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BRANCH AUDIT PROCEDURE

Validation of balances of Old Program to Cyberone Online System

Trial Balance
Print Report in Cyberone:
REPORT NUMBER REPORT GROUP REPORT NAME
5203 GL Trial Balance Trial Balance Per Branch (with GL code)

Compare balances of Old Program to Cyberone Trial Balance if tally as to every
particulars/account.
Compare schedules if tally in Cyberone.
Cash
Plan to count all cash balances SIMULTANEOUS to prevent any transfers of floats to hide
discrepancies.
Cash counts
The following procedures should be applied:
Surprise cash count: cash counts must be performed without the custodian being
informed in advance.
Control all cash funds: until the completion of the count to prevent cash being transferred
between funds to conceal deficiencies.
Count in the presence of the custodian: to ensure the auditors cannot be blamed for any
shortage.
List each item in the fund: showing the denominations of notes and coins. (cash count sheet)
The custodian should sign: the record as evidence of agreement.
Agree the total to the petty cash book balance: and investigate any differences.
Accountable forms

Accountable forms require security consistent with their potential value or negotiability. The
degree of control involved in safeguarding and handling an accountable form should be dependent on
the scope for its misuse and the possible financial consequences, but with due regard to administrative
costs.
The following procedures should be applied:
Inventory checking: physical verification of the quantities and condition of items held
compare to the schedule.
Validate Register of Accountable forms: check the completeness of record of the following
information in respect of each type of accountable form:
date of receipt;
quantity received;
serial numbers of the forms. Where the forms are received in pads or bound books, a
separate line is to be used to record the serial numbers applicable to each pad or
book;
its nature (the type of accountable form);
the destruction, cancellation, transfer or issue of accountable forms; and
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All entries in the register are to be signed and dated by the cashier.

In respect of issues:
date of issue;
quantity issued;
serial numbers of the forms issued in those cases where the forms are in loose form;
and
signature of the employee receiving the forms.

Check the Control and Issue of Accountable forms: Are bulk stocks of accountable form
maintained at the vault under the control of the cashier? Are working stocks issued to
customer relation staff being safe keep? During working hours the forms should not be left
in such manner that they are accessible by persons passing through unsupervised areas.
Outside normal working hours the forms should be locked in secure storage.
Check the register if the issued accountable forms from the bulk stocks were recorded
by the cashier. Check the serial numbers of the form recorded and acknowledged in the
register book.



Bank Reconciliation

A bank reconciliation is the process of matching the balances in an entity's accounting records
for a cash account to the corresponding information on a bank statement, with the goal of
ascertaining the differences between the two and booking changes to the accounting records as
appropriate.
The following procedures should be applied:

Step 1 - Test mathematical accuracy: In auditing a bank reconciliation, always performs a
basic arithmetic test to ensure that cash additions and deductions made to bank and book
balances are mathematically correct.

Step 2 - Confirm bank and book balances: While some work focuses on detecting potentially
non-compliance accounting practices, one goals is simply to uncover any clerical errors
from compiling accounting information.
Checks the listed original balances on the bank reconciliation working paper to ensure
that they agree with the source information shown on the bank statement and the book
records.

Step 3 - Verify bank charges and credits: Bank charges are bank fees assessed on a bank
account and credits are interest or other collections allocated to the bank account. Bank
charges and credits may be unknown until the receipt of its bank statement. As a result,
book records may overstate or understate the cash balance. Thus, a bank reconciliation
deducts bank charges from and adds bank credits to book balance.
Ensure that the bank charges and credits used in the bank reconciliation agree with
those included in the bank statement.

Step 4 - Validate adjusted book balance: Free of accounting error and fraud, the adjusted
book balance should equal the adjusted bank balance after an accurate and compliant bank
reconciliation.
Validate the adjusted book balance of cash, which later includes in the cash account of
the financial statements. Checks to see whether the adjusted book balance of cash is in
agreement with the cash account balance recorded in the general ledger.



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Post Validation of Daily Transaction (sampling)

a. Substantive Test of Transactions
Activities performed to detect material misstatement or fraud related to transactions or account
balances.
Analytical Procedures - comparison of data from different sources to determine if reported
information looks odd or wrong.
Trace a transaction (loans portfolio & deposit liabilities report, schedules of Accounts
Receivable, Accounts Payable, Fees & Commission and Accruals) to the accounting records to
verify that it was properly recorded.
Unexpected differences or variations in the data indicate a need for further review.

