AUDIT PROCEDURES

CASH COUNT PROCEDURE

Cash in Vault

1. Request cashier or cash custodian to witness the verification. The presence of

the cashier or cash custodian in the verification is very important. The cashier
cannot refuse acceptance of any shortages or overages found in his/her
presence.
2. Count the cash and other cash items in the vault.
3. List breakdown of cash counted on the cash count sheet as follows:
4. To expedite verification, bulky cash in bundled bills and packed coins may be
counted on a test basis, provided that the total amount per account tallies with
the balance per record. In case a discrepancy exists because of the test-count,
piece-by piece verification should be made.
5. Prepare a separate working paper for checks and other cash items found in the
vault.
6. Return counted cash items to cashier or cash custodian
7. Request cashier or cash custodian to sign the cash count sheet to signify return
of the items counted.
8. Obtain cash transfer slip/s and determine cash balance at the time of
verification. Indicate cash balance per books or receipt on the cash count
sheet.
9. Compare balance per books or receipts with the total amount per count. In
case of discrepancy, write comments or actions taken by the cashier inclusion
in the report.
10. Discuss result of cash count with the respective branch/office.

Teller’s Cash

1. Request teller to witness the cash count. If possible, verification should be

done simultaneously with the count of all cash accountabilities. Do not count
teller’s cash during peak hours.
2. Count the cash and other cash items in the custody of the teller.
3. list breakdown of cash counted on the cash count sheet. Foe checks and other
cash items in the possession of the teller, prepare a separate working paper.
4. Return the counted cash items to teller.
5. Request teller to sign on the cash count sheet signifying return of the items
counted.
6. Obtain cash transfer slips of teller and deposit and/or withdrawal slips
covering her transactions as of the time of cash count.
7. Determine her total cash accountability by following the steps below.

a. Write down beginning cash balance for the day or previous day’s
ending cash balance.
 b. Add cash deposits
c. Deduct cash withdrawals from the total of a and b above.
8. Compare cash accountability determined in number 7 above with the total
amount per count. In case of discrepancy, write comments or actions taken by
the teller for inclusion in the report.
9. Discuss result of cash count with the respective branch/office.

Petty Cash Fund

1. Request petty cash custodian to witness the verification.
2. Count the cash and other cash items in the possession of the custodian.
3. List breakdown of cash counted in the cash count sheet.
4. List in a separate worksheet the unreplenished petty cash voucher showing the
following information:
a. Date paid
b. Payee
c. Nature of disbursement and account charged
d. Amount paid
e. Approving officer

5. Examine the unreplenished petty cash vouchers and supporting receipts to

determine that:
a. The unreplenished vouchers are duly approved by the
Manager/Supervisor.
b. The supporting receipts/invoices are in their original form to avoid
possibility of double payment.
c. In case there are no supporting receipts, the unreplenished vouchers
are acknowledge by the payee/s.
d. Single payment out of the fund does not exceed P 1,000.00 (limit)
6. Take note of unliquidated temporary cash advances. These should be referred
to the Manager foe immediate settlement.
7. Total the amount of counted bills and coins and the same with the total
amount of unreplenished petty cash vouchers.
8. Compare amount of fund per records/books with the total amount obtained in
number 7. in case of discrepancy, write comments or action taken by the
custodian for inclusion the report.
9. Discuss result of cash count with the respective branch/office.

Due from Other Banks

Reconciliation of demand deposits

1. Obtain bank statement/s with corresponding cancelled or paid checks and
debit/credit advices/memo from depository bank.
2. Compare balances per bank statement with the general ledger/subsidiary
ledger account. In case of two or more types of accounts in a depository ban,
trace balance in the subsidiary ledger.
 In case of combination of two or more depository bank in a single general
ledger account, trace book balance in the subsidiary ledger.

3. Examine the paid check to determine that-

a. The signatories appearing on each check are in accordance with the
bank signing authorities.
b. No postdated or stale checks are paid.
4. Trace cancelled/paid checks against the previous month schedule of
outstanding checks, subsidiary ledger of corresponding local bank account and
bank statement. List down checks already issued per subsidiary ledger/check
register but not yet cleared with or paid by depository bank. In case of checks
paid by depository which were not recorded in the subsidiary ledger, list
detais of the checks.
5. Compare credit entries per bank statement (representing fund transfer to
deposits) with the debit entries per subsidiary ledger.
List down debits already taken up per subsidiary ledger/check register but
were not yet taken up per bank statement or vice versa.
List down discrepancies on debits per subsidiary ledger and credits per bank
statement.
6. List down debits per bank statement which were not taken up per subsidiary
ledger. Test computations of such debits as supported by debit
memos/advices.
7. Summarize all reconciling items following the attached format in the
preparation of reconciliation statement.

