Internal Control Questionnaires and Verification Procedures

Custody of Property

1. Do the bank’s procedures preclude persons who have access to property from having “sole custody of property,” in that:

   1. Its physical character or use would make any unauthorized disposal readily apparent?

   2. Inventory control methods sufficiently limit accessibility?

2. Is the addition, sale, or disposal of property approved by the signature of an officer who does not also control the related disbursement or receipt of funds?

3. Is board of directors’ approval required for all major additions, sales, or disposals of property (if so, indicate the amount that constitutes a major addition, sale, or disposal $ )?

4. Is the preparation, addition, and posting of property additions, sales, and disposals records, if any, performed and/or adequately reviewed by persons who do not also have sole custody of property?

5. Are any property additions, sales, and disposals records, balanced, at least annually, to the appropriate general controls by persons who do not also have sole custody of property?

6. Are the bank’s procedures such that all additions are reviewed to determine whether they represent replacements and that any replaced items are cleared from the accounts?

7. Do the bank’s procedures provide for signed receipts for removal of equipment?

8. Do the bank’s policies cover procedures for selecting a seller, servicer, insurer, or purchaser of major assets (through competitive bidding, etc.), to prevent any possibility of conflict of interest or self-dealing?

9. Do review procedures provide for appraisal of an asset to determine the propriety of the proposed purchase or sales price?

Previous: Internal Control Questionnaire Next: Depreciation