Internal control procedures established by a corporation govern the physical security and authorized access to the stamp used for bank transactions and tax filings. Financial seal custody is a distinct administrative function that separates the power to approve payments from the physical ability to execute them. This stamp, often referred to as the finance chop, is used on checks, wire transfer forms and official tax receipts to verify the identity of the account holder.
The rules for its storage require that it be kept in a secure location, such as a fireproof safe, when not in use. Access is restricted to a designated officer who is typically separate from the individual who holds the official company chop. These protocols apply to all corporate entities operating in China to prevent the misappropriation of funds.
They stop applying once a company account is closed and the seal is formally cancelled by the bank.
Organizational security depends on the division of responsibilities among different employees to prevent a single person from having total control over the company’s capital. Financial seal custody must be assigned to an individual who does not have the authority to initiate or authorize a payment on the corporate banking portal. For example, the person who holds the seal is often a senior accountant, while the person who approves the payment is the finance director or the general manager.
This dual-control system ensures that no transaction can be completed without the cooperation of at least two people. If one individual held both the power of approval and the seal, the risk of embezzlement or unauthorized transfers would increase significantly. The arrangement is a standard requirement for passing annual audits and maintaining compliance with international accounting standards.
Formalized steps for requesting and logging the use of the finance chop ensure that every impression is accounted for in the company’s records. For financial seal custody to be effective, every request for the seal must be accompanied by an approved payment voucher or a tax document. The custodian must verify that the signature on the authorization form matches the signature on file for the approving manager.
After the seal is applied, the custodian records the transaction in a dedicated logbook that includes the date, the recipient of the funds and the amount of the transaction. This logbook is reconciled monthly against the bank statements to ensure that no unauthorized stamps were made. Any discrepancy in the logbook triggers an immediate internal investigation and may lead to the suspension of the custodian.
Physical protection of the seal tool involves more than just a locked cabinet; it requires a controlled environment that prevents theft and environmental damage. Financial seal custody involves the use of a secure safe that is bolted to the floor or the wall of the finance department. The safe should ideally be equipped with a dual-locking mechanism, requiring both a physical key and a digital code held by different people.
During non-working hours, the room where the safe is located should be monitored by motion sensors or video surveillance. The safe also protects the seal material, which could be damaged by extreme temperatures or humidity, leading to a distorted impression that would be rejected by the bank. If the safe is tampered with, the company must immediately notify the bank and the local police to flag the seal for potential fraud.
This rigorous physical security is the last line of defense for a company’s liquid assets.
PSB seal recordation binds corporate authority through a 13-digit code, overriding signatures unless fraudulent creation meets explicit civil code standards.
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