Can anyone out there share their procedures and policies for the processing of debit and credit memos. 1,2, or 3 part form? Who gets copies of what? If an employee, signs do you have an officer sign? If an officer signs, is that enough?, do you have customers sign? Looking I guess for a "best practices".

I am not sure if ours is "best practices", so I will be interested in reading other replies.

The employee who writes up the debit/credit memo signs it. If it is at the direction of an officer (e.g. debit the customer's account to pay for an advance on an LOC or charge off a different account), the employee will also have that officer initial the ticket (always remember CYA). We had some branches that if the customer wanted to withdraw from their checking or savings, they would do a debit memo and have the customer sign it, but we stopped that practice. The customer either completes a counter check (for checking) or a withdrawal ticket (for savings).

We used to have three part tickets - the original went through proof, the customer received the middle copy, and the last copy (and most illegible) went into the customer's file or was attached to whatever paperwork initiated the transaction. It was discovered that most employees didn't really do anything with the third copy however. If the transaction was being done at a different branch, they either would not send it for filing to the customer's branch, or if they did, no one had time at the customer's branch to file them. So the decision was made to just go with two part forms - the top copy goes through proof and the customer gets the carbon. We have imaging, so if anyone needs a copy of the ticket, they have access to it.

Most three part forms went that way of the dodo - too expensive. On the other hand, entries to customer accounts often require a three part form - original to proof, copy to customer as a notice, copy to the file or attached to other documentation for an audit trail.

The signing practice/rule is that all "internal forms," e.g. 1-2-3 part forms must be signed by two people - the preparer and the person approving the transaction. If an officer prepares a form, in theory at least, a second authorized person must approve the transaction. In practice, officer approved forms often are processed without a second signature, unfortunately.

As noted by the poster above, it's not good practice to have customers sign internal processing forms, only instruction forms should be signed by customers, or, of course a check or counter-check.

Your internal audit people or program should have this "requirement" as a routine item to audit as the approving signature requirement is routinely ignored in the production environment.

From personal experience, I have found the best practice to be requiring, in policy, supervisor/ofcr approval on db/cr memo items if the customer is not available for signature, but, if the customer is avail to always have them sign.

As with all policy, this will not prevent a dishonest employees attempts, it can however, keep the honest ones honest (cya mentioned) and gives additional backing to actions taken against a dishonest employee.

We had an employee help themself to customer funds and deposit back before their stmt dropped. They kept up with their own scheme and would call the customer and tell them a db to their account had occurred in error but they caught it and was recrediting their account (by debiting another customer). None of the db/cr were signed, and once the scheme was uncovered, the guilty pleaded not guilty (of course.) Needing to get them out of the bank as soon as possible but before research was complete, the reason for suspension was "completion of the db/cr items without proper approval" They claimed - but other tellers do not get items approved/signed either! Our policy was immediately revised to specifically include this requirement....

The story got even better, but they finally admitted to the acts, which occured over a 3 year period with a loss in excess of $20M.

Grist:

What is your bank's practice for signature authorization limitations covering cashier checks, money orders, loan disbursement checks, etc. also wire transfers. Does you bank have a policy covering all signature authorizations or specific procedures applicable to the various functions?

thanks for the information.

Requests are mine not my employer

Within my current environment, we are fast and loose with authorities (new bank environment), other than we have a Board approved policy that allows management to assigned limits within the following area of activity: Internal Bank Documents, Official Checks & Wire Transfers, Bank Expense Checks, Uncollected Funds, and Overdrafts. Limits have been assigned at the employee level covering those areas.

The next step is to implement an "Authorization Record" covering each employee and signed by each employee. That record will include: Dual Custody (Assigned Keys or Combinations), Signing Authorities, Cashing Limits, Large Item Review, Debit Memo (approval), Salary Advance (approval), Credit Card Advance, Certificates of Deposit, Waiver of Service Charge and Uncollected Funds Review Authorizations, along with a listing of miscellaneous keys and other combinations assigned.

One of the purposes of the Record is to indicate that there is no authority in specific areas so that it's clear to each employee, that's especially important if an employee just starts doing something that they are not authorized to do - they cannot say that they don't know that authorization is required, in writing.

Thank you for sharing the information with me.

At two of the prior institutions ("good" big banks, well established) that I previously worked for we had authority levels set by positions which covered everything. since it was assigned by position, it did not need to be changed every time an employee changed. The one policy covered all the items I was questioning you about.

The institution I currently work for does not have such a policy and/or procedures on any level. I have been addressing this issue for 2 years. I was hoping if I was able to provide another way to implement the necessary authority levels, maybe management would act upon it. I am only familiar with my way. Yours is different. Maybe they will like it.

Thanks again

Requests and opinions are mine not my employer.

Assigning by position is very similar to assigning by employee, in that the limits work out to be very similar within each group of employees. On the other hand, some employees have better risk handling abilities than other employees within the same general work group, so individually assigning limits acknowledges that element.