We are a small community bank with an external audit team. Please help me understand how other banks handle risk from input transaction control. The example given was that all teller transactions have controls because of cash balacing and the possibility of a teller noting something unusual in an employee transaction they handled.

The concern is about transactions that don't pass through a teller, like G/L tickets and the possibility of malfeasance.We are being asked to provide written procedures on the control of input to our processing.

I still don't understand. What do you recommend I look at to determine our risk and the sufficiency of procedures to combat that? Thanks for your help

Thanks.

All GL tickets need to be signed by the preparer and approved by an authorized employee/officer. Processed tickets need to be subject to review the next business day, assuring that approval is included.

At the last bank I was with, we satisfied the auditors by putting a procedure in place to conduct a cursory review of proof work prior to the work being picked up each day. That way a branch supervisor thumbed through a sampling of proof bundles before they were put into the locked proof bags picked up by the courier. They looked for, among other things, unapproved GL tickets and unvalidated cash in/cash out tickets. It obviously wouldn't catch everything, but it mitigated the risk to the point that the auditors could live with it.

Here's a good discussion that took place a few months ago.