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Multiple signatories and end of the cheque

 
 
Reentrant
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      11-26-2009, 09:25 AM
There's been another round of press stories predicting the end of the
cheque. That will hardly affect my personal finances, but I'm also the
treasurer of a club which quite sensibly requires two designated
signatories per cheque. I suspect this is normal for many organisations
and maybe some suspicious (OK, prudent) married couples too.

I'm not sure how this will work once cheques disappear.

Are there (now or planned) online accounts that require two or more
persons to authorise an online payment? eg one person initiates an
online payment as normal, but all this does is email other signatories
that a payment requires authorisation. Nothing happens until one of them
logs on and confirms the transaction; only then does the payment go ahead.
--
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Roger Mills
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      11-26-2009, 10:59 AM
In an earlier contribution to this discussion,
Reentrant <(E-Mail Removed)> wrote:

> There's been another round of press stories predicting the end of the
> cheque. That will hardly affect my personal finances, but I'm also the
> treasurer of a club which quite sensibly requires two designated
> signatories per cheque. I suspect this is normal for many
> organisations and maybe some suspicious (OK, prudent) married couples
> too.
> I'm not sure how this will work once cheques disappear.
>
> Are there (now or planned) online accounts that require two or more
> persons to authorise an online payment? eg one person initiates an
> online payment as normal, but all this does is email other signatories
> that a payment requires authorisation. Nothing happens until one of
> them logs on and confirms the transaction; only then does the
> payment go ahead.


Not as far as I know. I had used to be the treasurer of an organisation
whose cheques required two signatures. When I applied for on-line access to
the account, the application form - signed by all the signatories - gave me
authority to act on my own. No alternatives to this were offered.
--
Cheers,
Roger
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Ronald Raygun
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      11-26-2009, 12:02 PM
Reentrant wrote:

> There's been another round of press stories predicting the end of the
> cheque. That will hardly affect my personal finances, but I'm also the
> treasurer of a club which quite sensibly requires two designated
> signatories per cheque. I suspect this is normal for many organisations


"Quite sensibly"? That's a load of rubbish. Everyone knows that
this is completely impractical and that what tends to happen in
practice is that a few (or even all) of the cheques in the treasurer's
chequebook are signed in advance by one of the other signatories, and
then the treasurer can get on with the day to day cheque writing
unhampered. Of course this defeats the purpose of the requirement for
dual authorisation, but in reality it just proves how pointless that
requirement is. You can't operate a charity without trust, and to
start from a position of presumed untrustworthiness of sole
signatories is just plain wrong.

The only other practical way to operate under such circumstances is
for the treasurer (or whoever) to pay for stuff out of his own pocket
(which may have been pre-stocked with a cash float) and get himself
reimbursed periodically but infrequently by a "properly" co-signed
cheque, the co-signatory having had the opportunity to scrutinise
the treasurer's claimed outlays for genuineness.

> I'm not sure how this will work once cheques disappear.


Remember that cheques are not the only form of paper based payment.
If/when cheques disappear, it therefore does not mean that paper
based payment methods will disappear too. After all, not everyone
has access to online banking facilities, so there is a need for
paper systems to remain around.

There is the giro transfer order, which is popular on the continent
(or at least in Germany to my knowledge where it seems to have
displaced cheques completely). Unlike a cheque (which you send to the
payee, the payee then sends to his bank, which then sends it to your
bank, which then releases the funds to his bank), which could be viewed
as a "pull" order, giros are "push" orders (they contain the payee's
and your own bank details, you send them to your bank, the bank then
sends the funds to his bank where hey go directly into his account).

Banks issue pre-printed giro forms in two varieties - one on which
the account holder's details are pre-printed in the remitter section,
and one where they are pre-printed in the payee section. The former
are most like cheques, they are given to customers who want to *pay*
bills. When someone sends them an invoice, this will contain the
firm's bank details, the customer copies these onto the form together
with a transaction reference, signs it, and sends it to his bank.
The latter are issued to customers who want to *issue* bills. The
invoice issuing firm can then further pre-print the form with the
transaction reference and amount, and sends it with the invoice to
the customer, who then adds his own account details, signs it, and
sends it to his bank.

