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Special thanks to @James Kallergis, AAP, Manager, Audit Services for helping me write this blog!

The accuracy of ACH Company Entry Descriptions is integral to ensuring that transactions are processed efficiently and securely. This article will explore the importance of the accuracy of the field using “RETRY PYMT” as an example of its relationship to audit trails. The Role of Entry Descriptions Entry Descriptions are crucial fields within the Entry Detail Record (Type 6). They provide a brief description of the transaction, helping to identify the purpose of the payment. This field is essential for several reasons: Clarity: It helps the recipient understand the nature of the transaction. Compliance: It ensures that the transaction complies with regulatory requirements. Audit Trails: It provides a clear record of the transaction, which is vital for auditing purposes.

There are two main reasons it is still important for ODFIs and their Originators to ensure “RETRY PYMT” is in the Company Entry Description field:

1. Audit Trails: Including "RETRY PYMT" in the Company Entry Description helps create a clear audit trail. It allows for the tracking of reinitiated Entries and provides evidence that the Entry was previously returned and is being resubmitted, which is essential for resolving disputes and ensuring compliance with ACH Rules.
2. Preventing Multiple NSF Fees: Charging multiple NSF (Non-Sufficient Funds) fees for the same transaction is generally considered unfair and deceptive under the Federal Trade Commission (FTC) Act and the Consumer Financial Protection Act (CFPA). Using the Company Entry Description of “RETRY PYMT” creates an audit trail for the Entry and helps prevent the potential multiple NSF fees, which could lead to major fines. Also refer to FDIC’s Supervisory Guidance on Multiple Re-Presentment NSF Fees: https://www.fdic.gov/news/financial-institution-letters/2022/fil22040a.pdf

While discussing this with the financial institutions during an audit, the question comes up of how the financial institution can verify or track reinitiated Entries. While it can be difficult, here are a few tips:

1. Set Clear Guidelines: Provide clear guidelines and instructions to Originators on the necessity of including "RETRY PYMT" in the Company Entry Description field for reinitiated Entries. This should be part of the initial setup and training process.
2. System Modifications: Ensure that Originators modify their systems to automatically include "RETRY PYMT" in the Company Entry Description field for reinitiated Entries if possible. This may involve updating software or programming rules to enforce this requirement.
3. Education and Training: Educate Originators on the importance of using "RETRY PYMT" for reinitiated Entries, including its role in preventing improper bank fees and facilitating dispute resolution.
4. Documentation: Ensure that all relevant documentation, including user manuals and operational guides, clearly states the requirement for "RETRY PYMT" in reinitiated Entries.

By following these steps, Originators can be effectively guided to use "RETRY PYMT" for Entry Descriptions in reinitiated Entries, ensuring compliance and reducing the risk of improper bank fees and disputes.

In summary, when ACH Rules have specific requirements, accurate and compliant Company Entry Descriptions are essential for maintaining the integrity and security of financial transactions in the ACH network. Including specific descriptions, such as "RETRY PYMT" for reinitiated Entries, is crucial in creating reliable audit trails. These trails are vital for tracking transactions, detecting errors and ensuring compliance with regulatory standards.