Multiple signatories and end of the cheque

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.

"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.

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.

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.

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

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.

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.

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).

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

Rob.

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 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.

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.

I don't know if this is still available, but about 8 years ago I worked for a partnership that had a business account with Barclays. Barclays installed some software on a couple of PCs (they sent a guy round for an afternoon), and the effect was that one person had to log into one of the PCs and set up the payments on the online account, and the second person had to log into the second PC and authorise the payments.

At the time it struck me as pretty labour intensive for Barclays to be sending people round to install software on their customers' PCs, and I seem to remember it was some sort of trial. The partnership was pretty small - two partners, and about thirty employees - but presumably made enough payments for Barclays to bother with the personal touch.

(Whole system was completely useless, because one of the partners kept announcing that he 'trusted me' and giving me his logins and asking me to log in to the second PC as him and authorise the payments I had set up. We had a merry-go-round where I kept refusing and making him change his passwords - which he promptly forgot - but I eventually managed to persuade the other partner to do the authorising. I had no intention whatsoever of stealing from them, but rather like the OP I'm uncomfortable about having unfettered access to other people's money).

The OP might want to approach the charity's current bankers, and ask them whether they have such a system.

But suggesting that checks cast doubt on their honesty is exactly the sort of social engineering that a socioopathic fraudster would use.

Also changes made for convenience are exactly what causes anti-fraud/fire safety/security measures to be compromised.

Going round to a retired accountant's house with a years worth of paperwork, drinking weak tea, being pestered by his bloody cats, and eventually getting his sign-off on a piece of paper.

But that's not the main issue. All I was really pointing out is that with cheques, the banks offer a both-to-sign option (which is sort-of justified in

and I'm interested to know how or if this will be implemented in online banking after cheques disappear.

Well, get the paperwork all up to scratch in a nice lever arch file, take it round to him, but explain that you're allergic to cats so you can't come in, and leave the stuff with him to get on with it. Tell him to phone you if he has any queries. If you've done your job properly there won't be any. If there are, invite him round, serve him strong tea, and let him be pestered by your dogs.

Or consider getting them "informally" audited. Basically the same procedure but with the person in question not necessarily being a qualified accountant.

Frankly, I'm aghast at the very thought that the membership or committee would accept dual signing as an alternative to at least an informal audit.

Understood.

Well, OK, I'll concede that.

True, but I suggest that's how it should be. The job of such measures is to reduce risk, not eliminate it. I suggest that where such measures get seriously in the way of life, then they've gone too far. The rule that prevention is better than cure is only true while the cost of prevention is reasonable.

As far as I know, countries which have discontinued national cheque clearing still have some sort of paper based giro transfer system as described by Ronald Raygun.

The UK has never really embraced giro transfers. There was National Girobank, now taken over by Alliance and Leicester. There are also bank giro credit slips, but the payer has either to pay in cash, or to write a cheque to accompany the bank giro credit slip.

Since January 1st 1998 banks only accept bank giro credits pre-printed with the account details of the payee for inter-bank transfers. Gone from the counter are the blank giro credit forms that could be filled in by hand. One or two banks such as HSBC still accept bank giro credit slips with the payee's details written in manuscript, but only for payment into HSBC/First Direct accounts.

Personally, I think it unlikely that the banker's clearing house will introduce a new form of paper based clearing for continental style giro transfers, and I would expect bank giro credit clearing to disappear at the same time as cheque clearing.

Yes, I am worried about the lack of alternatives. My mother is in a nursing home and organises her finances by post. She has no internet access, is too hard of hearing to use telephone banking, and cannot easily travel to a bank branch.

Maybe some banks will continue to offer cheques, but set up reciprocal agreements with other banks rather than using a centralised clearing system as now. That was what the building societies used to do when they were not members of the banker's clearing house, and what is done in the USA by smaller banks.

Regards,

MJA