Tests of details - tracing figures to supporting documentation to determine if transactions are
valid, properly classified, accurate and complete. Tests also include recalculating and
confirming recorded information.
- Examine if tickets, checks, debit and credit memos are complete, duly signed, and
concisely explained.
- Review attachments in ticket in confirming recorded information.
- Check details, approval, correct validation in cyberone and total run-up of Deposit and
Withdrawal slip.

Compliance testing Interview bank employee using the Internal Control Questionnaire to test
the organization's compliance with control procedures.
List of Internal Control Questionnaire
- ACCOUNTING RECORDS AND PROCEDURES for Accounting Associate
- CASH for Cashier & Teller
- DEPOSIT for New Account, Accounting Assistant & Teller
- LOANS for Loans Bookkeeper


b. Deposit Liabilities
Current Account/Savings Account: Check the application form for completeness of details
and documents submitted. Randomly validate deposit slip and withdrawal slip at least 3 to
5 days per month. Check balances in CyberOne system, if there has been big changes in
outstanding balance in any account, review movement of transactions in their statement of
account then trace back to their deposit or withdrawal slip and debit or credit memo.

PSD/CTD: Check the application form for completeness of details and documents
submitted.
Print Report in Cyberone:
REPORT NUMBER REPORT GROUP REPORT NAME
3804 Time Deposit-Outstanding
Balances
Outstanding Balances
Rate/Term/Maturity

Check the interest rate of all accounts if aligned to Inter-office memo no.10-2014.

ATM Card & Pin mailer: Card issued by our bank to our customers which enables them to
access an automated teller machine for transactions such as deposits, cash withdrawals,
obtaining account information, and other types of banking transactions.
Check Dual Control: ATM card and Pin mailer should be indorsed to two Bank employee.
Check the log book for completeness in signature of the person (owner) who received the
card and pin mailer. Cards which were not been received for 3 months or more should be
indorsed back to HO and pin mailer should be shredded by the cashier.

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Dormant Account: When there has been no financial activity for a long period of time,
other than posting of interest, an account can be classified as dormant. This account is
most vulnerable to internal abuses and fraud by bank employees.


The following procedures should be applied:

Obtain a report showing all dormant accounts.
o CyberOne Reports No. 2054 Outstanding balanceDetails
o CyberOne Reports No. 2311 Transfer from Active to Dormant Account
o CyberOne Reports No. 2341 Transfer from Dormant to Active Account
Determine if there has been any activity in these accounts since the date
classified as dormant.
If activity is found, trace the transaction back to the deposit or withdrawal
slip.
Check the signature with the signature card.
On all dormant accounts, determine that they are being charged in monthly
service fee.
Compare the prior audit's report of accounts to the current report. For any
accounts that have become active since the last audit, trace the item that re-
activated the account and verify that the customer made the transaction.
Verify signature cards on dormant accounts are maintained under dual control.

Closed Account: An account that has been deactivated at the request of the
account holder or by the action of the provider in which
no additional adjustments may be made. It represents the final, detailed statement of
account activities between the two parties.
Review the closed account report. Choose a selected sample of closed accounts and
compare the signature in the withdrawal slip with the signature card. Check the
signature of the employee and the overriding officer.


c. POSTING TO THE GENERAL LEDGER AND SUBSIDIARY LEDGER
The process of copying detailed entries in an accounting journal into the general ledger. It is
needed in order to have a complete record of all accounting transaction.
The following procedures should be applied:

Check the completeness of record of the following information in ledgers:
o Date
o Explanation
o Amount of entry
o Running balance

Reconcile general ledger to subsidiary ledger
As there is always room for a human error, it is important to reconcile the general
ledger balances to the subsidiary ledger.
Compare G/L balance to the subsidiary ledger balance - start by analyzing the
G/L and sub-ledger balances to identify any differences. While doing that, pay
special attention to the transactions that are unusual in their nature.
Investigate reasons for the difference - after comparing the G/L and subsidiary
ledger and found differences, you should investigate reasons for them. Reasons
for the difference can include the following:
Items posted to G/L, but not in subsidiary ledger
Items posted to subsidiary ledger, but not in G/L
Errors


d. LOANS
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Loan Releases: check if note proceeds are always released by credit to deposit accounts or
by official checks and never in cash.




Deductions & charges: randomly check PNs for correct computations of deduction and
charges.

Ledgers: Is the posting updated? In case of accounts with charges, check for correctness of
computation. Do loan ledgers contain the following basic information for each loan
account:
Name of borrower
PN number
Date granted and maturity date
Type of loan including its status (current or past due)
Collateral
Outstanding balance
Accrued/Unearned interest





Prepared by:

MARK ANTHONY L. AYALA
Audit Assistant







Checked and Approved by:


GLORIA B. MARQUEZ
Internal Audit Officer