Internal Control Questionnaires and Verification Procedures

Clearings

Have the bank prepare a schedule of all clearings by bank name and cash letter total. Determine that the combined total agrees to the bank’s final recap and to the general ledger.
Select a number of individual clearing amounts for confirmation.
Prepare and mail a positive confirmation request for each individual item selected. The receiving bank will balance the individual items to the cash letter total and will list any return items or other exceptions. During this process, the examiner should be alert for unusual items such as employee checks that have been deliberately misrouted.
Place confirmation requests in the related cash letters, and maintain control over the cash letters until they are picked up for delivery.
Cross-reference the control copies of the confirmations to the schedule noted in step 1.
Control all returned (answered) confirmations, and investigate any reported differences. Include all confirmations in the working papers and document the disposition of all exceptions.
Beginning on the examination date and for a period of 3 business days after the examination date, obtain all incoming returned items. Review the items, and investigate any old or unusual items. Also determine if there are any items which relate to officers, employees, or directors.