BANKING OPERATIONS DEPARTMENT AUDIT WORK

PROGRAM

PROJECT TEAM (LIST MEMBERS)

Project Timing Date Comments

Planning

Fieldwork

Report Issuance

Time Project Work Step Initial Index

Pre-Planning

Obtain the following:

• Prior internal audit work papers
• Prior internal audit report(s) and management replies
• Staff assignments for the audit
• Time budget

Review the work program and prior reports. Interview division

management and personnel to determine the procedures utilized in each
department. Obtain documented policies and procedures if available.

Coordinate the audit with external auditors and compliance auditors as

necessary to understand their role in the audit (if any) and the
responsibilities of each group.

Review prior internal audit work papers and reports extracting and/or
noting any pertinent data or report items yet to be implemented.

Item Processing

Request the following and prove totals to the corresponding daily

statement on a scope basis:
• Official checks
• Expense checks
• Certified checks
• Money orders
• Dealer finance

Determine that reconciliations are properly performed and reviewed.

2 Source: www.knowledgeleader.com
 Time Project Work Step Initial Index

Determine if official checks have been paid with no credit. Follow up on

any items outstanding for more than XX week(s).

Select a sample of official checks and trace official check signatures to the
signature card file. Determine that a process is in place for updating official
check signatures timely.

Determine that all checks outstanding more than X months have been
moved into a dormant account.

Review the dormant check account. Determine that a proper reconciliation

is being performed. Determine if there are any accounts or documents
over XXX years old that have not been remitted to the state. If so,
ascertain the reason.

Review processes in place for reconciling the municipal accounts.

Determine that proper procedures are in place.

Review the procedures performed in operations related to the federal

reserve reconciliation. Determine that follow-up performed on outstanding
items is adequate and timely.

Perform a review of the procedures in place for high-dollar verification.

Select a sample of items more than $XXXX to determine if operations are
complying with procedures.

Customer Accounting

Obtain a complete understanding of the deposit auto loan journal.

Determine how it is used to reconcile deposits (DDA, time, cash reserves)
daily.

Collect supporting documentation for all entries required for reconcilement.

Obtain explanations for all reconciling items and trace them to a resolution.

Review the deposit unposted transaction report. Determine if proper

follow-up procedures are in place to clear items timely.

Review the ATM settlement. Trace all reconciling items to a resolution.

Review rejected items.

Retail Services

Review W-8s. Determine that these forms are renewed after three years.

Obtain the list of outstanding collections and review for proper

documentation.

Review procedures in effect over restraining notices and tax levies. Select
a sample and verify that they are handled in accordance with proper
procedures.
• Restraining notices cannot exceed one year.
• Tax levies should be paid after XX days.

3 Source: www.knowledgeleader.com
 Time Project Work Step Initial Index

Determine that the bank follows policies and procedures under the Right to
Financial Privacy Act. Complete the questionnaire. Note the number of
records released by the bank since (Insert Date).
• Review a sample of these records for completeness. Look for the
following items:
− Copy of subpoena
− Copy of request for research
− Copy of letter sent to court/agency
− Certified mail card to prove it was received
• Determine how management ensures that bank personnel know the
conditions under which they may provide to any federal government
authority access to or copies of the information contained in the
financial records of any customer.
• Determine if bank records are maintained on government agency
requests for customer records and if requirements are adequately
conveyed to all affected bank personnel.
• Determine if ongoing bank policies, procedures and training are
adequate to ensure compliance with the Right to Financial Privacy Act.

Obtain the latest abandoned property report filed with the state. Determine
if procedures are in effect over remittance of abandoned property.

Ensure that the bank is following proper account disclosures for their
customers and proper funds availability policy.

ATM Hot Card Request: Cards that have been lost, stolen or have been
subject to unauthorized use are hot carded to __________ via fax. Select
a sample of hot card request forms received by retail services over the last
12 months.
• Review the form to determine if it was properly completed.
• Determine if __________ was notified the same day the card was
reported lost/stolen. If not, ascertain if the delay was caused by the
branch or retail services.

Review the procedures related to reporting ATM transaction irregularities

to retail services.
• Ensure that the bank reports the results of preliminary investigations
within XX days.
• Ensure that a written confirmation request form was sent to the
customer.
• If the customer followed up with written confirmation, retail services are
required to give a provisional credit and resolve the matter within 45
days. Trace the credit to the customer’s account. If no written
confirmation was received, then the bank does not have to give a
provisional credit.

Review the ATM cash proof. Determine the procedures in effect for review,
follow-up and resolution of the overages/shortages.

4 Source: www.knowledgeleader.com
 Time Project Work Step Initial Index

Review the procedures in effect in the operations area for ensuring that
proper backup withholdings are set up when necessary.

Review the procedures in place for properly filing reclamations (returning

social security deposits, checks upon death of the depositor, etc.).

Obtain the reconciliations prepared by the department related to travelers’

checks (e.g., Financial Services Company X and Financial Services
Company Y). Review the procedures in effect for reconciling these
accounts to the vendor statements and controlling the distribution of the
checks to the various branches.

ATM Section

Obtain an understanding of the controls over the ATM branch

administration. Indicate, in a memo, the procedures that are followed
related to maintenance, upgrades, etc. of ATMs.

Determine if a log is kept for maintenance calls. Review for frequent calls
for the same ATM.

Support

Review the rate change process. Obtain copies of the rate change fax.
Determine that the rate change was properly approved. Determine that the
rate change was properly entered onto the system.

Ascertain that the bank is following regulations.

• Select a sample of each type of deposit account (money market, time
deposits, etc.). Recalculate the APR rate calculations to determine that
they comply within the acceptable tolerance levels as specified by
regulations.

Obtain the latest proof prepared by the comptrollers. Determine that

branch reconciling items are being cleared timely by the support group.
Ensure that a clear path of resolution is maintained in the files and that
aging unresolved items are maintained.

Determine the progress that has been made on the unreconciled items for
the period (Insert Date) through (Insert Date). Ensure that a clear path of
resolution is maintained in the files. Determine the action plan for
recovering funds, if necessary.

General Ledger and Suspense Accounts

Obtain a list of all general ledger suspense accounts for which the
operations area has responsibility for reconciling.
• Determine how often departmental proofs are prepared and confirm
that an officer regularly reviews the proofs.
• Determine that all aging suspense items are performed timely.
• Verify the balances in the general ledger accounts as of the audit date.
• Trace clearing reconciling items to the subsequent suspense listings.

5 Source: www.knowledgeleader.com
 Time Project Work Step Initial Index

• Trace items to subsequent postings to the general ledger.

Obtain a list of all accounts for which the operations area maintains
responsibility. Review the activity in the accounts and determine that these
accounts are properly reviewed. A list of these accounts should include:
• Origination fees
• Other fee income
• Teller clearing accounts
• Other assets (cash items)

Disaster Recovery/Business Resumption

Request whether a contingency plan exists for the department. Determine
that key employees are aware of the plan in case it needs to be put in
effect.

Summary and Report

Re-review the previous audit report and management’s replies and

determine that all items were properly addressed by department
management. If appropriate, include any remaining outstanding items in
the new audit report.

Discuss all current exceptions with management before completing the

fieldwork.

Review work papers and draft the report.

Discuss the report draft with management.

6 Source: www.knowledgeleader.com