Consigned Items and Other Customer Services

Internal Controls

Because the bank assumes a contingent liability for engaging in these activities, it must maintain proper internal controls, strong operating procedures and safeguards, and sound audit coverage. Banks accomplish the necessary control and review of consigned items through the use of nonledger control or memorandum accounts. These nonledger control accounts may consist of ledger cards for customer safekeeping and safe deposit box facilities; inventory listings for traveler’s checks, U.S. savings bonds, and commemorative coins; and registers for collection items. In all cases, employees must generate control totals and balance the function(s) daily. Periodically, employees must perform a physical inventory of the items to prove the control totals.

Banks must maintain adequate bonding on all employees wherever contingent liabilities exist. This coverage will include protection against claims arising from mishandling, negligence, mysterious disappearance, or other unforeseen occurrences.

Previous: Consigned Items Next: Accounting