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Clerk of Court Manual

CHAPTER 2

Financial Operations

2.0 Introduction

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.

2.1 Internal Control

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.

2.2 Organization

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.

Tasks:

2.3 Accountability for Supplies and Equipment

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.

Tasks:

Identification information (for example, ID tag number, serial number)
Location
Custodian
Acquisition information (for example, date of purchase, cost, vendor, purchase order or check number)

2.4 Accounting - in General

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.

Tasks:

2.5 Cash

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 ยง 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.

2.5.1 Bank Accounts

Tasks:

If any legal restrictions require separate accounts;
Effects of multiple office locations;
Types and volume of transactions processed.

Verification of check number sequence.
Examination of paid check signatures and endorsements for any unusual items.

2.5.2 Cash Receipts

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.

Tasks:

All receipts should include:

Date
Payor
Amount Paid
Method of Payment (cash, check, money order)
Type of Payment (fine, fee, bond, etc.)
Case number

Date Received
Payor
Amount Received
Method of Payment
Type of Payment

2.5.3 Cash Disbursements

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.

 Tasks: