A Practical Discussion on the Archiving and Destruction Process of Voided Checks
When a check is stopped at the bank and voided in the system, the company typically destroys it. However, auditors prefer to archive it instead. The author believes that a voided check alone cannot determine whether it has been paid, and modern technology allows for paperless payment, making archiving of little practical value. The company already has internal controls such as bank reconciliation, and archiving would only waste time and space. This article raises questions on this matter and seeks opinions from peers.
After a check is stopped by the bank and marked as void in our system, we typically shred it. However, auditors, for some verification need, want us to archive these voided checks instead. I disagree with this, believing that archiving does not provide additional value compared to destruction.
My core reasoning is: even if we hold the voided check, merely looking at the physical document cannot determine whether it has been cashed by the bank. With today's technology, checks can be cleared and cashed without the physical instrument. Therefore, retaining the paper document does not provide any additional confirmation.
From an internal control perspective, we already have established monitoring mechanisms, such as reconciling the total of canceled checks on bank statements with the company's consolidated check register. These measures are sufficient to effectively monitor abnormal check flows. Based on this, I maintain that storing a cabinet full of voided checks only wastes time and space, with no substantial benefit to risk control.
Here, I would like to hear from peers: in similar situations, does your company choose to destroy or archive? Are there regulatory or audit requirements that make archiving necessary? Please share your practical experience and compliance considerations.