Internal Control Questionnaires and Verification Procedures

Policies

  1. Has the board of directors, consistent with its responsibilities, adopted written policies governing:

    1. Trading limits, including:

      • Overall trading volume?

      • Overnight net position limits per currency and aggregate?

      • Intra-day net position limit per currency and aggregate?

      • Aggregate net position limit for all currencies combined?

      • Maturity gap limits per currency?

      • Individual customer aggregate trading limits, including spot transactions?

      • Written approval of excesses to above limits?

    2. Segregation of duties among traders, bookkeepers, and confirmation personnel?

    3. Accounting and revaluation procedures?

    4. Management reporting requirements?

  2. Do policies attempt to minimize:

    1. Undue pressure on traders to meet specific budgeted earnings goals?

    2. Undue pressure on traders, by account officers, to provide preferred rates to certain customers?

  3. Are traders prohibited from dealing with customers for whom trading lines have not been established?

  4. Are all personnel, except perhaps the head trader, prohibited from effecting transactions via off-premises communication facilities?

  5. Is approval by a non-trading officer required for all compensated transactions?

  6. Do credit approval procedures exist for settlement (delivery) risk either in the form of settlement limits or other specific management controls?

  7. Does a policy procedure exist to insure that, in the event of an uncertain or emergency situation, the bank’s delivery will not be made prior to receipt of counterpart funds?

  8. Do the above policies apply to all branch offices as well as majority-owned or controlled subsidiaries of the bank?

  9. Does the bank have written policies covering:

    1. Foreign exchange transactions with its own employees?

    2. Foreign exchange transactions with members of its board of directors?

    3. Its traders’ personal foreign exchange activities?

    4. Its employees’ personal business relationships with foreign exchange and money brokers with whom the bank trades?

  10. Are the above policies understood and uniformly interpreted by all traders as well as accounting and auditing personnel?

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