8041.1 - EXAMINATION OF PAID CHECKS FOR POSSIBLE ALTERATION OR FORGERY
(Revised 2/99)
ALTERATION - When agencies find checks in which the monetary amounts have been altered, the Department of Finance, Office of State Audits and Evaluations, the Bureau of State Audits, Investigations Division, and the State Treasurer's Office will be immediately notified. Alterations will generally be discovered when the monthly reconciliation of the bank and the centralized State Treasury accounts is performed. See SAM Section 8060.
FORGERY - It is the agency's responsibility to review checks for possible fraudulent endorsements. Therefore, agencies will at least test check endorsements for possible deviations. The purpose of this examination is to determine whether the name of the payee appears as the first endorsement and to attempt to detect fraud. Attention will be given to deviations from the normal, such as: (1) endorsements in similar writing on several checks payable to different payees, (2) the same subsequent endorser on several checks, (3) an agency employee being a subsequent endorser, (4) effacement of endorsements, and (5) ink endorsements where a stamp would be normal. Agencies that detect deviations from normal will investigate them and will notify the Department of Finance, Office of State Audits and Evaluations, and the Bureau of State Audits, Investigations Division immediately of any indication of fraud determined by their investigation. A letter also will be sent to the payee in duplicate requesting acknowledgment of payment if there is a reasonable question concerning the propriety of the endorsement.
If an agency has been notified by a payee that a duly issued check has been lost, stolen, or not received, and the check in question is subsequently determined to have been paid by the State Treasurer, the issuing agency will then initiate the following action:
- Obtain Treasury form, Forged Endorsement Affidavit, STO-CA-OO34, from the State Treasurer's Office. Complete item number (1), attaching a full and legible photocopy (front and back) of the alleged forged check to the top front of each copy of the form. In the "Name of Payee" block of item number (1), type the name exactly as typed on the check. If initials were used, type in parentheses the full name, if known. For example, if the check is made payable to J. Doe, type (in the "Name of Payee" block) "J. Doe (John Doe)." Whenever possible, a street address should be indicated in addition to a post office box. On the top of the form, the agency will indicate the address to which the payee will return the form.
- The agency will then forward the three form STO-CA-OO34's, with the photocopies of the check attached, to the payee for signature. All three copies must be signed in ink. The payee's signature must be either witnessed by two disinterested parties with witnesses signing all three copies, or notarized. Only one copy of the form needs to be notarized if notarial acknowledgment is made in lieu of witnesses. The payee is to return all three copies to the agency. Upon receipt of the completed affidavits, the agency will detach the photocopy of the alleged forged check from the first copy of the form and attach the original check.
- The agency accounting officer or his/her designated assistant should review and compare affiant's signature with the endorsement on the check; the alleged forged endorsement should also be compared with any other material on file in the payee's handwriting. Agencies should submit suspected documents to the handwriting experts of the Department of Justice, Bureau of Forensic Services, Questioned Documents, for their analysis. The agency will, with reasonable justification and proper notice to the affiant, refuse acceptance of the forgery affidavit if it is determined beyond reasonable doubt that any statement on the affidavit is perjured.
- Acceptable affidavits, with original forged check and two photocopies of same attached, will be forwarded, in triplicate to: State Treasurer, P.O. Box 942809, Sacramento, CA, 94209-0001.
- Upon receipt by the State Treasurer, the first copy of the Treasury form STO-CA-OO34 and the original forged check will be charged back to the applicable bank. The second copy will be returned to the agency with the date of charge-back indicated on the front. The third copy will be retained by the State Treasurer.
- The bank will be given fifteen days from the date of charge-back in which to protest. Agencies will be immediately notified by the Treasurer's Office as to any such action by the bank. Reissuance by the agency prior to 21 days from the date of charge-back to the bank is at the agency's own risk. See SAM Section 8427 for procedures for handling forged warrants.
