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#308039 - 01/25/05 04:22 PM Employee account review procedures...
A_G Offline
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Anyone willing to share theirs, assuming you have one. Thanks.
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Audit
#308040 - 01/25/05 04:49 PM Re: Employee account review procedures...
EdOils Offline
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EdOils
Joined: Jan 2004
Posts: 553
Louisiana
I don't have anything written, but here's what I do.

Each quarter, I review the most recent months worth of statements on all employees who have accounts here. It's about 20, so it doesn't take that long. I'm looking for any unusual deposits, mostly, but do skim the w/d. Like I tell the employees, I'm only looking for a few things, not how much they spend at Walmart. All non-regular deposits over $100 are researched, but I will look at the smaller ones, if they are frequent. (I hate looking at the ones that deposit their Avon or Mary Kay checks into it. ) I also review transfers to accounts not owned by the employee. Loans are reviewed for source of payment quarterly and proper approval/booking annually.

This is all I can think of off the top of my head. I'd like to know what others are doing.
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#308041 - 01/25/05 07:32 PM Re: Employee account review procedures...
Anonymous
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Isn't that extreem level of oversight an incentive for staff to take their accounts across the street to another institution?

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#308042 - 01/25/05 08:14 PM Re: Employee account review procedures...
Jokerman Offline
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Quote:

Isn't that extreem level of oversight an incentive for staff to take their accounts across the street to another institution?




(a) How does it effect the staff? (b) Boy, how I wish they would!!!

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#308043 - 01/25/05 08:44 PM Re: Employee account review procedures...
A_G Offline
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Quote:

Isn't that extreem level of oversight an incentive for staff to take their accounts across the street to another institution?




Or safe and sound banking...especially in light of the Enrons, Tycos, Worldcoms, etc.
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#308044 - 01/25/05 10:17 PM Re: Employee account review procedures...
Gigi2Three Offline
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Gigi2Three
Joined: Mar 2004
Posts: 277
Employee accounts are reviewed monthly here. I thought that was pretty standard.

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#308045 - 01/25/05 11:03 PM Re: Employee account review procedures...
Cathy P Offline
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Cathy P
Joined: Jan 2003
Posts: 318
NE
I review employee checking accounts monthly. Like EdOils I look mostly at deposits for things out of ordinary, but also at withdrawals (noticed one employee who seemed to be doing a lot of online gambling). It's amazing how many tellers will make little dinky deposits. I make sure that transfers into the account are coming from another of their accounts and not a relative's account or if it is, that a different teller performed the transaction.

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#308046 - 01/26/05 02:42 PM Re: Employee account review procedures...
WV Banker Offline
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Joined: Jan 2005
Posts: 11
West Virginia
I review employee accounts quarterly, looking for unusual activity. I look mostly at deposits and transfers. To establish a baseline for "normal" activity, I've set up a spreadsheet to monitor the number and total amount of deposts in addition to the number and total amount of deposits that aren't attributable to payroll deposits.

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#308047 - 01/26/05 04:59 PM Re: Employee account review procedures...
litmachog Offline
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litmachog
Joined: Apr 2004
Posts: 83
Arkansas
We have done employee account reviews annually for the last several years. We have reviewed all the primary and secondary accounts for each employee each year and then reviewed accounts of other known family members. That has been where we have found issues with employees. We were looking at all employees each year but are now backing off to 25% each year.

We look at the cash deposits (is there a pattern or any large deposits), withdrawals/transfers out (are employees doing their own transactions), potential for kiting, if overdrafted - are they being charge (we caught an employee in I/T reversing her OD charges with this). Plus we will look at anything unusual that needs to be reviewed.

We do a lot of review but we have never had an employee leave the bank for that reason. I don't really believe that causes employees to leave their employment.
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#308048 - 01/26/05 05:09 PM Re: Employee account review procedures...
Anonymous
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We discourage our employees from banking with us. Rather than have free account with us, they can have a free account at either one of our two largest correspondents (their choice). Being in a fairly large city, these institutions have dozens of offices in our area. If these two choices are not to their liking, they can of course have their pay direct deposited at any financial institution. Let's be honest, the extra handling of employee accounts makes almost all of them more trouble than they are worth.

Even if you have employee accounts, I am surprised by the definition some posters are using as material! Anything over $100, unbelievable!! I didn't know that being a bank auditor qualified you as a proctologist or gynecologist.

I think I will print this thread and post in the lunchroom so our employees realize what we are saving them from!

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#308049 - 01/26/05 06:00 PM Re: Employee account review procedures...
Jokerman Offline
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Quote:

I am surprised by the definition some posters are using as material! Anything over $100, unbelievable!!




I think it depends on the employee - for a senior officer, I agree that would be silly. For a new teller, though, I might want to see the other side of that transaction. Not that if it was cash I would do anything, necessarily, but if there were several in the month, I might ask the supervisor about it.

