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Internal Control Questionnaires and Verification Procedures

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Internal Control Questionnaires and Verification Procedures ICQs and Verification Procedures Comptroller’s Handbook December 2007 Internal Control Questionnaires and Verification Procedures Table of Contents Introduction............................................................................................................ 1 Pre-Examination Planning..............................................................................................1 During the Examination.................................................................................................2 Accounts Receivable and Inventory Financing........................................................6 Internal Control Questionnaire .....................................................................................6 Verification Procedures.................................................................................................8 Agricultural Lending .............................................................................................11 Verification Procedures...............................................................................................11 Allowance for Loan and Lease Losses ...................................................................14 Internal Control Questionnaire ...................................................................................14 Verification Procedures...............................................................................................15 Asset and Liability Management ...........................................................................17 Internal Control Questionnaire ...................................................................................17 Asset Securitization...............................................................................................19 Internal Control Questionnaire ...................................................................................19 Verification Procedures...............................................................................................22 Bank Dealer Activities...........................................................................................27 Internal Control Questionnaire ...................................................................................27 Bank Dealer Activities............................................................................................................ 27 Private Placements................................................................................................................. 51 Verification Procedures...............................................................................................53 Bank Dealer Activities............................................................................................................ 53 Private Placements................................................................................................................. 56 Bank Premises and Equipment ..............................................................................57 Internal Control Questionnaire ...................................................................................57 Verification Procedures...............................................................................................60 Bankers’ Acceptances ...........................................................................................62 Internal Control Questionnaire ...................................................................................62 Verification Procedures...............................................................................................65 i Capital and Dividends...........................................................................................68 Internal Control Questionnaire ...................................................................................68 Verification Procedures...............................................................................................69 Cash Accounts ......................................................................................................72 Internal Control Questionnaire ...................................................................................72 Verification Procedures...............................................................................................81 Commercial Lending.............................................................................................85 Internal Control Questionnaire ...................................................................................85 Verification Procedures...............................................................................................91 Commercial Real Estate and Construction Lending...............................................94 Internal Control Questionnaire ...................................................................................94 Verification Procedures.............................................................................................111 Concentrations of Credit.....................................................................................114 Internal Control Questionnaire .................................................................................114 Consigned Items..................................................................................................116 Internal Control Questionnaire .................................................................................116 Verification Procedures.............................................................................................123 Credit Card Lending............................................................................................127 Internal Control Questionnaire .................................................................................127 Verification Procedures.............................................................................................130 Due From Banks — Domestic and International.................................................131 Internal Control Questionnaire .................................................................................131 Demand Deposits ................................................................................................................ 131 International Time Deposits ................................................................................................. 136 Verification Procedures.............................................................................................140 Demand Deposits ................................................................................................................ 140 International Time Deposits ................................................................................................. 145 Emerging Market Country Products and Trading Activities ................................147 Internal Control Questionnaire .................................................................................147 Verification Procedures.............................................................................................151 Employee Benefits...............................................................................................153 Internal Control Questionnaire .................................................................................153 Floor Plan Financing ...........................................................................................155 Internal Control Questionnaire .................................................................................155 ii Verification Procedures.............................................................................................162 Foreign Exchange ................................................................................................164 Internal Control Questionnaire .................................................................................164 Verification Procedures.............................................................................................170 Income and Expense ...........................................................................................172 Internal Control Questionnaire .................................................................................172 Verification Procedures.............................................................................................175 Interest Rate Risk ................................................................................................177 Internal Control Questionnaire .................................................................................177 Investment Securities ..........................................................................................181 Internal Control Questionnaire .................................................................................181 Verification Procedures.............................................................................................184 Lease Financing...................................................................................................189 Internal Control Questionnaire .................................................................................189 Verification Procedures.............................................................................................192 Loan Portfolio Management................................................................................195 Internal Control Questionnaire .................................................................................195 Management Information
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