Internal Control Questionnaires and Verification Procedures

Internal Control Questionnaire

1. Does the bank have established insurance guidelines which provide for:

   1. A reasonably frequent, at least annual, determination of risks the bank should assume or transfer?

   2. Periodic appraisals of major fixed assets to be insured?

   3. A credit or financial analysis of the insurance companies who have issued policies to the bank?

2. Has management established operating procedures for filing fidelity bonding claims that include:

   1. Taking prompt action when fraudulent activity is suspected to avoid further losses after what may later be regarded by the insurer as the date of discovery?

   2. Considering obtaining the advice and assistance of legal counsel, consultants, or accountants in filing claims?

   3. Ensuring adherence with insurance policy filing and notification requirements?

   4. Allocating human and monetary resources as warranted by the significance of the claim?

   5. Ensuring adequate monitoring and follow-up after the claim is filed?

3. Does the bank have a risk manager who is responsible for risk control?

4. Does the bank use the services of a professionally knowledgeable insurance agent or broker to assist in selecting and providing advice on alternative means of providing insurance coverage?

5. Does the bank’s security officer coordinate his or her activities with the person responsible for handling the risk management function?

6. Does the bank maintain a concise, easily referenced schedule of existing insurance coverage?

7. Does the bank maintain records, by type of risk, to facilitate an analysis of the bank’s experience in costs, claims, losses, and settlements under the various insurance policies in force?

8. Is a complete schedule of insurance coverage presented to the board of directors, at least annually, for their review?

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