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#2236469 - 05/11/20 03:24 PM Tracking Financial Statement Exceptions
jill5455 Offline
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Joined: Feb 2016
Posts: 6
I'm the Internal Auditor and Audit Coordinator at our bank. Our Loan Policy currently states that financial statements are required at loan opening and annually on loan customers with $150,000 or more in aggregate debt. We've had external auditors make several findings where the financial statements are missing or are outdated. I notify the responsible loan officers of these findings, and then I track them on my Audit Findings log for 30 days and then move them to the Policy Exceptions list, which goes to the Board monthly, that the Compliance Officer maintains. Has anyone heard of other banks not tracking Financial Statement exceptions as Loan Policy Exceptions? Our CLO stated that other banks do not do it it this way. To me, it seems uncomplicated, they are Policy Exceptions, so they should be tracked as such. Any insight would be helpful. Thank you.

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#2236473 - 05/11/20 03:41 PM Re: Tracking Financial Statement Exceptions jill5455
rlcarey Online
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rlcarey
Joined: Jul 2001
Posts: 79,234
Galveston, TX
Well, it is either the Bank policy or it is not. It is not, then the requirement should be removed from the policy and the legal loan documentation or it should be changed to "on request". Otherwise, it is a policy violation and these were tracked in every bank I ever worked in. The lack of updated financial information on your borrower is like making an "account receivables" loan then never bothering to ask for updated accounts receivable information from the borrower.
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#2236474 - 05/11/20 03:44 PM Re: Tracking Financial Statement Exceptions jill5455
osucpa Offline
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Joined: May 2011
Posts: 1,400
I have never heard on the Internal Auditor tracking financial statements exceptions (or any other type of exceptions) for loan customers. They are always done through Loan Operations when the loan is being set up. Depending on the size of the bank and the ability of your core processing system (most of them have the ability) to track loan documents through an exception tracking platform.

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#2236482 - 05/11/20 05:06 PM Re: Tracking Financial Statement Exceptions jill5455
jill5455 Offline
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Joined: Feb 2016
Posts: 6
Thank you, rlcarey.

osucpa, I essentially only track them for 30 days immediately following the release of the audit report, which is probably pointless. Then they are moved to our Lending Compliance Officer's Financial Statement Exceptions Report, which doesn't really get noticed like the Policy Exceptions report does.

Thank you both for your responses!

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