Internal Control Questionnaires and Verification Procedures

Collateral

  1. Are multicopy, pre-numbered records maintained that:

    1. Detail the complete description of collateral pledged?

    2. Are typed or completed in ink?

    3. Are signed by the customer?

    4. Are designed so that a copy goes to the customer?

  2. Do different employees perform the functions of receiving and releasing collateral to borrowers and of making entries in the collateral register?

  3. Is negotiable collateral held under joint custody?

  4. Are receipts obtained and filed for released collateral?

  5. Are securities and commodities valued and margin requirements reviewed at least monthly?

  6. When the support rests on the cash surrender value of insurance policies, is a periodic accounting received from the insurance company and maintained with the policy?

  7. Is a record maintained of entry to the collateral vault?

  8. Are stock powers filed separately to bar negotiability and to deter abstraction of both the security and the negotiating instrument?

  9. Are securities out for transfer, exchange, etc., controlled by pre-numbered temporary vault-out tickets?

  10. Has the bank instituted a system which:

    1. Insures that security agreements are filed?

    2. Insures that collateral mortgages are properly recorded?

    3. Insures that title searches and property appraisals are performed in connection with collateral mortgages?

    4. Insures that insurance coverage (including loss payee clause) is in effect on property covered by collateral mortgages?

  11. Are coupon tickler cards set up covering all coupon bonds held as collateral?

  12. Are written instructions obtained and held on file covering the cutting of coupons?

  13. Are coupon cards under the control of persons other than those assigned to coupon cutting?

  14. Are pledged deposit accounts properly coded to negate unauthorized withdrawal of funds?

  15. Are acknowledgments received for pledged deposits held at other banks?

  16. Is an officer’s approval necessary before collateral can be released or substituted?

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