Employee Account Statement Reviews

Posted By: kendrar

Employee Account Statement Reviews - 01/16/08 02:53 PM

I am very new to this position - I have done audits before but they have been mostly financial statement related audits. I am the internal auditor and one of my tasks is to review employee account statements each month. In my reviews I have found a number of employees making numerous cash deposits into their accounts. I noted this in my audit report and, as suggested by the CEO/President and the Executive Vice-President, was going to recommend that the employees who deposit cash into their accounts indicate the source of cash on the deposit tickets. That has met with much opposition from some of the branch managers that have to make management responses to my findings. It is my understanding that bank employees should be held to higher standards than the rest of our customers. I am just wondering what other internal auditors do in regards to employees depositing cash into their accounts. Also, what other procedures should I do to determine that the cash that the employees deposit into their accounts is appropriate? I am looking for any guidance here, please do not feel like you will be saying something that I already know - I am extremely new to the banking world - only worked at a bank for approximately 3 months. I need some help and understanding in this matter.

Thanks in advance for all your help.
Posted By: stuckonZ

Re: Employee Account Statement Reviews - 01/16/08 10:59 PM

First of all, I didn't realize auditors still reviewed employee accounts. Obviously this is a delicate situation. As a 20 yr auditor and a former GA at a large regional, I would suggest strongly that you keep the results of your testing to yourself and investigate unusual activity only when necessary. There is nothing that says employees can't or shouldn't deposit cash in any Reg or state law that I know of.

Determining when to investigate is tricky as well. Just reviewing records over a period of time will allow you to see patterns develop. If you see unusual patterns develop such as structuring cash deposits, employees on the kiting suspect report, or finding numerous cash outages at a banking center then investigate these employees further. Otherwise file your testing away and refer to it when necessary.
Posted By: Jokerman

Re: Employee Account Statement Reviews - 01/17/08 03:38 AM

Kendar, I agree that it's not reasonable to ask every employee to disclose their private business every time they make a cash transaction. When I was conducting these audits (and I just reviewed system info - much quicker than going from statements), I would just ask the employee's supervisor if I saw repeated unusual cash deposit amounts. And I didn't just look at cash - if I saw any deposit that was unusual, I asked if they had any concerns and if they knew what the purpose might be, then documented it. I kept a sheet that showed a rolling twelve months of notations, so I could see if any unusual activity was recurring. Finally, you'll need to think about context - a transaction by the vault teller that might warrant follow up may not be worth it for a senior lender.
Posted By: ItNeverEnds CRCM

Re: Employee Account Statement Reviews - 01/17/08 04:57 PM

I review employee accounts I usually use the system as Jokerman stated instead of statements, generally it's easier to see patterns on the system history rather than on the statement itself (depending on how your statements are set up). Again like Jokerman said look at the position of the employee, do they have access to cash which could be embezzlement. Also, look for cash kiting, are they writing checks when they don't have the funds to check cashers or stores that will give cash back and depositing the cash back into their account before the check clears. But I agree that it's not reasonable to ask every employee to document the source of cash when depositing.
Posted By: OkieDokie

Re: Employee Account Statement Reviews - 01/17/08 05:50 PM

I work at a state non-member bank, and a minimum internal control requirement is that the auditor or someone he supervises review employee accounts, some banks have their human resources person review these accounts. I agree with not asking employees to note the source of cash, it offends them, and quite frankly they will write all sorts of things.
Posted By: BSAguy

Re: Employee Account Statement Reviews - 01/18/08 04:41 PM

We have to complete monthly reviews for bonding purposes. We developed a report that shows all employees that had more than 7 deposits, or a deposit of over $2,500 in the statement cycle. The report only shows the deposit activity for each account that meets the above criteria. We complete a review of those accounts by sampling the transactions. We don't review 100% of the transactions.