Payments to Individuals overview

The information below explains the requirements and processes related to payments to individuals at Indiana University.

This section focuses on payments issued by check and outlines the requirements, controls, documentation, and compliance considerations necessary to support accurate processing, monitoring, and oversight throughout the payment lifecycle.

Review the information below to learn about issued check management, including check handling, monitoring, reconciliation, and exception processing.

Effective management of issued checks includes monitoring outstanding checks, processing stop payments, handling cancellations and reissuances, and complying with unclaimed property requirements. These practices help safeguard university funds, maintain accurate financial records, support internal controls, ensure regulatory compliance, and promote responsible management of university resources. The information below outlines key roles, responsibilities, and expectations for managing checks from distribution through final resolution.

UCO-EXP-9.01: Issued Check Lifecycle Management

Prerequisites

Prior to reading the Issued Check Lifecycle Management Standard, it is beneficial to review the following items to gain foundational information:

1. FIN-ACC-30 Fraud and Fiscal Misconduct
2. FIN-ACC-470 Internal Control
3. FIN-ACC-560 Custodial Funds
4. FIN-TRE-120 Processing Revenue
5. DM-01 Management of Institutional Data

Preface

This standard establishes the requirements and internal control expectations for university-issued check disbursements at Indiana University, excluding checks issued from IU custodial fund bank accounts. It provides an overview of the check payment lifecycle after the check has been issued.

The standard outlines key processes related to check issuance and management, including handling and distribution, monitoring, reconciliation, and exception processing based on payment type and status.

Introduction

The preferred method of payment for university disbursements is ACH (electronic direct deposit). However, circumstances may arise in which payment must be issued via a paper check. For purposes of this standard, “check” refers specifically to a physical paper check.

This standard applies to university-issued checks after the point of issuance and establishes the requirements and internal control expectations for managing checks throughout the post-issuance lifecycle. Payment types covered by this standard include, but are not limited to, BUY.IU supplier payments, Emburse Enterprise payments, Bursar refunds, and payroll checks.

The standard addresses activities occurring after a check has been generated by the university, including source systems, payment types, roles and responsibilities, handling controls, reconciliation activities, check statuses, and exception processing. Exception processing within this standard includes activities such as cancellations, reissuance, forgery claims, and the write-off of outstanding checks.

For purposes of this standard, cash management refers to the activities used to monitor, track, and reconcile check disbursements to support effective internal controls and reduce the risk of errors, loss, or misuse of university funds.

This standard does not apply to checks drawn from IU custodial fund bank accounts. Fiscal officers should refer to UCO-AST-1.01: Custodial Funds for guidance regarding these checks.

Importance and Impact of Issued Check Management

Indiana University issues payroll and non-payroll checks to support a broad range of financial activities. Once issued by IU, checks represent official university disbursements and must be managed consistently to safeguard institutional assets. This standard establishes processes for handling, cancellation, reissuance, forgery claims, and write-offs to ensure compliance with state regulations, audit expectations, and internal control requirements.

Improper handling of check exceptions can result in misstated cash balances, duplicate payments, delayed unclaimed property  reporting/remission, audit findings, and increased fraud exposure. Effective management supports accurate financial reporting, minimizes financial and reputational risk, and ensures that Indiana University maintains strong stewardship of institutional resources.

Issued Check Lifecycle Management Discussed in Detail

Primary Source Systems and Types of Payments for Check Issuance

Paper check activity at IU may originate from a variety of university systems, departments, and administrative functions. Primary payment sources and related activities include the following, but are not limited to:

Enterprise Systems

• PeopleSoft Human Resources Management System (HRMS): The core system for processing payroll checks and related payments.
• BUY.IU: The core system for processing supplier checks.
• Emburse Enterprise: The core system for processing travel and non-travel reimbursements.
• PeopleSoft Student Information System (SIS): The core system for processing student payments.

Non-Enterprise Systems, Processes, and Applications

• SiriDynix Symphony (SIRSI): A subsidiary system used by IU Libraries to process library-related customer payments.
• Origami Risk: A subsidiary system used to process workers’ compensation payments.
• IU Press: A subsidiary system used to process publishing-related disbursements.
• Insurance and Claims: An application used to process payments related to claims, settlements, and other risk-related disbursements.
• Revolving and Custodial Funds: Revolving and custodial fund accounts may issue checks for approved university business activities in accordance with applicable university policies and procedures. Please see UCO-AST-1.01: Custodial Funds for additional information.

