The Clerk of Court is responsible for receiving, accounting for and disbursing funds to various state and county offices as well as to individuals. The Clerk of Court handles filing fees, bond and bail monies, trust funds, fines, restitution payments, and child support and alimony payments. It is imperative that the Clerk of Court's office has adequate policies and procedures in place to ensure that all funds received and disbursed are properly handled. Protecting funds within the office involves personnel, procedural and security considerations.
Depending on the size of the county, the amount of funds collected, and each county's accounting policies and procedures, financial arrangements between Clerks of Court and their County Treasurers will vary. The information in this chapter identifies the key elements of good financial management, and describes the tasks associated with them. Each element should be in operation whether in the Clerk of Court's office or in another governmental office responsible for a specific financial function. The Clerk of Court should document the scope of duties and the means used to meet minimum standards when another governmental body is involved in handling funds received by or disbursed from the Clerk's office.
Although the degree of involvement of a Clerk's office staff varies in receiving and accounting for funds and varies from county to county, the clerk is responsible for seeing that fines, fees, and other monies are properly collected, disbursed and that an accurate accounting system is being used. A number of state laws require Clerks of Court to disburse funds differently in specific situations, particularly fines, fees and assessments collected in General Sessions (criminal) cases. A clear understanding of the specific provisions and when they apply is required to fulfill these statutory requirements. After the legislative session has concluded each year (usually in June or July), Court Administration provides Clerks of Court and other interested parties a memorandum which summarizes the statutory requirements. A copy of the memorandum is included in the Miscellaneous Section of this chapter. Memorandums including the most recent memorandum can be accessed under the Court News section on the SCJD Website.
It is essential for Clerks of Court and their staff to understand that they are charged with the responsibility for monies received by the court, and that misuse of these funds or failure to pay them to the appropriate county or state office subjects the clerk to a variety of civil and criminal penalties.
The objectives of good internal controls are to safeguard and to properly account for all assets. The elements of internal control include staffing practices, job delineation for those who handle money, accurate documentation of all transactions, and proper physical security of cash and accounting supplies.
The basic premise behind staffing practices as a means of internal control involves the principle that different people should collect, record and account for funds, and different people should authorize and issue payment of funds. People who are responsible for verification of financial records should not be involved in the creation of the records which they are checking. It is important to separate these job duties and to hire competent, trustworthy personnel. Mechanisms to cross-check financial activities should be in place to avoid errors and to prevent the unauthorized use of funds.
Assigning specific responsibilities for handling financial matters to each individual staff member clarifies who is responsible for what task. Each employee should know and understand for what part he or she is responsible, and should also know that inadequate or poor performance will be called to the attention of the appropriate supervisor. A mechanism for reporting work performance issues and any specific financial transaction verification problems to someone with the authority to take corrective action is part of effective internal control.
Accurate recordkeeping is an essential part of internal control. Proper documentation for each step in processing funds into, through and out of the office must be prepared. Proper documentation ensures control, facilitates verification and eases the burden of preparing timely and accurate accounting records and reports.
The last piece of internal control, adequate physical security of funds, accounting records and supplies such as receipts, vouchers and checks, cannot be overlooked. Public access to areas where monies are handled should be limited for security purposes. Access by staff to funds, financial records and supplies should be limited to only those staff members who have job duties which require them to handle these items. For example, staff members who authorize checks to be written should not have access to the checks; employees who receive cash should not have access to the original journal entries.
To the greatest extent possible, separating staff responsibilities for each aspect of handling funds is critical to ensure sound accounting practices. Receiving and disbursing functions should be separated, as should preparation and verification of records. Staff should be cross-trained so that when one person is out, someone else can perform the required tasks. This will prevent a backlog of work, and also provides an element of control. If the staff is too small to allow optimum separation of duties, staff assignments should be rotated on a regular basis.
- Prepare an organization chart. Update as needed.
- Prepare job descriptions for each employee's financial responsibilities.
- Require staff who handle or have access to cash to take regular annual vacations. As an alternative, require employees to change duties within the office.
- Develop a procedures manual for financial operations. Include procedures for processing and recording financial transactions at outlying offices.
- Obtain fidelity bonds to cover all staff who have access to funds.
