud. Admin., § 1-401
Section 1-401: Minimum Accounting Standards
“Audit” means a systematic examination of records or financial accounts to verify their accuracy. It is a test of management's internal accounting controls and is intended to ascertain whether financial statements fairly present the financial position and results of operations, test whether transactions have been legally performed, and identify areas for possible improvements in accounting practices and procedures.
“Automated financial management system” means a system which electronically links financial transactions with case financial records, cash receipts, disbursements journals, and other appropriate accounting journals and ledgers.
“Bank reconciliation” means the process of comparing activity posted to the court's accounting records with the bank account statement to ensure that bank and court records are in agreement and that discrepancies are investigated and resolved.
“Beginning change fund” means a fixed amount of currency and coins maintained by individual cashiers for the purpose of returning change to court customers.
“Case financial record” means all the electronic records necessary to document the imposition, payment, disbursement, forfeiture, adjustment, or satisfaction of court assessments.
“Cash or money [monies]” means currency, coins, personal checks, business checks, traveler's checks, cashier's checks, certified checks, money orders, wire transfers; credit card, debit card, and pre-paid card transactions; bank drafts, EFT, or any other negotiable instrument that a financial institution will accept for deposit.
“Cash drawer fund” means all monies received for the court including the fixed amount of currency and coins established as the beginning change fund, which is maintained by each cashier designated to handle financial transactions.
“Cashier” means court personnel designated to handle financial transactions.
“Chargeback” means a payment card transaction that is subsequently reversed and charged back by the payment card merchant.
“Check” means a written order on a bank to pay on demand a specified sum of money to a named person or entity from money on deposit, and can be in the form of personal check, business check, traveler's check, cashier's check, certified check, or money order.
“Court” means supreme, appellate, superior, justice, and municipal court and includes administrative offices, clerk of the court, and probation departments.
“Court change fund” means a fixed amount of currency and coins maintained by the court and assigned to a specific authorized employee, for the sole purpose of providing change throughout the day to the cashier [or cashiers].
“Court personnel” means an employee of the court, including cashiers and local government employees authorized by the court to accept payments on the court's behalf, and judicial officers authorized by the court to prepare or verify financial reconciliations on the court's behalf.
“Deposits in transit” means deposits made to a bank account that have not been credited to the bank statement.
“Deputized clerk of court” means an individual who is officially empowered to perform the specified duties of the clerk of the court.
“Disbursement” means the actual payment of funds in the form of a check or some form of electronic fund transfer.
“Disbursements journal” means the listing of all case related payments made by the court by distribution type (restitution, bond, medical services enhancement fund, criminal justice enhancement fund, etc.) by date.
“Dishonored payment” means any payment presented to the court not honored by the financial institution including a merchant chargeback.
“Electronic Fund Transfer (EFT)” means a medium of electronic payment, such as, but not limited to an electronic check or direct deposit.
“Exception” means the court's inability to meet a particular standard.
“Financial records” or “accounting records” means records maintained by the court to account for all monies received and disbursed by the court.
“Independent contractor” means collection agency, alcohol screener, or any other school, agency, or provider that performs services to carry out court orders that are not contracted with the AOC to provide services or are on a state contract.
“Internal controls” means procedures and records designed to minimize opportunity for the mishandling or theft of money and to ensure the integrity of the financial records.
“Merchant” means any individual, agency, or corporation that processes, stores, or transmits payment information.
“Online transaction” means an electronic transaction conducted, such as, but not limited to by telephone (IVR), internet, or world wide web.
“Open item” means monies held for a party or a case that have not been allocated or posted to a particular account or scheduled for disbursement, such as, but not limited to unidentified monies, bonds, restitution, overpayments, or other monies held in a suspense account or hold account.
“Outstanding check” means a court disbursement check that has not cleared the bank.
“Payment card” means any debit, credit, and pre-paid cards branded with one or all card association logos such as: Visa, MasterCard, American Express, Discover, JCB, and Visa International.
“Petty cash” means funds used to make small operational purchases, which must be exclusive of the court change fund.
“Posting or journal entry” means data entered and recorded in an accounting journal. A posting or journal entry may also be used to reclassify, adjust, or correct account balances.
“Preparer” means court personnel authorized to prepare financial records for use or consideration or conduct a count of monies for the dual purposes of balance and reconciliation.
