Internal Control Questionnaires and Verification Procedures

Underwriting and Scoring Models

1. Does audit and/or internal loan review test compliance with underwriting standards?

2. Are underwriting standards periodically reviewed and revised?

3. If credit scoring models are used:

   1. Are credit limits determined by cutoff scores?

   2. Are models periodically revalidated?

   3. Are there internal procedures governing overrides

4. Is data from the application tested for input accuracy to the account processing system? If so, what is the sample size and frequency of the test?

5. Are line of credit increases reviewed periodically by an independent person to determine compliance with bank policy and procedures?

6. Does an independent person review periodically credit lines for appropriateness of amount?

7. Are procedures in effect to review credit lines when the bank becomes aware of a change in financial status or creditworthiness of a cardholder?

8. Is an exception report produced and reviewed by management that includes credit card extensions, renewals, or other factors which would result in a change in customer account status?

9. Are records of issued cards balanced daily to the report total of new and reissued cards?

10. Does the bank have procedures covering the establishment of employee accounts?

11. Are employee accounts periodically reviewed?

12. Has the bank established a policy on cash advances to employees?

13. Is the information on fraud claims reviewed to determine whether:

    1. A bank employee could have been involved?

    2. A breakdown in the bank’s control of issued cards is indicated?

    3. The card could have been abstracted before it left the bank?

14. Are signatures on sales drafts compared to signatures on notifications by owners of cards disclaiming knowledge of sale or loss of card?

15. Is an officer required to sign off on the conclusion of a fraud investigation?

16. Does the credit card operation prepare a budget by:

    1. Function (e.g., collections, application processing)?

    2. Program (e.g., secured card, private label)?

    3. Overall operation?

17. Are actual results compared to budget at least monthly?

18. Are significant trends and deviations adequately explained in the financial review process?

19. Do asset securitizations receive appropriate approval?

20. Are collection programs for securitized loans appropriate?

21. Does management have a plan to ensure adequate funding for maturing securitizations?

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