Sunday, October 22, 2017

Don’t Forget the Small Stuff

Posted by Sharon July 11, 2013 11:12am

Photo Credit: Suat Eman

With the current “eye of the regulatory storm” being mostly focused on asset quality, IRR and problem loans, you might be forgetting to check up on “not so blatantly obvious” potential for regulatory scrutiny.  This blog is being issued as a reminder to check up on the small issues, because the regulators just might be circling back around on these:

Regulation GG – Make sure you updated your account disclosures for business account applicants to include a notice regarding the prohibition of internet gambling.  Also, if you hadn’t done it when it was required long ago, make sure you sent notices out to all existing business account customers advising them of the requirements of Reg GG.  If you did not previously send notices to existing business customers, do it now.  Regulators may cite you as a violation of Section 233.5(a) of this regulation if notices are not sent.

Consumer Complaints – Make sure you have proper policy and procedures in place for the handling of consumer complaints.  Ensure you have a log book that tracks the complaints.  Ensure the log book includes the assignment of responsibility for handling the complaint and documents all relevant dates (ie: date received, date assigned, date resolved, date customer was notified of outcome).

Outstanding Real Estate Taxes – Ensure your loan policy contains language on monitoring and follow-up procedures for borrowers that are delinquent on property taxes. Items that should be included are: procedures and necessary forms that should be found in the file; time frame for when the loan officer should contact the taxing authority; and the process for bringing the delinquent taxes to the attention of the Senior Management.  Ensure you are maintaining a report showing loans with unpaid taxes that includes the amount of taxes outstanding and when the taxes were last paid. The report should be utilized in management's reporting functions.

Management Succession Plan – Ensure you establish a formal management succession plan. It should be well-documented and formally approved by the Board. The management succession plan should address management's continuity for each key position of the bank.

Accounting Policy and Procedures – Ensure the policy, which includes procedures, describes all applicable accounting topics. Ensure it includes procedures on management reporting and approval regarding general ledger entries, the chart of accounts, suspense accounts, and daily reconciliation.

Segregation of Duties Over the Wire Transfer Function – Ensure there is adequate segregation of duties involving wire transfer operations. The same individual assigned to verify and release wire transfer transactions should not also have responsibility for reconciliation of the transactions.  Management should ensure that the functions involving verification, release, and reconciliation are appropriately segregated.

Vacation Policy – Ensure that what is in your vacation policy agrees with your practice.  Also ensure that your vacation policy describes the process for approval of waivers, as recommended in the Department Industry Letter on Vacation Policy issued August 22, 1996.  This Industry Letter provides guidance to banking institutions.  It encourages banks to maintain a written vacation policy which, at a minimum covers those officers and employees involved or engaged in transactional business or having the ability to change the official records of the institution.  They suggest that employees in sensitive positions should be required to take at least 2 consecutive weeks of vacation on an annual basis.  During such time, they should offsite and offline.  In other words, not only physically away but also not have the ability to conduct any transactions while away.  And while they realize that exceptions may occur, they recommend that the same individuals not be permitted continual exceptions.

Again, hope this helps!  These are just some of the things that I have heard through the grapevine that have caught the regulator’s attention!

Comments

Add a comment

  • Required fields are marked with *.

If you have trouble reading the code, click on the code itself to generate a new random code.



 Image

Sharon Geiger

Quality Control Specialist

Sharon Geiger, Quality Control Specialist Sharon has 27 years banking experience, 21 of which have been involved in internal audit. She has extensive knowledge of all aspects of the banking industry, with a particular emphasis on regulatory compliance and identifying risks and controls. As QCR Specialist, she performs Quality Control Reviews to ensure all workpapers and reports are completed in compliance with the firm's standards.



Sharon's Posts Subscribe to RSS Feed



Controls over Employee and Officer T&E Expenses
Is Regulation CC Put on the Back Burner?
Top Compliance Topics Discussed at the NJ Bankers Compliance University
Some tips and tricks for dealing with Regulatory Examinations
Updated Regulation E Booklet from the OCC!
Is Flood Disaster Still on the Heat Map?
Have You Implemented Your Plan yet?
FDIC Consumer Newsletter
More Flood Insurance Changes...
Same Sex Married Couples - Ensuring Equal Treatment – Announcement from Consumer Financial Protection Bureau
Truth in Lending (Regulation Z) Annual Threshold Adjustments (CARD ACT, HOEPA and ATR/QM)
ABA Survey on Impact of Dodd Frank Compliance
ABA Mortgage Origination Deskbook
Who handles Your Dormant Accounts?
How do you charge Early Withdrawal Fees on Time Deposits?
Do you still offer NOW Accounts?
Policy Changes Required – Do you Wait until Annual Approval?
ACAMS to provide Free Webinar
ACBB Changes its Name
Who Do You Give Cash to?
ABA Briefing to Help Banks Address Cyber-security Threats
The OCC Issues Booklet: “A Common Sense Approach to Community Banking”
Safe Deposit Box Contents are not insured – But They COULD Be!
FDIC Can Review New Products
Let’s Talk About Overdrafts!
Regulation E and NACHA Rules: When you Want to Stop Payment on a Recurring Debit
CFPB Stands Up Against Poor Debt Collection Practices
Don’t Forget the Small Stuff
Double Endorsed Checks: What is the Risk?
Social Media – Will the Regulators Do Spot Checks?
Controls Worth Sharing – Did you know?
Solutions to Reducing Dormant Accounts at Your Institution
Regulation E Foreign Remittance Rules
Expiration of Unlimited Deposit Insurance for NIBTAs
Regulation O – 5 Easy ways to avoid violations