Anyway, there is no reason why such giro orders could not bear
two signatures.

> Are there (now or planned) online accounts that require two or more
> persons to authorise an online payment? eg one person initiates an
> online payment as normal, but all this does is email other signatories
> that a payment requires authorisation. Nothing happens until one of them
> logs on and confirms the transaction; only then does the payment go
> ahead.


Yes, CAF Bank, owned by the Charities Aid Foundation and which specialises
in offering banking facilities to charities, does indeed operate an
online dual authorisation scheme. One signatory logs on and initiates
the transaction, and when complete it goes into a suspended state until
approved by another signatory. I don't think it automatically emails
anyone, though, it is in any case probably more appropriate for the
signatories to contatc each other independently of the bank, be it by
email, by post, by phone, or indeed by the second signatory being
actually present in the same room and ready to log in on the same
computer as soon as the first has logged out.

CAF Bank imposes a dual authorisation requirement for most transactions,
so cheques *must* have two signatures. This is unlike most other banks
who leave it up to the customer organisation whether they wish to have
one, two, or any specific combination of signatories. Presumably none
of this is actually ever checked except in the case of large amounts.

 
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Rob Graham
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      11-26-2009, 01:34 PM
Ronald Raygun wrote:
> Reentrant wrote:
>
>> There's been another round of press stories predicting the end of the
>> cheque. That will hardly affect my personal finances, but I'm also the
>> treasurer of a club which quite sensibly requires two designated
>> signatories per cheque. I suspect this is normal for many organisations

>
> "Quite sensibly"? That's a load of rubbish. Everyone knows that
> this is completely impractical


Hey, hang on! Don't dismiss this out of hand. There are plenty of
organisations that require this. You seem to be looking at it from the
standpoint of a charity or somesuch. I was the director of a company
where we had set it up (it was prudent to do so because there were
shareholders and who was going to explain to them that someone who we
had all trusted had absconded with some money? They would quite rightly
have said we were not fit for purpose).

And you go on to make a lot of dogmatic statements about how these
things should work. But not everyone wants to, or does, do it your way.


Rob Graham
 
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Ronald Raygun
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      11-26-2009, 02:46 PM
Rob Graham wrote:

> Ronald Raygun wrote:
>> Reentrant wrote:
>>
>>> There's been another round of press stories predicting the end of the
>>> cheque. That will hardly affect my personal finances, but I'm also the
>>> treasurer of a club which quite sensibly requires two designated
>>> signatories per cheque. I suspect this is normal for many organisations

>>
>> "Quite sensibly"? That's a load of rubbish. Everyone knows that
>> this is completely impractical

>
> Hey, hang on! Don't dismiss this out of hand. There are plenty of
> organisations that require this. You seem to be looking at it from the
> standpoint of a charity or somesuch.


Well, the OP provided the context of a club, and I extended it to
charities or somesuch. Although I didn't explicitly say so, I meant
it to apply to organisations which are so small, and the members so
scattered, that it is impractical for two signatories to get together
often enough to co-sign day-to-day cheques. It might increase the
hassle involved for the signatories so much that no-one would
volunteer to be one. It's often difficult enough to get folk to
agree to serve on committees at all, even without this obstacle.

> I was the director of a company
> where we had set it up (it was prudent to do so because there were
> shareholders and who was going to explain to them that someone who we
> had all trusted had absconded with some money?...)


You could explain to your shareholders that you had done a risk assessment
and found the risk that a sole signatory would abscond with a significant
sum of money to be acceptably low. You could have put in place a rule
that two signatories are only needed in the case of cheques above a
certain limit. No-one is likely to abscond untraceably, with everything
that would be involved in disappearing completely and settling elsewhere
with a new identity, unless the payoff is going to be worth it. It'd
have to be millions, given that they'd have to fund their own retirement
and say goodbye to their existing pension rights.