Check Management Roles and Responsibilities at IU

• Fiscal Officers: Monitor check activity associated with their accounts, review outstanding check activity at least quarterly, verify payment and supplier information related to stop payment or reissue requests , investigate discrepancies or unusual transactions, and support timely resolution of outstanding or stale checks in accordance with university procedures.
• Departments and Payment Initiators: Review supporting documentation for payment requests; verify supplier payment information and mailing addresses; safeguard  checks received through special handling; and coordinate with UCO Cash Accounting to resolve incorrect, lost, stale, or disputed check payments.
• UCO Cash Accounting: Reconcile bank activity, the IU general ledger, and outstanding checks; monitor stale-dated and unclaimed property items; process stop payment requests  and check exception activity; coordinate forgery claims and write-offs; maintain compliance with unclaimed property requirements; and ensure accurate cash reporting on the university’s financial records. To maintain appropriate segregation of duties, UCO Cash Accounting staff may not initiate payments except for activities related to unclaimed property reporting, due diligence reissuance processes, or approved stop payment reissuance activities.
• UCO Customer Service: Print, handle, secure, and distribute university-issued checks in accordance with university procedures and internal control requirements, including support for mailing, special handling, and check distribution activities.
• University Payroll: Authorize release of payroll checks for distribution; verify payroll mailing information; coordinate payroll check reissuance activities; and support compliance with payroll regulations, wage payment requirements, and payroll payment procedures.

Check Disbursement Statuses

• Cleared: A check that has been cashed or deposited.
• Outstanding: A check that has been issued but has not been cashed or deposited.
• Stale: A check that has been outstanding for six months or longer.
• Cancelled: An outstanding check that has been voided and may no longer be cashed.
• Reissued: A replacement check issued after cancellation of the original check.

Check Controls and Handling

University-issued checks must be managed and stored in accordance with university internal control and physical security requirements to reduce the risk of loss, theft, unauthorized access, or improper distribution. The handling and processing of checks may involve sensitive data subject to the requirements of policy DM-01 Management of Institutional Data.

The issuance of a check is governed by the internal controls process documented for the related systems referenced above. Checks are printed, distributed, stored, and released only by authorized personnel with appropriate restricted access as provisioned by UCO. Secure handling procedures apply to active checks, voided checks, payroll checks, and checks designated for special handling.

Physical checks are printed and mailed out daily by UCO Operations and authorized staff on the Indianapolis campus. Checks with special handling must be picked up in person from UCO Customer Service or authorized staff on the Indianapolis campus. Voided checks are securely stored and destroyed by UCO after the retention period.

Some checks, including payroll, require special handling procedures, including tracked delivery methods, departmental follow-up with the payee to confirm receipt, and additional remittance documentation to support secure delivery and accurate application of payment by the payee.

Refer to the Issued Check Management Procedures reference document  for detailed check printing, storage, distribution, mailing, and special handling procedures.

Check Reconciliation

UCO Cash Accounting performs monthly reconciliation of university-issued check activity to support accurate financial reporting and monitoring of outstanding checks.

The reconciliation process includes balancing bank activity, outstanding checks, and general ledger activity for applicable university bank accounts. Reconciliation differences are researched and resolved timely through established reconciliation and adjustment procedures.

UCO Cash Accounting maintains supporting reconciliation documentation, including reconciliation reports, adjustment workpapers, and related system records, in accordance with university recordkeeping and internal control requirements.

Refer to the Issued Check Management Procedures reference document for detailed reconciliation procedures.

Outstanding Check Monitoring

Fiscal officers on accounts that issue check payments must review outstanding check activity at least quarterly by running the IUIE PDP Disbursement Status Report using their fiscal officer user ID. The IUIE PDP Disbursement Status Report identifies outstanding checks associated with accounts for which the user is assigned as the fiscal officer.

Review of outstanding check activity is necessary to support timely payment resolution, maintain accurate outstanding check records, and reduce the risk of stale-dated or unclaimed property items. The fiscal officer should ensure the department reissues or cancels checks that remain outstanding to prevent them from being improperly reissued or remitted to states as stale and/or unclaimed checks.

If outstanding or stale-dated checks are identified, fiscal officers are responsible for reviewing payment information, verifying that payment records match supporting documentation and supplier records, and coordinating follow-up activities with UCO Cash Accounting, when necessary.

Refer to the Issued Check Management Procedures reference document for detailed stop payment, cancellation, and reissuance procedures.

Exception Handling

Stop Payment Process

Departments are responsible for notifying UCO Cash Accounting of outstanding paper checks that must be cancelled or reissued by submitting a Stop Payment Form. Review the When to Request a Stop Payment video to learn more about when these options are appropriate.

Check payments may only be reissued or reprocessed through the approved stop payment and reissuance process coordinated by UCO Cash Accounting.

Payments must be reissued to the same payee name for the same dollar amount. If the payee’s name or the dollar amount is changed, the initial payment must be cancelled, and a new financial transaction must be initiated.

Check Cancellations

Proper cancellation of checks ensures university accounting records accurately reflect liabilities, funds are returned to the appropriate accounts, and units within the university maintain accurate outstanding check records.

Check cancellation is appropriate in the following situations:

• the check was issued in error (e.g., duplicate payment, incorrect amount, wrong payee)
• the payee’s name is incorrect or incomplete
• the underlying business purpose has changed (e.g., IU no longer owes the balance)
• the incorrect payment method was used (e.g., wire vs. ACH).

