parti: objectives and features of the new reporting system 159 - TARA

Example 3 X lodges Z's cheque for £100 in his Bank A bianch - X's account 1^
credited This cheque is in transit to the clearing department and the adjustment
used at present has the effect of cancelling the crediting which has already taken
place to X's account It, therefore, tends to reverse or cancel the earlier transaction
In this case the transaction could not be treated as if it had reached its
destination, since the pending adjustment is to Z's current account or overdraft
at Bank B (Bank A would not have such cheques in transit fiom the clearing
department to the drawee branch, since at that stage the cheques would be held by
Bank B)
Example 4 X deposits £100 in a Cork branch of Bank A for credit to his account in
the Dublin branch - cash debited At the bank-return date the item is in transit to the
clearing department of Bank A The pending credit would be to X's account, either
reducing his overdraft or increasing his current account. The adjustment used at
present would have the effect of treating the in-transit item as if it had reached its
destination
Example 5. X deposits £100 in a Cork branch of Bank A for credit to his account in
the Dublin branch - cash debited In this case the item is in transit from the clearing
department to the payee's branch There is a credit to X's account pending, which
will have the effect of reducing his overdraft or increasing his current account. As in
the case in Example 4, the adjustment used at present has the effect of treating the
m-transit item as if it had reached its destination (It is also worth noting that other
examples of credits in transit from the clearing department to the account-holding
branch would include sums deposited in other banks for credit to X's account in his
Dublin branch of Bank A)
Example 6. X transfers £100 from his own account at Bank A to Z's account at Bank
B - X's account is debited At the bank-return date the item is in transit to the
clearing department The adjustment at present attempts to reverse the initial
transaction, I e , reducing X's overdraft or increasing his current account. In this
case it is not possible for the transaction to be carried forward to its destination,
since the credit is to Z's account, that is, reducing his overdraft or increasing his
current account, at Bank B
From Bank A's standpoint, Examples 1 and 2 refer to internal transfers.
Accordingly, it makes little difference whether the transactions were reversed or
carried to their destination by the adjustment for items in transit. In the case of
Example 3, Bank A has not received credit foi the cheque, a reversal of the
transaction is, therefore, the most appropriate adjustment. In Examples 4 and 5,
Bank A has already received the benefit of the deposits at the bank-return date.
Accordingly, treating the items in transit as if they had reached their destination
would appear to be the most appropriate adjustment The adjustment in the case of
Example 6 appears to be the most questionable Here, a customer of Bank A would
already have his account debited, or have deposited funds in the relevant branch In
effect, Bank A has a liability to Bank B in respect of the item in transit, but the
adjustment has the effect of reversing the transaction However, in some sense it
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