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#308050 - 01/26/05 06:24 PM Re: Employee account review procedures...
Anonymous
Unregistered

Anon here-

Jokerman, valid observation. My intent was to show these procedures to be performed on a risk-focused basis and "fishing expeditions" must be minimized.

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#308051 - 01/26/05 11:41 PM Re: Employee account review procedures...
Anonymous
Unregistered

You might check your state code to make sure you are not out of compliance with that review-Oklahoma's says to review all officer's accounts quarterly and all other employees (note again, the word that says "all") semi-annually.

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#308052 - 01/27/05 05:31 PM Re: Employee account review procedures...
Anonymous
Unregistered

We have over 900 employees. 5 auditors. No way to review their accounts with any detail. We use exception reports to look at employee NSFs and potential kiting. Otherwise, we only look at them if there is a specific suspicion.

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#308053 - 02/02/05 05:24 PM Re: Employee account review procedures...
Anonymous
Unregistered

So, once found out that an employee has been kiting (proven)
what will be your recourse? Is this a valid ground for termination? Reason I'm asking is , we have an employee whose account has been closed due to kiting (2002) and said employee/teller is still working in the bank. Interesting thing is, they recently opened a new account for her (2004).
I appreciate all your thoughts on this. Thank you.

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#308054 - 02/02/05 05:42 PM Re: Employee account review procedures...
Anonymous
Unregistered

Most financial institutions have ZERO TOLERANCE when in comes to employee dishonesty. 'just my 2cents.
'by the way I'm not a lawyer either. :-)

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#308055 - 02/02/05 05:51 PM Re: Employee account review procedures...
Jokerman Offline
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I wonder what your bonding company would say? I just don't see how you can justify keeping an employee for which you filed an SAR.

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#308056 - 02/02/05 06:14 PM Re: Employee account review procedures...
Lu Offline
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Joined: Apr 2002
Posts: 597
We had to let a teller go for kiting. We were under the impression that there was no choice. We filed a SAR. Great employee too!
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#308057 - 02/02/05 09:07 PM Re: Employee account review procedures...
Jay-Risk Offline
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Joined: May 2004
Posts: 274
New England
Quote:


Isn't that extreem level of oversight an incentive for staff to take their accounts across the street to another institution?




Anon's comment above is not entirely off the mark. The 2004 Report to the Nation on Occupational Fraud and Abuse, published by the Association of Certified Fraud Examiners, and available at www.cfenet.com, noted that for any type of anomaly testing to be valid, it should target a "universe" population and the inspection standards should be documented and adopted by the Board.

Unless you somehow mandate employees' direct deposit of their bi-weekly payroll into your institution's accounts, the review of employees' accounts will decidedly reflect a population that desires free accounts -- i.e., employees who earn less and want to avoid the costs of accounts with other institutions. In other words, higher paid loan officers, investment staff, underwriters, accounting and financial professionals will bank elsewhere, while lower paid administrative staff will be banking with you. Looking at $100 inbound transactions for any employee is obtrusive. A preventive awareness campaign, where employees are fully informed of your anomaly testing process, coupled with your having documented standards in place, is the way to promote and encourage ethical behavior.

Without a systematic anti-fraud process, any employee exhibiting obvious indicators of fraud (e.g., very high end cars, clothes, jewelry, etc., which are obviously well beyond the employee's legitimate means), but who knows how to defeat your process by keeping very little inbound activity into your bank's accounts, can easily stay below your radar.

Finally, I am troubled by one poster's mentioning of "Avon and Mary Kay" deposits and I am hopeful that this was just an off-handed comment mentioned only for the BOL audience and not something that would be discussed lightly over coffee in the lunch room. An audit professional who employees know conducts periodic reviews of personal identifying information of employees and then lets comments slip, even ever-so-lightly, is most assuredly headed for trouble.

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#308058 - 02/03/05 01:41 AM Re: Employee account review procedures...
Anonymous
Unregistered

Our code of conduct is very specific on how employees are expected to handle their account relationships with our institution. Kiting is grounds for immediate dismissal. We report them to the bonding co & file a SAR. After two warnings about NSFs, we close their accounts closed. Etc.

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#308059 - 02/03/05 02:09 PM Re: Employee account review procedures...
Anonymous
Unregistered

I have found that just the knowledge that someone is reviewing employee accounts regularly is somewhat of a deterrent to unusual transactions. I will even have employees stop by my office and let me know that they are having a large deposit, etc. and tell me what the circumstances were. They also know that another officer reviews my account regularly.

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#308060 - 02/03/05 10:18 PM Re: Employee account review procedures...
Anonymous
Unregistered

we are thinking about starting an employee account review program. can anyone post the disclaimer/policy they give to employees regarding review of their accounts? we are trying to go about this the best way possible. thanks!