Improper or incorrect check payments identified by departments should be reported to UCO Cash Accounting promptly to support timely review and resolution of the payment activity.

The check cancellation procedures vary depending upon the type of check (payroll or non-payroll) and the status (stale or non-stale). UCO (Cash Accounting, Customer Service, Payroll, and Operations) and IU departments play different roles in this process.

Please review the Stop Payment Form Training, Stop Payment Workflow, and the Issued Check Management Procedures reference document for an outline of the general procedures for cancelling a check.

A check that is not delivered or cashed is still subject to reissuance or remittance as unclaimed property. If UCO Cash Accounting does not receive a response from the payee before the annual unclaimed property reporting deadline, Indiana University must remit stale-dated checks in accordance with applicable state unclaimed property regulations.

Reissue of Disbursement Checks

Payments owed to a payee but not received by the payee must be researched and reissued, when appropriate, in a timely manner to support accurate and prompt payment. Payments that have been cashed cannot be reissued.

Reissue requests require documentation supporting the need for reissuance and verification that the original payment will not be cashed or deposited. Reissue requests may not be used to change the payee’s name, method of payment, or payment amount. For detailed procedures related to reissuing disbursement checks, please refer to the Issued Check Management Procedures reference document.

Check reissuance is appropriate in situations including:

• Lost checks
• Stolen checks
• Destroyed checks
• Stale-dated checks

If a payee reports that a check was not received but records indicate the check was cashed, the department is responsible for working with the payee to correct the issue and is responsible for any loss of funds. Additionally, the loss must be reported to Internal Audit and UCO Cash Accounting if fraud or check forgery is suspected per IU policy FIN-ACC-30: Fraud and Fiscal Misconduct.

Checks Issued to the Wrong Payee or for the Wrong Amount

If a check was issued with an incorrect payee name, payment amount, or payment method, the original payment must be cancelled so funds can be returned to the originating general ledger account. After cancellation, the department is responsible for verifying the payment information on the payee’s profile is accurate before initiating a new payment request.

Requests for a new disbursement should be supported by appropriate documentation and remittance information to support audit documentation and accurate payment processing. Payee information including name, amount, payment method, and mailing address, must align with the supplier invoice or required payee substantiation prior to payment processing.

Special Considerations for Payroll Checks

Payroll check reissuances are subject to additional payroll compliance, wage payment regulations, tax reporting, and employee verification requirements managed by University Payroll.

These requirements include:

• Verification of employee identity
• Review of year-to-date earnings and tax reporting
• Confirmation of the mailing addresses
• Prevention of duplicate wage payments

Departments must coordinate with UCO University Payroll prior to reissuing payroll checks to ensure all applicable payroll, tax, and employee verification requirements have been satisfied.

Check Forgery

Suspected check forgery requires immediate action. Instances of suspected fraud or forgery must be immediately reported to Internal Audit and UCO Cash Accounting. UCO Cash Accounting will coordinate with Internal Audit to support the forgery claim and investigation process.

Timely reporting of suspected forgery to UCO Cash Accounting and Internal Audit is critical, as delays increase the risk of fraud and reduce the likelihood of reimbursement.

Refer to the Issued Check Management Procedures reference document for detailed forgery claim procedures and processing requirements.

Write-Off of Outstanding Checks

Checks that remain uncashed after extended periods must be written off to comply with state unclaimed property laws. UCO Cash Accounting is responsible for completing the write-off process monthly. Write-offs help ensure that cash and liability balances reported on the university’s balance sheet remain accurate.

When a check reaches stale status, the funds are transferred to a clearing account and removed from outstanding check listings. Depending on the payee’s last known address, the funds will be remitted to the appropriate state for unclaimed property. Until the funds are remitted to the state, the department is required to continue attempts to reach the payee so that payment can be made.

Requirements and Best Practices

Requirements

1. Follow policy DM-01 Management of Institutional Data on safeguarding sensitive data (payee information and bank account) when handling or processing checks.
2. Review the IUIE PDP Disbursement Status Report at least quarterly using the fiscal officer user ID to identify stale-dated checks, outstanding checks, and potential payment issues.
3. Report suspected fraud, forgery, or other suspicious check activity immediately to Internal Audit and UCO Cash Accounting.
4. Promptly report incorrect check payment activity to UCO Cash Accounting.
5. Coordinate with University Payroll prior to reissuing payroll checks.
6. Review the Issued Check Management Procedures reference document prior to completing check cancellation, reissuance, stop payment, reconciliation, or special handling activities.
7. Maintain supporting documentation and remittance information for payment requests.
8. Safeguard checks received through special handling procedures in approved secure locations.

Best Practices

1. Periodically review university policies, procedures, and training related to issued check lifecycle management activities.
2. Review supplier profiles and supporting documentation prior to approving BUY.IU requisitions.
3. Confirm suppliers or payees receive large-dollar or time-sensitive check payments.
4. Perform regular departmental account reconciliation activities to identify incorrect payment activity and outstanding check discrepancies.