Top 10 ACH Audit Findings: Improve Your Nacha Compliance | ACH Consulting

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Top 10 ACH Audit Findings and How to Address Them

Friday, June 28, 2024

Top 10 ACH Audit Findings and How to Address Them

As ACH Network participants, it's crucial to stay compliant with Nacha Operating Rules. NEACH Payments Group has analyzed our second quarter 2024 audit findings and identified the top 10 areas where organizations often fall short. Here's what you need to know and how to improve:

  1. Annual ACH Compliance Audits

Finding: Many organizations fail to conduct annual ACH compliance audits or retain records for the required 6-year period.

Recommendation: Schedule your annual audit well before the December 31st deadline. Implement a system to securely store audit reports for at least 6 years.

  1. Periodic Risk Assessments

Finding: Organizations frequently neglect to conduct regular ACH risk assessments or implement comprehensive risk management programs.

Recommendation: Conduct ACH risk assessments at least every 18 months. Develop and maintain a risk management program based on your findings.

  1. Security Policies and Procedures

Finding: Lack of formal written security policies for protecting ACH information is common.

Recommendation: Develop and implement detailed security policies that cover the processing, storage, and transmission of ACH data. Regularly review and update these policies.

  1. Origination Agreements

Finding: Many agreements lack required Nacha language or are not properly executed.

Recommendation: Review all origination agreements to ensure they include all required Nacha clauses. Implement a process to obtain and retain signed agreements.

  1. Training and Education

Finding: Insufficient ACH training for staff and originators is a frequent issue.

Recommendation: Establish a formal ACH training program for employees. Develop a process to keep originators informed about Nacha rule changes.

  1. Authorization and Notice Requirements

Finding: Problems with obtaining proper authorizations and providing required notices such as UCC4A are common.

Recommendation: Review your authorization processes for all entry types. Ensure all required notices are provided to receivers in a timely manner.

  1. Exposure Limits

Finding: Many organizations fail to establish appropriate exposure limits for originators.

Recommendation: Implement a process to set and regularly review exposure limits based on each originator's risk profile and transaction volume.

  1. Return Handling

Finding: Issues with timely processing of returns, dishonored returns, and notifications of change are frequent.

Recommendation: Establish clear procedures for handling all types of returns within required timeframes. Regularly train staff on these procedures.

  1. Record Retention

Finding: Organizations often fail to retain required records for mandated periods.

Recommendation: Implement a robust record retention system that ensures all required documents (e.g., authorizations, WSUDs) are kept for at least two years from the termination or revocation of the authorization.

  1. Third-Party Sender Obligations

Finding: Many third-party senders fail to properly oversee relationships with originators and nested third-party senders.

Recommendation: Develop comprehensive policies for managing originator and nested third-party sender relationships. Regularly audit these relationships for compliance.

Staying compliant with ACH rules is an ongoing process. By addressing these common audit findings, you can significantly improve your ACH compliance posture. Remember, it's not just about passing audits – good compliance practices protect your organization, your account holders, clients, and the integrity of the ACH Network.

Need help implementing these recommendations or want a thorough review of your ACH compliance? Contact our team of experts today!

 

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