Internal Control Questionnaires and Verification Procedures

Internal Control Questionnaire

1. Are directors annually informed of important matters relating to employee benefits, such as costs and administration problems, which would assist them in formulating any changes or modifications deemed desirable?

2. Have employee benefit plans been reviewed and approved by both bank counsel and the Internal Revenue Service, if applicable, prior to implementation?

3. Does the bank compare its program of employee benefits with those of other banks in its peer group, and, if so, is an analysis of that comparison included in a report to the board of directors at least annually?

4. Have all employee benefit plans presently in effect received proper approval of the board of directors before their inception, with appropriate documentation in the minutes?

5. Have procedures been established to assure that all expenses related to employee benefits are correctly identified in accordance with OCC instructions for preparation of the report of income and generally accepted accounting principles?

6. Are procedures in effect which call for periodic independent determinations that those individuals receiving benefits from the bank are in fact bona fide employees?

7. Are economies sought through the use of “standard benefits packages” which can be more efficiently administered by a bank trust department, an insurance firm, or other specialists in the field?

8. Where administration of an employee benefit plan is being handled by a party outside the bank, has the bank retained the managerial or final decision making function about types and amounts of investments?

9. If not, are detailed and timely reports received which enable the bank to accurately monitor the plan?

10. Are officers and employees in sensitive positions, including those persons who have direct or indirect control of bank general ledger accounts, required to be absent for at least two consecutive weeks each year?

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