Ok, we're a $300MM bank. We have centralized loan processing for our main and six outlying branches that make loans. I'm in the middle of a loan audit, and was surprised to find that the controller is spending a good amount of time balancing a number of miscellaneous lending accounts - such as deferred loan fees, credit life premiums, forced-placed insurance premiums, etc. Other than the fact that it eliminates the oversight function I think the controller should have, can anyone see other problems with this? Is this common? From other banks I've worked at, I expected the loan department to be responsible for balancing their accounts. How big a problem do you think the lack of independent oversight is?

(The controller does not supervise anyone in the loan servicing department.)

Here's the deal - Controller's step in and balance all kinds of stuff if no one is around, or trained, to balance/reconcile accounts. It's a thankless task, based on the fact that auditors come around and criticize Contollers for being too hands on, e.g. separation of duties comes into play. Both the Controller and the Auditors are correctly performing their duties, but in the real world, stuff happens that just needs to be taken care of by the Controllers of this world.

Yes, you are correct, loan types should balance their accounts on a daily basis in a perfect world. In addition, sometimes Controllers go south, so they should not be the only one's reconciling stuff - a good certification plan had better be in place to support this scenario.