Thread Options
#1588376 - 08/05/11 04:52 PM Loan Audit Procedures
Auditor412 Offline
Member
Joined: Jun 2011
Posts: 51
Midwest, United States
We are looking to revise our audit procedures regarding loans and are looking for a good set of procedures which cover the overall process/procedures. Is there anyone who would be willing to share? Or has a lead for good reference material? I am just getting my feet wet regarding loan audits so any assistance is greatly appreciated!!

Return to Top
Audit
#1589681 - 08/09/11 05:47 PM Re: Loan Audit Procedures Auditor412
osucpa Offline
Diamond Poster
Joined: May 2011
Posts: 1,400
We cover the following areas in our Loan Operations audit.

-Perform a walk-through of the area to determine various responsibilities in loan operations. This help new or inexperienced auditors and easy to update in future years.
-review loan documentation for a sample of loans and letters of credit during the time period. (For these loans review for in accordance with loan policy, completed note and agrees to our system.
-Review and test the process for recording loan origination fees.
-Test loan proceeds for a sample a loans reviewed above.
-Test payment process and recording of payments for a sample of loan reviewed above.
-Review and test how loan documentation exceptions are reviewed and cleared.
-Recalculate accrued interest for a sample of loans.
-review loans with unusual interest rates (both high and low rates).
-review controls over collateral vaults and perform procedures.
-review and test reconciliation process.

I hope this helps.

Return to Top
#1589728 - 08/09/11 06:48 PM Re: Loan Audit Procedures osucpa
Auditor412 Offline
Member
Joined: Jun 2011
Posts: 51
Midwest, United States
Thank you that is helpful!!!!!

Return to Top
#1590646 - 08/11/11 02:54 PM Re: Loan Audit Procedures Auditor412
Many Hats Offline
Platinum Poster
Joined: May 2008
Posts: 915
Orlando, FL
Other review items to consider are:

-review process and procedures for tracking UCC's (mainly looking to ensure UCC renewals are filed in a timely manner)

-review vendor reports (not reports maintained by the ops dept.) and compare to portfolio to ensure all properties in a flood zone are being tracked and monitored for expiring insurance; to ensure all loan that are supposed to be tracked for delinquent property taxes are accounted for; and if you order O&E's before closing - that you have also ordered a post-closing O&E to ensure you lien was filed correctly.

-make sure someone is looking at your daily maintenence reports (the reviewer should not be the person who is making the changes)

-review your reconciliation procedures

-review your loan check and cashier's check audit procedures for proper controls

-review your loans that require annual reviews to ensure you have collected appropriate documentation (i.e., PFS, tax returns, business financial stmts) and if they are missing, review your process for tracking those items and the follow up attmeps that have been made to collect those items.

All of the above pertains primarily to loan operations. Were you also looking for loan compliance audit items?

Return to Top
#1590883 - 08/11/11 07:20 PM Re: Loan Audit Procedures Many Hats
osucpa Offline
Diamond Poster
Joined: May 2011
Posts: 1,400
One thing to consider is the number of hours you are going to have for the audit. Your budgeted audit hours will determine what procedures you will be able to perform. Remember, your audit steps should be risk based.

Return to Top
#1591197 - 08/12/11 02:34 PM Re: Loan Audit Procedures osucpa
Auditor412 Offline
Member
Joined: Jun 2011
Posts: 51
Midwest, United States
Loan Operations is my focus for this audit! Thank you for all your comments! It is certainly appreciated!
Last edited by ld412; 08/12/11 02:35 PM.
Return to Top
#1623929 - 11/03/11 02:51 PM Re: Loan Audit Procedures Auditor412
Tberry Offline
Member
Tberry
Joined: Mar 2002
Posts: 84
Kansas
I would say that the information provided here is for an audit of the loan operations departement. If you are doing an audit of loans then you want a "credit review" checklist. I can provide one if that is what you are looking for. It will cover compliance as well as safety & soundness, policy, procedures. Of course the policies and procedures will depend on your bank.

I annually review all classified loan files and a sample of all other loan files including consumer, commercial, real estate, HELOC, etc. We also do the Freddie Mac Mortgage Quality Control procedures.

Return to Top
#2006797 - 04/08/15 03:45 PM Re: Loan Audit Procedures Auditor412
Angela @ FNB Offline
New Poster
Angela @ FNB
Joined: Mar 2012
Posts: 24
Arkansas, USA
I know this is an old post, but I could really use that Credit Review checklist. My people seem to just open the file and look through it, mostly depending on the processor or the officer to tell them if there is an exception. Crazy!
_________________________
AFS
Compliance, ALLL, Accounting,Community Banking

Not every day is meant for flying; reserve the cape for days you need it!

Return to Top
#2006853 - 04/08/15 06:23 PM Re: Loan Audit Procedures Angela @ FNB
Cornfed Turtle Offline
Diamond Poster
Joined: Mar 2006
Posts: 1,323
"...Somewhere in Middle Americ...
I could share mine with you, but it probably wouldn't be very helpful. Mine are driven by our control steps and our loan policy. Probably wouldn't apply to your bank. I could outline a bit for you.... are you talking consumer? residential?

I can tell you that for both, our checklist includes matching value back to purchase price or appraised value and then calculating an LTV. Same with DTI, we go get the income from the file, the debts from the CBR and recalculate the DTI.

Return to Top

Moderator:  Andy_Z