“Receipt date” means the date the payment was posted to the court's automated financial management system.
“Receipts journal” means the listing of all monies received by allocation type (judicial collection enhancement fund, medical services enhancement fund, criminal justice enhancement fund, etc.) by date.
“Reconcile/reconciliation” means to match and compare figures from one accounting record against those presented on another accounting record or financial statement, to determine record accuracy and to account for all transactions and financial documents.
“Remit” means to transmit, send, relinquish, or surrender funds to the appropriate agency.
“Second person verifier/verification” means court personnel authorized to review financial records for accuracy, completeness, and compliance with the established standards, and verify the accuracy of a count of monies for the dual purposes of balance and reconciliation.
“Transaction date” means the actual date upon which a payment transaction occurred. This date differs from a settlement date for payment card transactions.
“Unclaimed funds” means any monies considered abandoned as defined by statute.
“Unidentified monies” means monies that have been received without any identifiable information, such as the party's name, case number, or sender's information.
“Void/Stop payment” means a method used to stop disbursement of funds through bank authorization or in the automated financial management system.
“Void” means to cancel a financial entry by changing the posted dollar amount to zero to render the financial entry null.
1. Each court shall use an automated financial management system in accordance with ACJA § 1-501 that ensures accurate reporting of all transactions and provides sufficient documentation for audit purposes. The automated financial management system shall include a record of all transactions and internal control measures to ensure the safety of public monies.
a. A statement regarding the methods of payment that the court accepts, which shall include, but is not limited to: cash, cashier's check, certified check, money order, credit card, debit card, or other financial institution generated fund transfer instrument and other forms or means of payment mandated by the supreme court;
5. The court shall adopt written financial policies and procedures to implement this section that prescribe the court's financial practices, and which apply to any departments or divisions within the court's administrative structure that receives or disburses money. These financial policies and procedures must be enforced and available for review by auditors.
6. On a recurring timeline established by the court in writing, the court shall inform all agencies regularly receiving payments on behalf of the court to remit the monies, including surety instruments collected, to the court as soon as reasonably practicable. The court shall retain the notification in accordance with the retention schedule.
7. The court shall notify local law enforcement, its respective chief justice, chief judge, or presiding judge, and the AOC court services division no later than the next business day upon discovery of a loss determined to be due to theft. Limited jurisdiction courts shall also notify the presiding judge of the superior court of the county.
8. Any secondary type of technology used to perform the duties assigned per this section for the preparer and second person verifier/verification roles that may include, but is not limited to Skype or electronic signatures, will require AOC approval. The court shall adopt written financial policies and procedures that prescribe how the technology will be used when conducting the preparation and verification of financials.
1. The presiding judge of each limited jurisdiction court, the clerk of the superior court in each county, and each department director shall sign the completed checklist, retain a copy, and forward the original to the presiding judge of the superior court of the county by January 31 of each calendar year. The presiding judge of the superior court in each county shall send the completed and signed annual MAS Compliance Checklists to the AOC court services division by March 1 of each calendar year.
2. The clerks of the court of appeals, the clerk of the supreme court, and the administrative director of the AOC shall submit a completed and signed annual MAS Compliance Checklist to the chief judge of the court of appeals or chief justice of the supreme court, respectively, by January 31 of each calendar year. The chief judge of the court of appeals and the chief justice of the supreme court shall send the completed and signed annual MAS Compliance Checklists to the AOC court services division by March 1 of each calendar year.
a. Ensure the review is conducted by either a certified public accountant (CPA) currently licensed by the Arizona State Board of Accountancy, a certified internal auditor (CIA) or certified government accounting professional (CGAP) certified by the Institute of Internal Auditors, or under the direction of a CPA, CIA, or CGAP.
e. Upon request and at no cost, grant the court being reviewed, as well as the supreme court, AOC, and the auditor general's office, access to any books, documents, records, and working papers that are in any way pertinent to the independent review. Further, these items shall be produced at the offices of the court, supreme court, AOC, or auditor general upon request.
2. The court shall send a copy of the final report to its respective chief justice, chief judge, or presiding judge, and the AOC court services division showing the date on which it was received, within seven business days of the court receiving the final report. Limited jurisdiction courts shall also send a copy to the presiding judge of the superior court of the county.