However, I accept that in the context of a business with enough staff that
two people whose job includes signing cheques are going to be getting
together on a daily basis anyway, then my criticism does not apply, since
it is entirely founded on the issue of practicality.

Nevertheless, dual signing is no guarantee against fraud, it is only a
little bit safer than single signing. For one thing it is possible that
two signatories could conspire to defraud (admittedly this is not very
likely, I just mention it because it's possible), but for another there
are clearly limits on how much scrutiny a co-signatory can be expected
to exercise when asked by the treasurer to "sign these four cheques
please, they're for such-and-such and here are the invoices, OK?". If
the treasurer is on the make, it's easy for him to slip in a bogus
invoice.

> And you go on to make a lot of dogmatic statements about how these
> things should work. But not everyone wants to, or does, do it your way.


More pragmatic than dogmatic I think. I wasn't saying how things
*should* work, but how they *can and do* work, in a context where
meetings between co-signatories would be inconvenient unless very
infrequent. Alternatively, I suppose it might be possible to "meet"
by post; the treasurer could write and sign some cheques, and post them
to someone else for co-signature together with a convincing explanation
of what they were for, but this still does not eliminate the possibility
of deception of the co-signatory by the treasurer.

I write from experience. I am treasurer of two small charities. One
of them has a single signature bank mandate, and in principle I could
easily steal 200k, but I couldn't afford to disappear for that. The
other has a dual signing requirement, but my whole chequebook has been
pre-signed by the chairman. The most I could steal here is less than
10k. This freedom makes my work so much easier than having to make
special arrangements to get every single cheque co-signed, that I can't
imagine working without that freedom. Were it taken away, I would find
it too much hassle and I would refuse to act as treasurer (or indeed as
co-authoriser).

 
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Reentrant
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      11-26-2009, 04:26 PM
Ronald Raygun wrote:
> Rob Graham wrote:
>
>> Ronald Raygun wrote:
>>> Reentrant wrote:
>>>
>>>> There's been another round of press stories predicting the end of the
>>>> cheque. That will hardly affect my personal finances, but I'm also the
>>>> treasurer of a club which quite sensibly requires two designated
>>>> signatories per cheque. I suspect this is normal for many organisations
>>> "Quite sensibly"? That's a load of rubbish. Everyone knows that
>>> this is completely impractical

>> Hey, hang on! Don't dismiss this out of hand. There are plenty of
>> organisations that require this. You seem to be looking at it from the
>> standpoint of a charity or somesuch.

>
> Well, the OP provided the context of a club, and I extended it to
> charities or somesuch. Although I didn't explicitly say so, I meant
> it to apply to organisations which are so small, and the members so
> scattered, that it is impractical for two signatories to get together
> often enough to co-sign day-to-day cheques. It might increase the
> hassle involved for the signatories so much that no-one would
> volunteer to be one. It's often difficult enough to get folk to
> agree to serve on committees at all, even without this obstacle.
>
>> I was the director of a company
>> where we had set it up (it was prudent to do so because there were
>> shareholders and who was going to explain to them that someone who we
>> had all trusted had absconded with some money?...)

