Internal Control Questionnaires and Verification Procedures

Policies

1. Has the board of directors, consistent with its duties and responsibilities, adopted written investment securities policies, including WI securities, futures and forward placement contracts, that address:

   1. Objectives?

   2. Permissible types of investments?

   3. Diversification guidelines, to prevent undue concentration

   4. Maturity schedules?

   5. Limitation on quality ratings?

   6. Policies regarding exceptions to standard policy?

   7. Valuation procedures and frequency?

2. Valuation procedures and frequency?

3. Have policies been established for transferring securities from the trading account to the investment securities account?

4. Have limitations been imposed on the investment authority of officers?

5. Do security transactions require dual authorization?

6. If the bank has due from commercial banks or other depository institutions — time, federal funds sold, commercial paper, securities purchased under agreements to resell or any other money market type of investment:

   1. Is purchase or sale authority clearly defined?

   2. Are purchases or sales reported to the board of directors or its investment committee?

   3. Are maximums established for the amount of each type of asset?

   4. Are maximums established for the amount of each type of asset that may be purchased from or sold to any one bank?

   5. Do money market investment policies outline acceptable maturities?

   6. Have credit standards and review procedures been established?

7. If the bank holds shares of mutual funds or unit investment trusts, has the board of directors adopted policies and procedures that include:

   1. Specific provisions for purchases of mutual fund and unit investment trust shares?

   2. Requirements for prior approval of initial investment in investment companies?

   3. Procedures, standards, and controls for managing such investments?

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