CREDIT AND LOANS REVIEW

1. Run-up loan/borrowers ledgers according to the following classification.

2. Compare run-up totals with the balance per subsidiary control ledgers or
general ledger controlling account.
3. Prepare working papers on documentation review using the following column
headings:
a. Name of borrower and account/PN number
b. Term in days/months/years
c. Date granted
d. Maturity date
e. Nominal/effective interest rate
f. Amount of loan
g. Outstanding balance as of cut-off date
h. Manner of repayment
i. Brief description of collateral to include-
Real estate Mortgage
• OCT/TCT Number
• Area/classification and location of property
 Chattel Mortgage
Description of chatter and location (may be listed
separately)
Assignment of shares of stocks/marketable securities
• Number of shares and par value per share
• Issuing institution/entity.
Assignment of deposits
• S/A-T/D number/depository bank
• Amount assigned
Co-Maker- name of co-maker/s
Others-specify
4. Obtain individual collateral credit folder pertaining to loan accounts desired to
be reviewed.
5. Physically examine the documents contents of each folder and indicate in the
working papers the exceptions of any of the documents required. All
incomplete documentations or exceptions noted should be referred to the
respective officer for the appropriate action.
6. Test mathematical accuracies on interest computations and verify propriety of
accounting entries.

Documentation requirement per borrower

Real Estate Mortgage

• Promissory Note(PN)- should be in original form duly signed by

borrower/s
• Original transfer certificate of title (OCT/TCT)- should be original
(not Xerox copy) and registered in the name of borrowers,
mortgage annotated in the title in favor of the bank should be
equivalent to amount of loan granted; annotation duly registered
with the Register of Deeds; date of inscription of mortgage should
be prior to release of loan.
• Post dated check/s (PDC’s)
• Deed of real estate mortgage (REM)-duly signed by borrower/s
and authorized signatories of the bank, notarized and registered
with the Register of Deeds.
• Real estate tax receipts (current) pertaining to the property
mortgaged.
• Tax Declaration of real property and insurance policy (on
improvements thereon) with current premium receipts.
• Application form and credit investigation/appraisal reports.
• Copies of loan release sheets.
• Loan committee/board approval
• Residence certificate/tax Identification Number
• Copy of income tax return for previous year/proof of income
 •
Location plan of property
•
Other documents
o Certificate of registration (BIR/SEC or Bureau of Domestic
Trade) and current year financial statements, if borrower is
engaged in business.
o Articles of co-partnership in case borrower is a partnership
o Articles of incorporation/by-laws and board resolution, in
case borrower is a corporation.
o Special power of attorney authorizing the person to borrow
in behalf of the true owner/borrower.
CHATTEL MORTGAGE

1. Promissory Note duly signed by borrower/s; in original form;

2. Deed of chattel mortgage (CHM) duly signed by borrower and
authorized signatory of the bank, notarized and registered. In case
secured by CHM of motor vehicle- registration certificate with the
Bureau of Land Transportation and Register of Deeds.
3. Documents pertaining to ownership of the property duly annotated
with mortgage in favor of the bank. In case secured by CHM of
inventory certified/updated list of chattel inventory.
4. insurance policy coverage of property with notation of payment in
favor of the bank in case of loss (with current premium receipt).
5. Postdated checks (properly filled-out)
6. Application form and credit investigation/appraisal reports.
7. Copies of loan release sheets and loan committee/board approval.
8. Residence certificate, tax identification number and income tax return
for previous year.
9. Other documents required.
ASSIGNMENT OF SHARES OF STOCKS/MARKETABLE SECURITIES

1. Promissory note duly signed.

2. Shares of stocks properly endorsed and annotated at company’s stock
and transfer books.
3. Deed of assignment duly signed.
4. PDCs properly filled
5. Applicatioon form and CIR/appraisal reports.
6. Copies of loan release sheets.
7. Loan committee/board approval
8. Residence certificate, tax identification number and current financial
statements.
9. Other document required.

ASSIGNMENT OF DEPOSITS

1. Promissory note duly signed.

2. Deed of assignment duly signed and notarized
 3. Savings passbook/certificate of time deposit properly endorsed with
hold out notice on corresponding ledger/ticket card.
4. Application form and credit investigation report.
5. Copies of loan release sheets.
6. Loan committee/board approval
7. Residence certificate, tax identification number and previous year
income tax return.
8. PDCs properly filled out
9. Other documents required

CLEAN LOAN/CO-MAKER
1. Promissory note duly signed by borrower/co-maker
2. Co-maker’s statement duly signed
3. Application form and credit investigation report
4. Copies of loan release sheets/disclosure statement
5. Loan committee/board approval
6. PDCs properly filled out
7. Residence certificate, tax identification number and previous year’s
income tax return.
8. Other documents required.
Audit Assistant

• Assist the Internal Auditor/Supervisor in the overall review of accounting and

financial records and operations of the bank branches.

• Conducts daily review of transactions affecting deposit accounts.

• Reviews daily statement of condition together with supporting proofsheets,

transaction tickets and related documents.

• Reviews and complies BSP circulars, memoranda and circular letters.

• Performs other related tasks and functions that may be requested by management.