LOAN CYCLE INTERNAL AUDIT-COMPLIANCE

Completed W/P
By Ref

A. Obtain a list of all loans to employees, officers, directors

and other related parties.

1. Determine whether loans to employees, officers, and

directors comply with bank policy and do not have
unusually favorable terms. Regulation “O” prohibits
extensions of credit to executives officers or directors
unless it (1) is made on substantially the same terms as
loans to outsiders, and (2) does not involve more than
the normal risk of repayment.

2. For any loans made within the past three months to

executive officers which exceed $25,000. determine
that the loan was approved in advance by the board.

3. For any loans to related parties selected in other audit

procedures, verify that the loans also appear on the insider
notes report.

B. Regulation “B”: Scan file of Denial Letters for recent dates

to determine that the bank gives the applicant a written
explanation when a loan application is rejected.

C. Prepare a narrative describing the Purpose, Scope and

Conclusion of the audit procedures.