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Auditing ACH transactions is an essential part of ensuring compliance and maintaining the integrity of your organization's payments. It can often feel overwhelming, but fear not! EPCOR’s expert team is here to transform that chaos into a streamlined process. Below are the top ten common ACH audit findings with practical solutions to tackle them.

1. Annual ACH Compliance Audits: Neglecting to complete your annual ACH Compliance Audit could put your organization at risk of non-compliance with the ACH Rules.

• Solution: Schedule your annual ACH Compliance Audit ahead of the December 31^st deadline as required by Subsection 1.2.2.1, General Audit Requirements. Ensure that audit reports are securely stored for at least six years, as required by Subsection 1.2.2.2, Proof of Completion of Audit.

2. Periodic Risk Assessments: Skipping regular ACH Risk Assessments could leave your organization unaware of potential emerging risks.

• Solution: Perform an ACH Risk Assessment periodically to identify and mitigate potential risks, in accordance with Subsection 1.2.4, Risk Assessments.  We recommend you complete a risk assessment every 12-18 months. Develop a comprehensive risk management program that addresses the risks of your ACH activities, such as operational, credit and fraud risks, to ensure ongoing compliance.

3. Security Policies and Procedures: Outdated or inadequate security policies may leave ACH data vulnerable to breaches or cyber threats.

• Solution: Develop and regularly update security policies in line with Section 1.6, Security Requirements. Stay ahead of emerging threats by adapting your policies to meet the latest industry standards and ensure the safety of ACH transactions.

4. Origination Agreements: Missing or incomplete language in origination agreements can lead to compliance gaps or operational challenges.

• Solution: Review your origination agreements to ensure they include all necessary provisions required by Subsection 2.2.2.1, ODFI Must Enter Origination Agreement with Originator and Subsection 2.2.2.2, ODFI Must Enter Origination Agreement with Third-Party Sender. This includes risk management clauses, indemnification language and proper authorizations. Secure signed copies of these agreements for your records.

5. Training and Education: The ACH Rules are complex! Without adequate training, employees may lack the necessary understanding of ACH operations and compliance obligations.

• Solution: Implement an ongoing ACH training program so your staff can receive regular updates on the latest ACH requirements.

6. Incoming NOCs and Correcting NOCs: Improper handling of Notifications of Change (NOCs) can result in inaccurate data and compliance issues.

• Solution: Establish clear procedures for managing incoming NOCs and instructing Originators to make corrections in a timely manner, ensuring compliance with Section 2.12, Notifications of Change. Originators must make the changes specified in the NOC or corrected NOC within six Banking Days of receipt of the NOC information or prior to initiating another Entry to the Receiver’s account, whichever is later.

7. Exposure Limits: Not setting or reviewing exposure limits can leave your organization vulnerable to financial risks.

• Solution: Define and regularly review exposure limits based on your organization’s risk profile, as required by Subsection 2.2.3, ODFI Risk Management. These limits help manage financial exposure and minimize the risk of significant losses.

8. Return Handling: Improperly managed ACH returns can lead to delays and potential compliance issues.

• Solution: Develop efficient return handling procedures in accordance with Section 3.8, RDFI’s Right to Transmit Return Entries. Ensure your team processes returns promptly  to minimize delays and stay compliant.

9. Record Retention: Not retaining ACH-related records for the required duration can cause complications during audits or compliance reviews.

• Solution: Implement a record retention policy that aligns with Subsection 1.4.1, Retention Requirement for Records of Entries. Ensure ACH transaction records are securely stored for at least six years and can be easily accessed when necessary.

10. ODFI Due Diligence: Inadequate due diligence on Originators and Third-Party Senders can expose your organization to unnecessary risks.

• Solution: Conduct thorough due diligence on all Originators and Third-Party Senders, as outlined in Subsection 2.2.3, ODFI Risk Management. We recommend this include background checks, creditworthiness assessments and ongoing monitoring to manage potential risks.

By tackling these common ACH audit findings with actionable solutions, you’ll not only ensure compliance with the ACH Rules but also help streamline your ACH operations and safeguard your organization from potential risks.

Looking to book an ACH Audit or Risk Assessment? Reach out to us audit@epcor.org and we’ll help you get everything lined up for a smooth and thorough review.

Struggling with audit prep or want a second set of expert eyes on your ACH operations? Our Advisory Team is here to help! From identifying risk gaps to streamlining compliance, our team can guide you through it all. Book your ACH Audit and Risk Assessment today!