The Clerk of Court is accountable for the items supplied to and used for the performance of duties of the office. These items are purchased with public funds, and as a public official, the clerk has the responsibility for seeing that supplies and equipment are used properly and appropriately. Procedures to identify and account for both capital and consumable items used in the office should be created.
- Inventory all property, plant and equipment items in the office. Include for each:
Identification information (for
example, ID tag number, serial number)
Acquisition information (for example, date of purchase, cost, vendor, purchase order or check number)
- Take physical inventory on an annual basis.
- Balance inventories to ledger control account.
- Establish procedures for official approval of all asset purchases.
- Review expenditures for capital items from federal funds with grantor prior to purchase.
- Provide limited access to storage area where accounting records (ledgers, journals, etc.), supplies (receipt books, blank checks, etc.), and valuable assets (cash, bank books, etc.) are kept.
- Obtain liability insurance coverage for loss of office contents and claims against the office that are not otherwise covered by other insurance.
- Review limits of insurance policies on an annual basis to ensure adequate coverage for loss.
A comprehensive accounting system provides a clearly traceable "audit trail" of transactions in and out of the office. Standardizing transactions (receipting, posting, transferring funds) as much as possible will facilitate the recording process, the maintenance of a comprehensive set of records (journals, ledgers, receipts, etc.), and the periodic review and reconciliation of records. A self-balancing, double entry system is recommended.
- Establish and maintain a current chart of accounts that reflects accounts necessary for preparation of financial statements, budgets, and other reports.
- Establish and maintain an accounting policies and procedures manual pursuant to county policies. Use manual for reference and to train new personnel.
- Maintain books or records of original entry for recording transactions from their source documents, for example, cash receipts and cash disbursements. Post transactions to these books in a timely manner.
- Maintain a general ledger in which to post information from the books/records of original entry. Include posting references to trace to original entry records. Complete in a timely manner. Balance monthly.
- Prepare a monthly trial balance. Designate a staff member to review and approve it.
- Reconcile subsidiary accounts such as trust accounts and receivable accounts monthly to their general ledger control accounts.
- Designate staff members who are familiar with the chart of accounts and accounting procedures to code and record transactions.
- Designate an employee to prepare journal entries. Ensure entries contain adequate explanations. Designate an employee to review and approve entries.
- Follow record retention schedules for financial records as determined by county policy and state record requirements.
- If a formal budget is adopted, document it in the accounting records. Designate an employee outside the accounting function to monitor budget compliance on a periodic basis.
- If the office receives federal funds, identify the federal fund activity by grant in the accounting records. Grant expenditures should reflect the approved grant and cost categories.
- Monitor expenditures to avoid expenditures in excess of approved amount.
- Prepare financial reports within required reporting deadlines.
- Designate an employee not involved in report preparation to reconcile reports to the general ledger or other accounting records.
Accountability for the cash flow in and out of the office is best accomplished by including all cash and bank accounts in the general ledger accounts. All accounts of this nature should be authorized and approved by the appropriate administrative authority. All bank accounts should be monitored on a regular basis. Deposits should be carefully prepared and verified, and statements should be reconciled promptly.
South Carolina Code § 17-15-240 allows Clerks of Court to deposit bail bond monies in interest bearing accounts with all interest accrued to be credited to the general fund of the county or municipality for those offenses triable in municipal court. Each office proposing to deposit these bail bond monies into an interest bearing account must develop a plan to account for the interest earned, and the plan must be approved by the county administrator, county council or the internal auditor. The plan and the document approving it must be filed with Court Administration.
- Maintain separate accounts for each major service or functional
Note: Before establishing accounts, consider the following factors:
If any legal restrictions
require separate accounts;
Effects of multiple office locations;
Types and volume of transactions processed.
- Designate a specific staff member to reconcile bank statements. This individual should not handle cash, record cash transactions, or sign checks.
- Reconcile accounts immediately upon receipt of bank statements.
- Bank statements should be delivered unopened to the designated staff member.
- Reconcile bank statements using appropriate procedures, including:
of check number sequence.
Examination of paid check signatures and endorsements for any unusual items.
- Compare cancelled checks to the bank statement.
- Compare cancelled checks with cash disbursement records as to check numbers, dates, payees and amounts.
- Investigate status of checks which have been outstanding for a long period of time.
- Ensure reconciliation is adequately documented.
- Have a supervisor or other appropriate official review and approve the reconciliation.