If the auditor's final report contains findings, the court shall send an action plan to the AOC court services division within 30 calendar days of the court receiving the final report. The action plan shall address corrective measures implemented by the court in response to any findings.
3. When any type of audit relating to the case management or case financial management of the court, other than the review described in this subsection, is to be conducted by any agency or private firm, the justice of the peace, court administrator, clerk of the court, presiding judge, or the administrative director of the AOC shall, before or during the audit, advise their respective chief justice, chief judge, or presiding judge of the audit. Further, the court shall send to its respective chief justice, chief judge, presiding judge, and the AOC court services division a copy of the final audit reports, findings, and evaluations of any audit conducted, showing the date on which it was received, within seven business days of receipt. Limited jurisdiction courts shall also send a copy to the presiding judge of the superior court of the county.
15. Court personnel shall investigate any shortage or overage of court monies within one business day. If there is still a discrepancy, court personnel shall document the discrepancy on the applicable cashier's cash drawer fund reconciliation documentation and as part of the daily deposit reconciliation documentation.
1. Document the preparation of daily cash counts and their corresponding reconciliations as referenced in (M)(1), deposit reconciliations as referenced in (L)(2)(c) and (f), monthly reconciliations as referenced in (I)(9) and (M)(2), the review of outstanding bonds over 90 days as referenced in (M)(3), and quarterly reconciliations as referenced in (I)(6)(h) using a method that identifies the preparer such as initials or signatures and includes the date of document preparation.
2. Document the verification of daily cash counts and their corresponding reconciliations as referenced in (M)(1), deposit reconciliations as referenced in (L)(2)(c) and (f), issued and voided manual receipts as referenced in (I)(6)(f) and (I)(7)(g), monthly reconciliations as referenced in (I)(9) and (M)(2), and quarterly reconciliations as referenced in (I)(6)(h) using a method that identifies the verifier such as initials or signatures and includes the date of document verification.
3. Sign checks prepared by someone else, unless the check requires two signatures. Checks must not be made out to “Cash,” and the signing of blank checks is prohibited. For electronic disbursements, ensure that the person who entered and authorized the electronic disbursement is not the same person who verified the electronic disbursement.
5. If the court does not have sufficient staffing to provide for a second person verifier at all times, then the court shall adopt written financial policies and procedures to control the risk of unauthorized financial transactions. These written financial policies and procedures must detail arrangements made with designated local government employees authorized by the court to verify transactions in accordance with the requirements in this section.
a. The court shall properly and clearly endorse all checks payable to the court with a restrictive endorsement stamp that reads “For Deposit Only--Payable To (account's name)” no later than the end of the business day on the date the check is receipted into the automated financial management system, unless the court utilizes an automated financial management system that electronically endorses checks.
(1) The court shall receipt all checks immediately when received. If the court is unable to receipt the checks when received, the checks must be immediately secured for safeguarding purposes, with receipting into the automated financial management system to be completed no later than the end of the next business day.
c. Retain copies or an electronic image of a cash log that details the breakdown and total of any monetary denominations received, the checks received, the credit card transaction details received, receipts generated by the automated financial management system, and any additional necessary supporting documentation in a file labeled “Unidentified Monies.”
f. The second person review of the manual receipts issued shall take place no later than the end of the next business day following receipt issuance. The review shall verify that the receipt or receipts was issued in sequence within each book, recorded in the automated financial management system, and has actually been issued.
h. The court shall document the reconciliation of all unissued manual receipts in accordance with the timeline established by the court's written policy and procedure, which shall require the reconciliation be conducted at least four times a year. Any variances noted while conducting the reconciliation shall be immediately investigated, and the outcome of the investigation documented as part of the reconciliation record.
2. The court shall provide a current copy of this section to each independent contractor with which the court directly contracts to receive or make payments on the court's behalf within the first three months of the contract. The court shall retain documentation of the notification sent to each entity in accordance with the records retention schedule.
