Does your agency deposit a large number of remittances in the form of personal and business checks or money 

orders? Do you take your deposits to a local financial institution with Treasury Government Account (TGA) 

status, or do you mail them to the local Federal Reserve Bank? Each of those methods has its risks and may 

delay credit to your account.

The Financial Management Service (FMS) has a product that will simplify and accelerate the deposit process 

and credit to your accounts. It is called Paper Check Conversion Over the Counter (PCC OTC). In fact, the 

Philadelphia Financial Center (PFC) was so impressed by the product that we implemented the system.

PFC will be using PCC to process the miscellaneous checks it receives and deposits on behalf of other Federal 

agencies. While PFC previously deposited these checks at a TGA bank, PCC will allow PFC to scan and 

deposit these checks without leaving the center. PCC will not only improve the efficiency of PFC’s check 

deposit process, but also provide an automated audit trail for improved controls. PFC began using PCC on 

February 23, 2007. 

What is Paper Check Conversion Over the Counter ?

PCC OTC is the process of converting paper checks (and money orders) presented to agencies into electronic 

ACH debits or electronic check debits through Check 21 to the check writer’s account. The process works as a 

Point of Sale (POS) when the consumer presents a physical check to the cashier for payment, or as an 

Accounts Receivable when the check is received through the mail as payment and the writer of the check is not 

present. The agency cashier takes the completed check and inserts it into the Point of Sale scanner that reads 

the MICR (Magnetic Ink Character Recognition) line on the bottom of the check and captures the image of the 

check into the POS computer. The check image captured from the MICR line and other input data is 

transmitted to the Federal Reserve Bank of Cleveland (FRBC) through a secure, web-based system called 

ELVIS (ELectronic Verification and Image Service). FRBC settles the transaction through the ACH network, 

makes CA$HLINK entries, and provides electronic deposit ticket and/or debit voucher (returns) (SF215 and 

SF5515) reporting back to the collection site.

When processing as a POS (check writer is present), the cashier returns the 

cancelled check to the consumer on the spot with the transaction information. 

When processing as an accounts receivable (mailed item), the agency retains the 

check (or money order), and is required to destroy the check in 15 days after 

receipt of settlement.

Prior to participating in the PCC OTC program, Agencies must submit an Agency 

Participation Agreement (APA) and an Agency Site Profile (ASP). 

Paper Check Conversion Over the Counter

Financial Management Service

April 2007 Philadelphia Financial Center

PFC Journal

Inside this issue:

GWA Modernization Project 3

Payment Format Changes 4

Automated Check Inventory 5

Secure Email Attachments 6

$1 Million in Presort Savings 6
Paper Check Conversion Over the Counter (Continued)

What is Check 21?

Check 21, also known as ‘Check Clearing for the 21st Century’ Act, was signed into law on October 28, 2003. 

Provisions of the law took effect on October 28, 2004. It is important to understand the effects of Check 21 on 

PCC OTC. Check 21 provides the legal framework for the creation of substitute checks, which can be used in 

place of the original paper document, without an agreement in place with other financial institutions. A 

substitute check is a paper reproduction of the original check. To meet legal requirements it must:

• Contain an image of the front and back of the original check.

• Bear a legend that states, “This is a legal copy of your check. You can use it the same way you 

would use the original check.”

• Display a MICR line containing all information appearing on the MICR line of the original check.

• Conform in paper stock, dimension, and otherwise, with generally applicable industry standards for 

substitute checks.

• Be suitable for automated processing in the same manner as the original check.

Check 21 provides one seamless deposit and reporting stream. Check 21 has brought the following changes:

• Eliminate TGA accounts and expenses.

• Consolidated image archive, reporting, verification, settlement, customer service and representment for every agency point-of-presence worldwide, including lockboxes.

• Better accounting, security, privacy and management controls.

Overall, this legislation has modernized the nation’s check payments system. Check 21 is designed to foster 

innovation in the payments system and to enhance its efficiency by reducing some of the legal impediments to 

check truncation. ALL payment instruments are eligible for processing under PCC OTC, including Money 

Orders, Treasury Checks, Credit Card Checks, Traveler’s Checks, Cashier’s Checks, Official Checks, ThirdParty Checks, Payroll Checks and Checks drawn by state or local government.

