Internal Control Questionnaires and Verification Procedures

Accounting and Reporting

1. Is there a definite segregation of duties, responsibility, and authority between the trading room and the accounting and reporting functions within the division and/or branch?

2. If applicable, are contract forms pre-numbered (if so, are records and controls adequate to insure their proper sequential and authorized use)?

3. Do personnel other than the traders sign contracts?

4. Are after-hours or holdover contracts posted as of the dates contracted?

5. Do accounting personnel prepare a daily position report, for each applicable currency, from the bank’s general ledger, and:

   1. Do reports include all accounts denominated in foreign currency?

   2. Are those reports reconciled daily to the trader’s position report?

   3. Are identified or unreconciled differences reported immediately to management and to the head trader?

   4. Are all counterparty non-deliveries on expected settlements reported immediately to management and to the head trader?

6. Are maturity gap reports prepared for liquidity and foreign exchange managers at least bi-weekly to include:

   1. Loans and deposits reflected in the appropriate forward maturity periods along with foreign exchange contracts?

   2. Loans, deposits, and foreign exchange contracts (specify whether reflected in the maturity periods in which they fall due or in which they are scheduled for rollover )?

   3. Commitments to accept or place deposits reflected in the appropriate maturity periods by both value and maturity dates?

   4. All those items (specify whether as of the day on which they mature or bi-weekly or monthly maturity periods )?

   5. All those items as of the day on which they mature, if necessary, i.e., in the event of a severe liquidity situation?

7. Does the accounting system render excesses of all limits identified at step 1 immediately to appropriate management, and is officer approval required?

8. Are local currency equivalent subsidiary records for foreign exchange contracts balanced daily to the appropriate general ledger account(s)?

9. Are foreign exchange record copy and customer liability ledger trial balances prepared and reconciled monthly to subsidiary control accounts by employees who do not process or record foreign exchange transactions?

10. Do the accounting and filing systems provide for easy identification of “financial swap” related assets, liabilities and future contracts by stamping contracts or maintaining a control register?

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