Receipt of cash requires a multi-stage procedure to ensure a limited number of functions are performed by one staff member. For example, staff members who receive money such as cashiers or staff members who open the mail, should not handle the general ledger, accounts receivable records, or cash receipt records. This division of job duties ensures that no one staff person can mishandle cash without a subsequent "check".
Physical control and safety of money within the office should be a prime concern. Cash drawers, safes, cash registers, or other methods of securing all money once it has been receipted should be used. Safety of both the cash received and the employees handling it should be provided.
- Use pre-numbered receipts or computer-generated receipts. Never use unnumbered receipts.
Different sets of receipts may be used to control for different kinds of funds, for example, receipts for payments made for photocopying could be different than those used for child support payments or filing fees. Attach voided receipts to all copies in the receipt book for audit purposes.
- Control cash receipt books.
If you do not have computer generated receipts, books not in use should be safeguarded and accounted for at all times. Completed books should be controlled for verification and audit purposes. Account for the numerical sequence of receipts and for all receipt series in use on a periodic basis. When a new receipt series is introduced, destroy the unused supply of the old series.
- Issue receipts when monies are received as follows:
At the time of receipt for all over the counter transactions,
After being logged in by the mail opener for checks received by mail.
All receipts should include:
Method of Payment (cash, check, money order)
Type of Payment (fine, fee, bond, etc.)
- Checks received by mail should be logged in by the mail opener. The log should include:
Method of Payment
Type of Payment
- After logging, the mail opener should deliver all checks to the cashier or other appropriate staff member.
- All checks should be endorsed restrictively, such as "Deposit to XYZ "
- Cash receipts should be deposited daily. If the amounts received are small, several but no more than five days receipts may be accumulated before a deposit.
- Prepare duplicate deposit slips and submit to the bank for
Compare cash register or computer totals to the bank deposit.
Compare bank deposit totals with totals from the pre-numbered receipts.
If you maintain a daily log, compare mail log to daily cash deposit.
- If cash overages or shortages are noted, the person responsible for the transaction should investigate the discrepancy promptly, and the error should be reviewed by a supervisor.
- A supervisor should periodically review mail logs and other documents.
- Request the bank return the validated deposit slip to a specified employee who did not prepare the deposit.
- Compare the validated deposit slip with the cash receipts records.
- If checks are returned by the bank as uncollectable,
upon their receipt,
Set up as a receivable.
Initiate appropriate collection action.
Cash disbursements by Clerks of Court are largely controlled by statute. Depending on the offense and the type of court, monies received as fees, fines, and assessments are divided among the county, designated entities and the state, depending on the offense and the type of court. Specific conditions and exceptions are delineated in the memorandum entitled Statutory provisions for the distribution of revenue generated by the circuit courts, family courts, magistrate courts and municipal courts; fees and related charges of the register of deeds, which appears at the end of this chapter.
- Use pre-numbered checks for all accounts.
Safeguard the supply of unused checks.
Render unusable any check that has been damaged or voided. For example, cut the signature portion from the check.
Account for the numerical sequence of checks on a periodic basis.
- Designate authorized staff members to sign checks.
Obtain written approval of the designations from appropriate administrative officials.
Complete signature cards for all authorized signers, and file the cards with the bank.
- Consider requiring dual signatures for cash disbursements, especially in a small office where a small number of employees are available, and inadequate separation of duties exists as a consequence.
- Prepare disbursements based on adequate supporting documentation, such as an original invoice. All disbursements should be by check, with the exception of petty cash disbursements, if a petty cash fund exists.
- Do not make checks payable to "Cash".
- If signature plates are used for signing checks:
Document each use of the plates.
Limit access to the plates to one or two staff members.
Maintain careful control of the plates when they are not in use.
- If signature is maintained digitally in software, segregation of duties should be designated and maintained; where available, restricted keys or other hardware or software devices should be maintained to restrict use of signature.
- Designate a staff member other than the check preparer or accounts payable clerk to handle and distribute signed checks.
- Post checks or vouchers to the appropriate registers as checks or vouchers are prepared.
- When transferring funds between accounts:
Provide adequate explanations of the transfer.
Obtain approval signature of an appropriate party.
- If vouchers are used, designate a staff member other than the employee who prepares the voucher to account for the numerical sequence.