Check 21 requires financial institutions to accept a substitute check from a presenting institute and grant it 

equivalent status as the original check, if the substitute check meets prescribed requirements. It also requires a 

reconverting bank to meet the warranties and indemnities enacted through the legislation and subsequent 

regulations. Check 21 requires financial institutions to provide education to individual consumers on 

substitute checks and consumer re-credit rights. For more information on Check 21, visit 

www.frbservices.org/Retail/Check21.html

Learn More About PCC OTC

The PCC OTC website has information that can be used to find answers to your questions about using PCC 

OTC. It is updated often with new information on upcoming changes, FAQ’s, news, etc. It can also be used to 

download the latest bulletins and newsletters. You can access the site at https://www.pccotc.gov/pccotc/

index.htm.

Additional information about these documents can also be obtained by contacting the PFC Customer 

Assistance Staff at (215) 516-8022.

Page 2

April 2007
Government-wide Accounting (GWA) provides the central financial accounting and reporting infrastructure for 

Federal payments, claims, collections, central accounts, and other financial transactions. This infrastructure results 

in the accumulation of government-wide financial information and the publication and release of various Treasury 

financial reports. The Financial Management Service (FMS) is the agency responsible for administering this 

accounting and reporting infrastructure and the creation of financial reports for the US Government.

The current accounting process has become inefficient, outdated, and untimely. Under the current process, Federal 

agencies must re-classify most of their transactions at the end of the month by Treasury Account Symbol (TAS). 

The TAS is an account symbol or title assigned by Treasury to each transaction based upon whether it is a receipt, 

appropriation, expenditure, or fund account. The current accounting process also includes a time-consuming 

reconciliation for agencies and FMS to ensure all transactions are reported and classified correctly. Consequently, 

it is difficult for agencies to close their books in a timely fashion.

The Government-wide Accounting Modernization Project (GWAMP) will change and streamline the central 

accounting, reporting, and reconciliation process for Federal agencies and FMS. Under GWAMP, agencies will 

classify transactions to the proper TAS when transactions are actually initiated. Additionally, agencies will classify 

their transactions by a new data element, the Business Event Type Code (BETC), when the transactions occur. The 

BETC identifies the type of transaction and the accounting effect on the fund balance with Treasury.

This new reporting process will have substantial benefits for agencies, as it will eliminate the multiple and 

duplicative reporting and reconciliations performed by agencies on a monthly and annual basis. Specifically, this 

reporting process allows FMS to provide agencies with an account statement. The account statement will provide 

agencies with online, near real-time access to their beginning fund balance, receipts and disbursements by 

transaction date, and the ending fund balance. Agencies will also be able to use the account statement to drill down 

to the transaction level for more detailed information on payment and collection activities. When implemented 

fully, the account statement will enable agencies to reconcile their fund balance with Treasury accounts on a daily 

basis, close their books earlier to meet accelerated reporting deadlines, and eliminate the need for monthly 

reporting.

In order to realize the full benefits of the account statement, agencies must begin classifying transactions to the 

TAS and BETC when transactions occur. The rollout of transaction reporting has already begun, with several 

agencies participating in a pilot where they are reporting their own and their agency trading partners’ TAS/BETC 

for Intragovernmental Payments and Collections (IPAC) transactions. FMS is looking for all agencies to provide 

valid TAS/BETCs with all IPAC transactions by the first quarter of 2008.

FMS is also working to ensure that agency payments and collections include valid TAS/BETCs by 2008. 

Modifications will be made to the Secure Payment System (SPS) and incorporated into the Payment Application 

Modernization (PAM) project over the next year to allow agencies to include TAS/BETCs in their payment files. 

Additionally, FMS developed the Shared Accounting Module (SAM) to assist agencies with the classification of 

transactions by TAS/BETC. Specifically, SAM is a utility that allows agencies to select and/or verify the 

appropriate TAS/BETC for each transaction.

For more information on GWAMP, please visit the GWA website at www.fms.treas.gov/gwa. For more 

information on SAM, please visit the SAM website at www.fms.treas.gov/sam.