>
> You could explain to your shareholders that you had done a risk assessment
> and found the risk that a sole signatory would abscond with a significant
> sum of money to be acceptably low. You could have put in place a rule
> that two signatories are only needed in the case of cheques above a
> certain limit. No-one is likely to abscond untraceably, with everything
> that would be involved in disappearing completely and settling elsewhere
> with a new identity, unless the payoff is going to be worth it. It'd
> have to be millions, given that they'd have to fund their own retirement
> and say goodbye to their existing pension rights.
>
> However, I accept that in the context of a business with enough staff that
> two people whose job includes signing cheques are going to be getting
> together on a daily basis anyway, then my criticism does not apply, since
> it is entirely founded on the issue of practicality.
>
> Nevertheless, dual signing is no guarantee against fraud, it is only a
> little bit safer than single signing. For one thing it is possible that
> two signatories could conspire to defraud (admittedly this is not very
> likely, I just mention it because it's possible), but for another there
> are clearly limits on how much scrutiny a co-signatory can be expected
> to exercise when asked by the treasurer to "sign these four cheques
> please, they're for such-and-such and here are the invoices, OK?". If
> the treasurer is on the make, it's easy for him to slip in a bogus
> invoice.
>
>> And you go on to make a lot of dogmatic statements about how these
>> things should work. But not everyone wants to, or does, do it your way.

>
> More pragmatic than dogmatic I think. I wasn't saying how things
> *should* work, but how they *can and do* work, in a context where
> meetings between co-signatories would be inconvenient unless very
> infrequent. Alternatively, I suppose it might be possible to "meet"
> by post; the treasurer could write and sign some cheques, and post them
> to someone else for co-signature together with a convincing explanation
> of what they were for, but this still does not eliminate the possibility
> of deception of the co-signatory by the treasurer.
>
> I write from experience. I am treasurer of two small charities. One
> of them has a single signature bank mandate, and in principle I could
> easily steal 200k, but I couldn't afford to disappear for that. The
> other has a dual signing requirement, but my whole chequebook has been
> pre-signed by the chairman. The most I could steal here is less than
> 10k. This freedom makes my work so much easier than having to make
> special arrangements to get every single cheque co-signed, that I can't
> imagine working without that freedom. Were it taken away, I would find
> it too much hassle and I would refuse to act as treasurer (or indeed as
> co-authoriser).
>

In our case the fact that I don't get pre-signed cheques (well,
sometimes the amount is left blank but the payee is always filled in)
means the club are happy not to have the accounts formally audited,
which makes my life a lot easier.

I agree needing two signatories is far from convenient, but it "feels
right" when dealing with money that's not mine. That's important for
volunteers (honest ones, anyway).

--
Reentrant
 
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Rob Graham
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      11-26-2009, 04:57 PM
Ronald Raygun wrote:
> Rob Graham wrote:
>
>> Ronald Raygun wrote:
>>> Reentrant wrote:
>>>
>>>> There's been another round of press stories predicting the end of the
>>>> cheque. That will hardly affect my personal finances, but I'm also the
>>>> treasurer of a club which quite sensibly requires two designated
>>>> signatories per cheque. I suspect this is normal for many organisations
>>> "Quite sensibly"? That's a load of rubbish. Everyone knows that
>>> this is completely impractical

>> Hey, hang on! Don't dismiss this out of hand. There are plenty of
>> organisations that require this. You seem to be looking at it from the
>> standpoint of a charity or somesuch.

>
> Well, the OP provided the context of a club, and I extended it to
> charities or somesuch. Although I didn't explicitly say so, I meant
> it to apply to organisations which are so small, and the members so
> scattered, that it is impractical for two signatories to get together
> often enough to co-sign day-to-day cheques. It might increase the
> hassle involved for the signatories so much that no-one would
> volunteer to be one. It's often difficult enough to get folk to
> agree to serve on committees at all, even without this obstacle.
>
>> I was the director of a company
>> where we had set it up (it was prudent to do so because there were
>> shareholders and who was going to explain to them that someone who we
>> had all trusted had absconded with some money?...)

