Internal Control Questionnaires and Verification Procedures

Compensation

1. Are compensation systems set up to avoid paying the same people incentive compensation for the sale of nondeposit investment products when no incentives are paid for renewing certificates of deposit?

2. Do supervisory policies control incentive compensation increases associated with sales contests or the introduction of new products?

3. Are referral programs designed so that employees, including tellers, may receive a one-time nominal fee of a fixed dollar amount for each customer referred, without regard for whether the sale is made?

4. Do policies prohibit tellers from participating in contests or other promotional programs in which prizes are based on successful sales to customers referred?

5. Do policies and procedures preclude incentive compensation based on the profitability of individual trades by, or accounts subject to the review of, bank employees who:

   1. Do policies and procedures preclude incentive compensation based on the profitability of individual trades by, or accounts subject to the review of, bank employees who:

   2. Accept new accounts?

   3. Review established customer accounts?

6. Do policies and procedures preclude payment of incentive compensation to department auditors or compliance personnel?

7. Does the management structure preclude control, audit, or compliance personnel from reporting to managers whose compensation is based on profits from nondeposit investment products sales?

8. Does the compensation program reduce remuneration to sales program managers whose accounts show:

   1. Missing documents?

   2. Unreported customer complaints?

   3. Reversed or “bad” sales?

   4. Compliance problems?

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