Government-wide Accounting Modernization Project to 

Improve and Streamline Agency Reporting and Reconciliation

Page 3

April 2007
Page 4

April 2007

The Treasury Offset Program (TOP) was established by the Department of Treasury’s Financial Management 

Service (FMS) to collect Federal debt from delinquent debtors. TOP is a computer matching program that 

uses a taxpayer identification number (TIN), which can either be an Employer Identification Number (EIN) or 

a Social Security Number (SSN), to compare the TINs of delinquent debtors with the names and TINs of 

recipients of Federal payments. If a match is found between the TIN and other payment data (such as the 

payee name), the Federal payment is reduced to satisfy the delinquent debt owed to the Federal Government.

Federal agencies use Electronic Data Interchange (EDI) payment formats to pass payment related data to 

vendors, such as an invoice number or Prompt Payment interest. Vendors use this information to reconcile 

Federal payments to outstanding invoices. These EDI formats include Cash Concentration or Disbursement 

(CCD+), Corporate Trade Exchange (CTX), or Prearranged Payment and Deposit Plus Addenda (PPD+) 

payments. The CCD+ format includes an addendum record where Federal agencies can include information 

that vendors can use to reconcile a specific payment to an outstanding invoice. CTX is a corporate ACH 

format which allows for up to 9,999 addenda records with approximately 800,000 characters. Consequently, 

the CTX format can be used by Federal agencies that owe multiple payments to one vendor. PPD+ is a format 

used to convey additional information for consumer EFT payments, such as reimbursements for travel 

payments. Pursuant to 31 CFR 285.5, agencies must identify and certify payments as either legally eligible or 

legally ineligible for offset. In the past, agencies using CCD+, CTX, or PPD+ as their payment format were 

unable to identify payments eligible for offset because of operational impediments.

However, EDI payment formats have recently been changed to allow agencies to correctly classify these 

payments as vendor or miscellaneous and therefore indicate if the payments are legally eligible or ineligible 

for offset. As a result, all agencies must ensure that EDI payments are classified correctly using the Federal 

Agency Guidance for Classifying Payments. These guidelines are available at the FMS website which is 

www.fms.treas.gov/eft/regulations/FPAPaymentClassificationGuidance.pdf.

Agencies are required to make applicable programming changes and complete testing of these changes with 

their servicing RFC by November 1, 2007 to provide for the offset of eligible EDI payments. FMS will begin 

offsetting EDI payments on December 1, 2007. FMS will monitor agency compliance with this requirement 

and provide assistance to agencies not in compliance or that request such assistance. If you need information 

about payment file formats for all EDI payment types, they are available on the FMS website at 

www.fms.treas.gov/ctx/formats.html.

Changes to Payment Formats to Expand Offset Capabilities
Page 5

April 2007

The Financial Management Service (FMS), a bureau of the Department of Treasury, is responsible for printing 

checks for the US government. In fiscal year 2006, the Philadelphia Financial Center (PFC) disbursed over 92 

million checks. 

In order to produce negotiable checks, PFC and the other regional centers receive rolls of blank checks called 

web-stock on which check data is printed. The regional centers safeguard and keep account of each paper 

check from receipt of the stock until each check is used or destroyed. This is done to safeguard the checks and 

ensure that they do not fall into the hands of unauthorized users. Each check received by a regional center is 

marked with an internal control number (ICN) that help the center track and control the stock. 

In addition to printed checks released in the mail stream, there are three unique conditions in which check 

stock must be carefully accounted for: 

• VOIDS: Blank check paper that does not have data printed on it for a variety of reasons, such as 

web-stock that is identified with flaws or excess stock after a print job is completed. 

• Post Print Verification (PPV) Spoils: Checks that cannot be recognized by Videk, an advanced 

system used to read and verify the print data on each check. 

• NON-PPV Spoils: Checks that are mutilated during the printing or enclosing operations 

Before the check inventory system was automated, PFC employees recorded and tracked its web-stock ICNs 

manually on paper forms in order to account for VOIDs, PPV and Non-PPV spoils, and to record the 

completion of the printing process for each web-stock. This paper-intensive process was time-consuming and 

did not provide an efficient solution for the reconciliation, research, and statistical analysis of web-stock 

consumption and the printing process. 

