I am supposed to be doing an audit on collection items, but our bank doesn't really have any. We may see one a year, but even that is a long shot.

What do I do here? I've never before been told to audit something that doesn't exist.

Perhaps a top-down approach similar to what the examiners use - review the written policies and procedures applicable to collection items to verify that all appropriate controls are in place, and verify that the appropriate personnel are familiar with the policies and procedures.

Who is requiring the audit? Your supervisor, outside audit firm, or regulator? I could argue this one. If your schedule is as full as mine, this would be WAY DOWN on the audit scale.

If you are truly only getting one or two in a year, maybe an interview type of audit could be done to ensure that the person that would handle this is sufficiently knowledgeable on how to handle a collection item. I would do a memo to file on the results if you are comfortable with them and call it a fine day.

I am considering throwing it in with the suspense items audit. At least that way, I could include it as an Item for review purposes without having a totally useless audit. Also, this would allow for expansion of the area in the future without it being overlooked.

Does this sound ok?

Yes, this would be a good way to keep collection items in your audit universe without wasting time on it now.

I would not call it an audit since the business unit was not created in the first place. I would call it a proposal, you could start by interviewing staff, understand the process, identify potential weakness and controls. You can also write an audit program