Review the bank’s policies for consigned items and other customer services. Determine if the policies:

• Have been adopted by the board of directors.

• Outline adequate controls.

• Address compliance with applicable regulations.

Review consigned items and other customer services operating policies or practices, paying particular attention to any changes since the previous examination.

For each consigned item and customer service offered, determine the adequacy of internal controls. The following are items to consider, as appropriate, in reviewing each area. Because the nature and scope of these services differ among banks, the absence of an item does not necessarily indicate a weakness in the bank’s internal controls.

Safe Deposit Boxes

A lease contract, reviewed and approved by bank counsel, covering the rental, use, and termination of safe deposit boxes is used.

A signed lease contract is on file for each safe deposit box in use.

A standard fee schedule for this service has been adopted.

Receipts for keys to the safe deposit box are obtained.

Officers or employees of the bank are prohibited from having access to safe deposit boxes except their own or one rented in the name of a member of their family.

The guard key to safe deposit boxes is maintained under absolute bank control.

The bank refuses to hold any safe deposit box keys for customers renting such boxes.

Each admittance slip is signed in the presence of the safe deposit clerk and the time and date of entry noted.

Admittance slips are filed numerically.

Vault records are noted for joint tenancies and co-rental contracts requiring the presence of two or more persons at each access.

• Safe deposit boxes are locked, the renter’s key removed and returned to the customer, and the guard key removed while permitting access to the contents.

The safe deposit clerk is prohibited from assisting the customer in looking through the contents of a box.

The safe deposit clerk participates in the relocking of the box to make sure the number of the box corresponds to that of the one that was opened.

An attendant examines all coupon booths after being used, but before being assigned to another renter, to be sure the previous person did not leave behind anything of value.

All collections of rental income are recorded when received.

All safe deposit boxes in which the lessee is delinquent in rent are flagged or otherwise marked so that access will be withheld until the rent is paid.

A file is maintained of all attachments, notices of bankruptcy, letters of guardianship, and letters testamentary (court-issued authority empowering a person named an executor in a will to act in that capacity) served on the bank. Affected safe deposit boxes are flagged.

An acknowledgment of receipt of all property and a release of liability is signed upon termination of occupancy.

Locks are changed when boxes are surrendered, whether or not keys are lost.

Drilling of boxes is witnessed by two individuals.

The contents of drilled boxes are inventoried, packaged, and placed under dual control.

All extra locks and keys are maintained under dual control.

Items in Safekeeping

A written contract, reviewed and approved by bank counsel, is used.

Contracts are on hand for each item that clearly define the functions to be performed by the bank.

Set fees are charged for this service.

Items are segregated from bank-owned assets and maintained under dual control.

Duplicate receipts are issued to customers for items deposited in safekeeping.

Blank, pre-numbered, multicopy receipts are kept under dual control and periodically audited.

A safekeeping register is maintained to show details of all items for each customer.

A record is maintained of all entries to custodial boxes or vaults.

Sealed packages are not accepted unless the contents are known.

Receipts are obtained from the customer when safekeeping items are released.

Custody Accounts (Omit this section if the bank’s trust department handles such accounts.)

A written contract, reviewed and approved by bank counsel, is used.

Contracts are on hand for each account that clearly define the functions to be performed by the bank.

Standard fees are charged for this service.

Duplicate receipts are issued to customers with detailed descriptions, including dates of coupons attached, if applicable, for all items accepted.

Blank, pre-numbered, multicopy receipts are kept under dual control and periodically audited.

All negotiable items handled in this area are maintained under dual control.

• For coupon securities held by the bank:

A tickler file or other similar system is used to ensure prompt coupon redemption on accounts for which the bank has been authorized to perform that service.

Coupons are not clipped unless the bank is authorized to do so.

Customers receive prompt credit when coupon proceeds or other payments are received.

Withdrawals and transmittals of items to customers are done in accordance with procedures.

All withdrawals are reviewed and approved by an officer prior to the transaction.

Collection Items

Access to the collection area is controlled.

Set fees are charged for this service.

A permanent record is maintained for registered mail.

Permanent registers are kept for incoming/outgoing collection items.

All collections are indexed in the collection register.

Registers furnish a complete history of the origin and final disposition of each collection item.

Receipts are issued to customers for all items received for collection.

Serial numbers or pre-numbered forms are assigned to each collection item and all related papers.

All incoming tracers and inquiries are handled by an officer or employee not connected with the processing of collection items.

A record is kept to show the various collection items which have been paid and credited as a part of the day’s business.

An itemized daily summary is made of all collection fees, showing collection numbers and amounts.

Employees handling collection items are rotated periodically, without advance notification, to other banking duties.

Settlement is made with the customer on the same business day that payment of the item is received.

The customer does not receive credit until final payment is received.

An officer supervises tracers and inquiries on unpaid collection items in the hands of correspondents.

Customers are promptly notified and the item returned when a collection is not paid.

The files of notes entered for collection are clearly and distinctly segregated from bank-owned loans and discounts.

The collection notes described above are maintained under memorandum control, and the control is balanced regularly.

Collection files are locked when the employee handling such items is absent.

Vault storage facilities are provided for collection items carried over to the next day’s business.

The collection teller turns over all cash to the paying teller at the close of business each day, and starts each day with a standard change fund.

Consigned Items

The reserve stock of consigned items is maintained under dual control.

Prudent inventory dollar limits are assigned.

Working supplies are kept to a reasonable minimum; e.g., two or three days’ supply, and adequately protected during banking hours.

A memorandum control is maintained of consigned items.

Separate accounts with the consignor are maintained at each issuing location (branch), if applicable.

The working supply is put in the vault at night and over weekends or holidays, or otherwise protected.

Remittances for sales are made on a regularly scheduled basis.

3. Determine whether bank officers and employees are operating in conformance with established policies or practices.

Discuss with appropriate bank personnel their roles and responsibilities regarding consigned items and other customer services.

Discuss with appropriate bank personnel their education, training and experience in the area of consigned items and other customer services.

Controls

Conclusion: Management has (effective/ineffective) control systems for consigned items and other customer services.

Objective: Determine that appropriate controls exist for consigned items and each customer service the bank provides.

Review the latest audit reports, management’s response to those audits and any additional reports to assess the scope and adequacy of the audit.

Review deficiencies noted during internal/external audit and other bank reviews and determine if management attention is appropriate and timely.