5. Suspense or hold accounts. The court shall establish written policies and procedures to account for monies held in a suspense or hold account on a monthly basis, and to apply these monies to a party's case financial record or disburse them to the appropriate party within a time period prescribed by the court's policies and procedures.
b. For any disbursement check reported lost or stolen, the court shall void/stop payment on the disbursement check in the court's automated financial management system once research by the court has proven the disbursement check has not been cashed, unless this function is performed by a city, county, or state treasurer (in the case of appellate courts).
e. For all void/stop payment disbursement checks, the court shall write “VOID” or “Stop Payment” across both the physical face and signature line of the void/stop payment disbursement check and retain all void/stop payment disbursement checks if available for retention; for example, checks issued via electronic disbursement, lost in the mail, or stolen would not be available for retention.
7. Unclaimed funds disbursement. Pursuant to A.R.S. §§ 44-302(A)(10) and (11), 44-307, and 44-308 for municipal and superior courts and A.R.S. § 22-116 for justice courts, the court shall report and remit as unclaimed (abandoned) funds to the Department of Revenue or county treasurer, unless this function is performed by a city, county, or state treasurer (in the case of appellate courts), the following:
c. The court shall ensure all currency, coins, and checks are deposited to the bank or local treasurer by the next business day the court and the bank or local treasurer are open, unless the total is less than $300. If the total is less than $300, at a minimum, the funds shall be deposited on a subsequent business day when the accumulated undeposited funds reach or exceed $300, or deposited once per week, whichever is earlier.
d. The court shall establish a secure procedure or practice for depositing court monies with the bank or local treasurer. If the court deposits court monies with the local treasurer, the court shall retain documentation that confirms that the court monies have been delivered to or retrieved by the local treasurer for deposit within the required timelines. The court and the local treasurer shall initial or sign and date the documentation acknowledging receipt of the court monies deposited, unless court monies are transported by armored car, in which case a log shall be maintained.
e. The court shall ensure that checks scanned for electronic deposit are retained not more than 30 days after the completion of the bank reconciliation for the month in which the checks were deposited. Shredding is the preferred method of disposal. Personal mobile devices may not be used to scan checks.
f. The court shall require that at least two separate authorized court personnel are involved in the deposit balance and reconciliation process. One authorized personnel acting in the capacity of preparer and one additional authorized personnel acting in the capacity of second person verifier to ensure the balance and reconciliation of the daily deposit with the receipts journal. The verification must occur at the time of the deposit preparation and prior to the depositing of funds with the bank or local treasurer.
3. Review of bonds outstanding over 90 days. Review all bonds posted outstanding over 90 days and bond records to determine the status of the bonds based on court order, for example: is the bond still active, waiting for the defendant to appear, or if the defendant appeared has the bond been ordered refunded or forfeited, etc. Take appropriate action, document the disposition of the bond reviewed, and retain documentation. Verification documentation is not needed for this review, unless required by the court's written policy and procedure.
4. Reconciliation requirements. If the court cannot determine why there is a variance in the reconciliation, the court is prohibited from simply adding a fictional amount to the reconciliation in order to force the reconciliation into balance. Any variance should be clearly documented as a line item on the reconciliation and should be resolved within no more than 30 days from the reconciliation.
b. Issue manual receipts in sequence within each book. The original receipt shall be given to the person making a payment; one copy shall be given to the clerk of court no later than the next business day, and one copy shall be retained in the manual receipt book in accordance with the records retention schedule;
c. Retain documentation that confirms that the issued manual receipt copies have been delivered to or retrieved by the clerk of the court, in lieu of requiring a second person review of the individual manual receipt issued and of the cross-referencing standard for the manual receipt number issued and the automated receipt number issued;
The requirements as outlined in this subsection supersede the requirements specific to issued manual receipts as outlined in (I)(6)(a) through (f).
The requirements as outlined in this subsection supersede the requirements specific to deposits as outlined in (L)(2)(a), (c), and (d).
4. Posted payment policies for probation departments that collect court-ordered fines, fees, or restitution from juvenile probationers, adult probationers, or third-party payors may exclude the collection of cash, as referenced in (D)(4)(a), as an accepted method of payment for probation department locations that meet either of the following criteria:
Credits
Effective January 1, 2008. Amended effective January 1, 2012; April 11, 2018; Jan. 1, 2021; April 10, 2024.
AZ ST Code of Jud. Admin, § 1-401, AZ ST CJA § 1-401
State Court Rules are current with amendments received through May 1, 2024. The Code of Judicial Administration is current with amendments received through May 1, 2024.
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