RESPONSIBLE CITY AGENCY: FINANCE DEPARTMENT
1.
To maintain compliance with General Accepted Accounting Principles (GAAP), all
third party escrows shall be setup only thru or by Salt Lake City Corporation’s
Department of Finance as these funds are an asset owned by Salt Lake City
Corporation. For purposes of this policy, an escrow is:
i. An arrangement made under contractual provisions between transacting parties, whereby an independent third party receives and disburses money or documents for the transacting parties, with the timing of such disbursements by the third party dependent on the fulfillment of contractually-agreed conditions by the transacting parties, or
ii. A trust account held in the borrower’s name to pay obligations such as property taxes and insurance premiums.
2.
Escrow funds held by a third party are an asset that must be shown on the
City’s financial records. Proper accounting for these escrows requires
advance notification and permission from a designated member of the Salt Lake
City Finance Department.
3. If the escrow is approved by the Finance Department, the Treasurer’s Office will communicate with the City Controller’s office so that the new account can be set up in the City’s General Ledger.
a.
The escrow with the necessary accounting information will be set up in the
Treasurer’s Office investment system to facilitate automated tracking of
the escrow and any resulting activity, except when the escrow account is
establish for the purpose of refunding outstanding City bonds
b. A copy of the escrow agreement must be kept on file in the Treasurer’s Office.
4. Whether in an interest bearing account or not; regular statements, preferably monthly statements, of the account will be sent directly from the holder of the escrow, usually a financial institution, to the Salt Lake City Treasurer’s Office so that changes in the escrow balance can be properly recorded by the City in a timely manner.These changes will include any disbursements from the account, bank adjustments, interest and fees charged to the account.
5. All fees paid on any third party escrow account will not be paid by Salt Lake City Corporation unless otherwise designated by contract and these fees will not be netted against any interest accumulating in the account. These fees are the responsibility of the contracting agency/individual or the City will be reimbursed by the contracting agency/individual for these charges.
6. Within 60 days of the completion of the project or in meeting the terms of the contract that created the third party escrow, the escrow will be liquidated and any funds due to the City will be paid in full to the Salt Lake City Treasurer’s office.
7. Failure to comply with this policy can result in disciplinary action that may include unpaid leave or termination, depending on the severity of the resulting misstatement in the financial records of Salt Lake City Corporation.
CURRENT REFERENCES: NONE
EFFECTIVE DATE: (Date signed by Mayor): November 4, 2013