Operational Auditing

CASE
ANALYSIS
G R O U P 3
Melissa Jarloc
Kathrine Yap
Operational Auditing

01 02 03
FACTS ISSUES RISKS
CONTENT
04 05 06
AUDIT AUDIT BENEFIT
OBJECTIVE SCOPE
Operational Auditing

Metrobank is one of the country’s largest lenders.

NBI conducted an entrapment operation against

of the bank executive of Metrobank.
S:

Managers' checks cannot be issued to an

T

individual as it only supposedly only for corporate

clients.
C

. The bank executive (suspect) has the authority to

A

decide on credit loans from the credit line of the

F

bank’s credit clients.

Release two loans for Robina Corporation worth

Php 900 Million and Php 850 Million with an interest
of Php 2.25 Million
Operational Auditing

Bank executive attempted to shift Php 220

:

Million pesos loan interest to an individual

S

payee account.
T

Robina Corporation denied the loan.

C

Bank executive forging signatures and

A

breached protocols.
F

Bank executive has been charged with theft,

falsification of documents, and violation of
banking law.
Operational Auditing

Violation of Banking Laws

Attempted Misuse of Manager’s Check
:
Unauthorized Loan Transactions
S

Forgery and Breach of Protocols

E

Internal Control Issues

U

Lack of Segregation of Duties

S

Weak Authorization Controls

S

Inadequate Monitoring and Oversight

I

Insufficient Documentation and Record-keeping

Inadequate Training Awareness

Operational Auditing

Financial Risk
Losses from Fraudulent Activities
Legal and Regulatory Penalties
S:

Operational Risk
K

Internal Control Weaknesses

S

Reputation Risk
RI

Loss of Customer Trust

Investor Confident Impact

Regulatory Scrutiny and Reputational Damage

Operational Auditing

E:
A Comprehensive Audit of Internal Controls
and Fraud Management of MetroBank
TIV

To evaluate the effectiveness of Internal

Control for credit and loan approvals
C

To assess compliance with banking

E

regulations concerning Manager’s Checks

J

and Loan Disbursements

To identify and evaluate fraud prevention,
B

detection, and response mechanisms

O
Operational Auditing

Credit and Loan Approval Process

:

Review the entire credit and loan

E

approval process lifecycle, from the initial

application to the final disbursement of
P

funds.
CO

Assessment of credit risk, approval by

relevant authorities, documentation, and
S

disbursement procedures.
Operational Auditing

Managers Checks Issuance and

Disbursement Controls
:

Examining the policies, procedures, and

E

actual practices related to issuing

P

managers' checks, with a particular focus

on compliance with regulations regarding
O

payee eligibility.
C

Review how managers' checks are

S

requested, approved, issued, and recorded,

especially those given to individuals, which
is against standard policy.
Operational Auditing

Regulatory Compliance
Assessment of the bank's adherence to
:

relevant regulations and guidelines,

E

especially those governing credit and loan

P

approvals and the issuance of managers'

checks.
CO

Review the bank's internal policies to ensure

they align with regulatory requirements and
S

examine the implementation of these

policies in operations.
Operational Auditing

Fraud Prevention, Detection, and Response

E

Evaluate the framework and mechanisms

P

Investigate the processes for identifying

O

fraud risks, monitoring transactions for

C

fraudulent activity, and responding to fraud

incidents.
S
Operational Auditing

Documentation and Record-Keeping

Review of quality, completeness, and
:

security of documentation and records

E

related to credit and loan approvals and

P

managers' checks issuance.

O

Evaluate the processes of creating, storing,

C

and retrieving documents and records,

S

ensuring they comply with legal and

regulatory requirements.
Operational Auditing

S:
1. Improved Internal Controls
T

2. Enhanced Compliance
FI

3. Fraud Preventions and Detection

E

4. Risk Mitigation
N

5. Enhanced Documentation and

E

Recordkeeping
B