Extension Finance Office
2280 Beardshear Hall, ISU
Ames, IA 50011-2026
Phone: (563) 599-1876
FAX: (515) 294-9781
Date: July 1, 2004
To: Local Depositories for Ag Extension District Funds
From: Cal Johannes, County Accounting Project
RE: Requirement for front and back images of cancelled checks
We have consulted with Andy Nielsen, the Deputy Auditor of State in charge of the Financial Audit
Division in Des Moines, about the situation created by the Check Clearing for the 21st Century Act
(Check 21) where banks return only images of cancelled checks to account holders. He said, "My
recommendation is for the Extension Districts to require the banks to furnish images of the front and
back of each check.."
Under Iowa law, districts are to have on file in their office both the front and back of their cancelled
checks. Andy Nielson indicated that state auditors have been asked to write up any governmental unit
that only has the front side of the check on file.
The reason for this is that one of the "controls" that should be done when the account is reconciled is
that of comparing the payee to the endorsement on the back of checks. This can't be done if the unit
only receives an image of the front of the check.
The finding is based on the Iowa Code, Chapter 554D, which states:
”Section 554D.114 Retention of electronic records – originals
5. If a law requires retention of a check, that requirement is satisfied by retention of an
electronic record of the information on the front and back of the check .....”
Based on this, as government sub-divisions, Extension Districts are required by State law to provide
the State auditors the front and back of cancelled checks.
Andrew E Nielsen, CPA
Deputy Auditor of State
Iowa Auditor of State
State Capital Building
Des Moines, Iowa 50319
Web site: www.state.ia.us/government/auditor/index.html
Extension programs are available to all without regard to race, color, national origin, religion, sex, or disability.