Policies & Procedures: Are They In Writing?

At the recent B.A.I. Audit/Compliance/Security Conference held in New Orleans, Louise Mickelson, an Associate National Bank Examiner with the Office of the Controller of the Currency, emphasized the importance of having policies and procedures in writing. Ms. Mickelson, who was Compliance Officer at the Farmers National Bank in Webster City, Iowa before joining OCC, stressed the importance of written policies and procedures not only for the examiners, but also for the continuity of the institution. She said, "Suppose your new accounts person gets hit by a truck, or wins the lottery and doesn't come to work any more. Could someone else sit down and do that job? Would they know how?"

One of the most ignored areas as far as written instructions are concerned is the safe deposit area. And it is one of the most vulnerable areas subject to lawsuit for negligence. If an institution has to defend itself in court in the case of a loss from a safe deposit area, the written policies and procedures are its most important defense.

Ms. Mickelson suggested that if you do not have written policies and procedures at this time, that each person handling the job write a job description. Then the compliance officer, or whoever is designated, can write the final policies and procedures from these descriptions. "The interesting part about doing the manual this way," she says, "is finding that the same job is done several different ways, and you may find that someone is not doing all parts of that job function. The comparison can be educational."

"The difference between policies and procedures," Ms. Mickelson pointed out, "is that policies need to be approved by the Board of Directors, and procedures do not."

Copyright © 1990 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 1, No. 4, 4/90