In order to address these concerns, PFC developed and implemented the Automated Check Inventory (ACI) 

system in 2004. The ACI system is an efficient alternative to the paper process by providing for accurate and 

automated record keeping of web-stock. Instead of writing web-stock ICN information on paper sheets, 

operators can enter the data directly into the ACI system as checks proceed through different stages of the 

regional center payment process. 

Once data is entered into the system, ACI has the functionality to automatically reconcile print jobs, identify 

operator input errors, provide for an automated audit trail of each web-stock, and produce reports for 

management on current web-stock inventory, web-stock consumption and destruction, and statistics on printed 

checks and voids, PPV and non-PPV spoils. These reports are currently being used by PFC to identify issues 

in the quality of web-stock it receives, operator production levels, and operational impediments associated 

with its check print systems. The ACI system is windows-based and convenient for various center employees 

to use; many of whom have different roles and responsibilities on the application. Most ACI fields utilize drop 

down menus to minimize data entry and prevent users from committing errors. 

If you have any questions about the ACI system, please contact Michael Dean at 215-516-8063 or 

Michael.Dean@fms.treas.gov.

Opening the Doors to Change: Automated Check Inventory
P.O. Box 51317

Philadelphia, PA 19115-6317

Phone: 215-516-8000

Fax: 215-516-8010

Email: philly@fms.treas.gov

The Philadelphia Financial Center Newsletter entitled PFC Journal is presented by the Customer

Assistance Staff and addresses a variety of topics of interest to individuals in the Federal financial

community.

The PFC Journal is available exclusively on our website.

http://www.fms.treas.gov/pfc

New Software Product to Provide for Secure E-Mail

Financial Management Service

The Philadelphia Financial Center (PFC) is responsible for disbursing payments for over 90 Federal agencies. In 

certain circumstances, PFC must exchange sensitive-but-unclassified (SBU) information with its customer agencies to 

carry out its disbursing functions. SBU refers to information that, if obtained by unauthorized users, could be used to 

adversely impact individuals or businesses. Examples of SBU information include social security numbers and bank 

account numbers. Since external e-mail to other systems is not secure, this is not an acceptable medium to exchange 

SBU information with our customer agencies.

Over the fall of 2006, PFC evaluated e-mail encryption software named Entrust and determined it was a suitable tool to 

allow for the secure exchange of information via e-mail with its customer agencies. The particular Entrust software 

product that PFC evaluated provides for the encryption of e-mail attachments. The software must be utilized by both 

the sender and receiver of the e-mail to open the attachment effectively. The software can be downloaded from the 

Internet for free.

PFC realizes the efficiency and convenience associated with sharing information by e-mail, and therefore wants to 

offer the capability to its customer agencies to allow for the encryption of e-mail attachments. In order to comply with 

agency security policies, PFC will not send e-mail attachments with SBU data to agencies that do not utilize this 

Entrust software.

If your agency is interested in using Entrust in order to correspond with PFC electronically, please contact Matthew 

Helfrich at (215) 516-8022 or Matthew.Helfrich@fms.treas.gov.

PFC Reaches $1 Million in Daily Presort Savings

On March 8, 2007, the Philadelphia Financial Center (PFC) achieved a significant milestone by reaching the $1 million 

plateau in daily presort savings using its Pitney Bowes Olympus II Sorter. PFC, as well as the regional centers in Austin 

and Kansas City, purchased the Olympus II Sorter in December 2004 to presort its daily checks and letters to obtain 

significant postage savings from the Post Office. PFC began using the Olympus II to presort its daily mail in April 2005, 

with the other centers implementing the equipment shortly thereafter. Even after considering the costs associated with 

purchasing the equipment, monthly service, and labor, PFC has still netted over $130,000 in postage savings since 

project inception.

The incorporation of presort equipment into daily operations at PFC has been a challenging undertaking. However, PFC 

employees and employees from various regional centers and divisional areas exhibited teamwork, vigilance, and 

creativity to implement a new business line that will provide for significant taxpayer savings and improved check 

payment controls for years to come. Congratulations to all those who contributed to this significant achievement.