>
> You could explain to your shareholders that you had done a risk assessment
> and found the risk that a sole signatory would abscond with a significant
> sum of money to be acceptably low. You could have put in place a rule
> that two signatories are only needed in the case of cheques above a
> certain limit. No-one is likely to abscond untraceably, with everything
> that would be involved in disappearing completely and settling elsewhere
> with a new identity, unless the payoff is going to be worth it. It'd
> have to be millions, given that they'd have to fund their own retirement
> and say goodbye to their existing pension rights.
>
> However, I accept that in the context of a business with enough staff that
> two people whose job includes signing cheques are going to be getting
> together on a daily basis anyway, then my criticism does not apply, since
> it is entirely founded on the issue of practicality.
>
> Nevertheless, dual signing is no guarantee against fraud, it is only a
> little bit safer than single signing. For one thing it is possible that
> two signatories could conspire to defraud (admittedly this is not very
> likely, I just mention it because it's possible), but for another there
> are clearly limits on how much scrutiny a co-signatory can be expected
> to exercise when asked by the treasurer to "sign these four cheques
> please, they're for such-and-such and here are the invoices, OK?". If
> the treasurer is on the make, it's easy for him to slip in a bogus
> invoice.
>
>> And you go on to make a lot of dogmatic statements about how these
>> things should work. But not everyone wants to, or does, do it your way.

>
> More pragmatic than dogmatic I think. I wasn't saying how things
> *should* work, but how they *can and do* work, in a context where
> meetings between co-signatories would be inconvenient unless very
> infrequent. Alternatively, I suppose it might be possible to "meet"
> by post; the treasurer could write and sign some cheques, and post them
> to someone else for co-signature together with a convincing explanation
> of what they were for, but this still does not eliminate the possibility
> of deception of the co-signatory by the treasurer.
>
> I write from experience. I am treasurer of two small charities. One
> of them has a single signature bank mandate, and in principle I could
> easily steal 200k, but I couldn't afford to disappear for that. The
> other has a dual signing requirement, but my whole chequebook has been
> pre-signed by the chairman. The most I could steal here is less than
> 10k. This freedom makes my work so much easier than having to make
> special arrangements to get every single cheque co-signed, that I can't
> imagine working without that freedom. Were it taken away, I would find
> it too much hassle and I would refuse to act as treasurer (or indeed as
> co-authoriser).
>


OK Ron, I'll let you off this time.

Rob.
 
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Ronald Raygun
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      11-26-2009, 05:25 PM
Reentrant wrote:

> In our case the fact that I don't get pre-signed cheques (well,
> sometimes the amount is left blank but the payee is always filled in)
> means the club are happy not to have the accounts formally audited,
> which makes my life a lot easier.


What do you mean by "formally audited"? You do have to prepare annual
account summaries for your club's AGM, I take it. Do you not have to
have these even informally checked by someone?

Even honest people can make mistakes, and getting someone to check
the accounts, even if not by means of a "formal audit", is always a
good idea, especially when you've made a mistake, the books don't
balance, and you can't figure out why. Often the checker can help
you find where the mistake is.

> I agree needing two signatories is far from convenient, but it "feels
> right" when dealing with money that's not mine. That's important for
> volunteers (honest ones, anyway).


I respect your opinion but I disagree with it. To me it would not feel
right to work under a requirement which not only implicitly casts doubt
on my honesty, but which also makes the job more inconvenient than it
needs to be, for what little safeguard it offers. I suggest this
safeguard is so weak that it's next to useless. If I really wanted to
embezzle funds, I'm sure I could do so even with a dual signing arrangement
in place. I would either work out how to fool the other signatory, or I
would intercept money on the way in to the bank rather than on the way out.

 
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Ronald Raygun
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      11-26-2009, 05:31 PM
Rob Graham wrote:

> OK Ron, I'll let you off this time.


Gosh, you were easier to convince than I thought. Make a note
to yourself never to volunteer to be co-signatory of a club! :-)

 
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Robin Graham
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      11-26-2009, 06:04 PM
Ronald Raygun wrote:
> Rob Graham wrote:
>
>> OK Ron, I'll let you off this time.

>
> Gosh, you were easier to convince than I thought. Make a note
> to yourself never to volunteer to be co-signatory of a club! :-)
>


Ah no. You misunderstand me. I wouldn't follow your precepts, but I'll
allow that you have a point in some circumstances.
 
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