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#308061 - 02/04/05 06:03 AM Re: Employee account review procedures...
EdOils Offline
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EdOils
Joined: Jan 2004
Posts: 553
Louisiana
I've been out of pocket, but I wanted to respond to this, as I think this is an important subject.

We all risk weight things differently, based on the amount of time we have, past experiences, etc. I agree that $100 is immaterial to the bank, but what about your employee? I don't know about you, but $100 is a lot of money to me personally. I also don't have that many accounts to look at, so time is not really a factor. My whole audit takes less than a day.

I have also had some bad experiences with employees stealing from another bank that I worked at. In the 3 years that I worked there, we had 2 head tellers steal over $100,000 from the vault and no less then 5 employees were fired for various transactions made in their own account. Also, an FDIC examiner friend of mine told me about a bank in another state where a 15yr employee stole over $750,000 (and still counting) using her own account. So am I worried that it will happen here? You better believe it. Is it a big risk? Absolutely!

Another poster said that this was a "fishing expedition". Isn't that what audit is about? Aren't we just fishing around for something that may or may not be there? The only thing is that on this fishing trip, I would rather come home with an empty ice chest, then the "big one".

Now Jay, let's talk about your post -

Quote:

Unless you somehow mandate employees' direct deposit of their bi-weekly payroll into your institution's accounts



This is not allowed by Reg E. An employer cannot tell an employee what financial institution he/she has to make their direct deposit into.

Quote:

the review of employees' accounts will decidedly reflect a population that desires free accounts -- i.e., employees who earn less and want to avoid the costs of accounts with other institutions. In other words, higher paid loan officers, investment staff, underwriters, accounting and financial professionals will bank elsewhere, while lower paid administrative staff will be banking with you.



This is not true. Where I live, every bank offers free checking. Our employees who do bank with us range from the lower paid employees to senior management and everywhere between. I do not personally bank here for various reasons, which I've discussed in other threads.

Quote:

Looking at $100 inbound transactions for any employee is obtrusive.



How so?

Quote:

A preventive awareness campaign, where employees are fully informed of your anomaly testing process, coupled with your having documented standards in place, is the way to promote and encourage ethical behavior.



I agree 100%. All employees know that I audit their accounts. They don't know what I look at, but they know that the audit is perfomed. In my book, that is enough.

Quote:

Without a systematic anti-fraud process, any employee exhibiting obvious indicators of fraud (e.g., very high end cars, clothes, jewelry, etc., which are obviously well beyond the employee's legitimate means), but who knows how to defeat your process by keeping very little inbound activity into your bank's accounts, can easily stay below your radar.



I don't believe that the cars you drive or the clothes you wear are definite fraud indicators (but they can be). For example, your teller can be driving a new Lexus, but her husband may make $100,000/yr. By the same token, another teller can drive a beat up Civic and steal you blind.

As for flying under the radar, it could happen. However, that $100 was not a hard rule. If I see someone making $20 deposits everyday, I'm going to look at it a little closer. You look for patterns, not just single deposits. If it looks like a duck and walks like a duck, it may be a duck. However, it could also be a goose.

Quote:

Finally, I am troubled by one poster's mentioning of "Avon and Mary Kay" deposits and I am hopeful that this was just an off-handed comment mentioned only for the BOL audience and not something that would be discussed lightly over coffee in the lunch room. An audit professional who employees know conducts periodic reviews of personal identifying information of employees and then lets comments slip, even ever-so-lightly, is most assuredly headed for trouble.



Lighten up, man. This was a joke and only made in here. Professionalism and decorum are always used when dealing with fellow co-workers, regardless of audit area.

Jay, I hope you don't think I'm picking on you, because I'm not. I love a good debate. If I'm off-mark here, let me know.
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#308062 - 02/04/05 04:03 PM Re: Employee account review procedures...
Anonymous
Unregistered

Come on, are you going to go up to an employee and demand an explanation of where they got that $20?? It sounds like someone enjoys this a little too much and might be on a power trip.

After this thread, I agree with the poster who got rid of employee accounts. If I were a CEO and saw some of these posts, I'd do it too. I don't know about you, but with all of the new regulatory expectations and requirements, I have more important things to do than break out the thumbscrews for every non-payroll deposit.

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#308063 - 02/04/05 04:29 PM Re: Employee account review procedures...
A_G Offline
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Joined: Jul 2004
Posts: 18,957
Quote:

Come on, are you going to go up to an employee and demand an explanation of where they got that $20?? It sounds like someone enjoys this a little too much and might be on a power trip.




I wouldn't demand an explanation, but I might just take an extra look to ensure the deposits are not coming from a source such as, say, some hidden GL expense account(!) or being transferred from a non-related account. If you see a pattern, investigate, it's an auditor's job, NOT a glorified power trip.
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