FIRST TAGUM RURAL BANK, INC.

Branch : Matina
Date : April 12, 2017

Subject : Annual draft report

For : MR. NESTOR R. LUMAIN JR.

Office-In-Charge

CC : All Staff

Responsible
Findings/Exceptions/Observations Officer/Personnel Branch / Department Reply & Committed
Timeline
CREDIT RISK

Violation on Circular no. 855 – General guidelines in

granting loans and loan evaluation / analysis process and
underwriting standards.

 Policies on the approval of loan were not strictly For submission to Sir Benjamin Geli
implemented. Some loan renewals were not Loans Processor
approved by the appropriate approving authorities.

- LIAS lacking signature of CRECOM.

(see details in annex L1 & L2

 Lacking signature on 2x2 Picture, Request for CI & Loans Processor Complied already under the account of
Appraisal Form, & ATD Sebua, Mary ann & Sanlocan, Josie
(see details in annex L1 & L2)

According to MIS the Loan number indicated

 Inconsistent information indicated in Promissory
Note and Disclosure Statement versus CyberOne
System
(see details in annex L1 & L2)
 1 Land title not annotated (T-364134) under the
account of Sison, Norman.
(see details in annex L3)
Loans Processor in Cyberone should be follow to prevent
inconsistency of the loan numbers therefore
the number indicated on the PN will be
change . By changing it the client will
counter sign on the edited part.
Client already contacted promise to comply
Loans Processor firstweek of MAY

Already Complied except for the Latest ITR

Violation on FTRBI Loan Policy SECTION 3: APPENDICES and Current year business permit of of Uy,
– Standard Loan Requirements Jocelyn. Client already contacted and
promise to forward by within this week.
 Lacking required documents

- Certificate for Completeness of Documents

- Interbranch CI
- Interbank CI
- Latest Income Tax Return
- Current Year Business Permit
- Notarized Agreement on purchase of postdated
check (see details in annex L1 & L2)
We submitted the folder to loan analyst for
 Noted 1 account forwarded by the branch to Loan checking but the branch make sure that the
Admin Department despite of several documents documents were already completed before
were not attached amounting to P 5,000,000.00 the release.
under the account of Urbantech Consultancy And
Realty Corp.
(see details in annex L4)
Violation on BSP Circular 855(Guidelines in setting-up
Allowance for Credit Losses
Non-Compliance on BSP circular 855
 Understated loan loss provision for the month of
March 2017 amounting to P629,764.37
(see details in annex L4)
 Loan accounts with erroneous tagging amounting
to P563,514.85
(see details in annex L5)
MORB X178.15 – Credit Monitoring
Unpaid amortizations
 Noted loan account of Ms. Dela Viňa with unpaid
amortization amounting to P1602.22 as of 3.3.117 Bookkeeper/Branch
(L10)
PDC monitoring
 All PDC issued by Urbantech Consultancy and
Realty Corp. intended for loan repayments were
noted pre-signed.
 Noted 5 loan accounts with lacking PDC’s intended
for loan repayments.
(see details in annex L7)
ROPA visitation
 No signage representing that area was under Branch Manager
bank’s property in the forclosed residential
property of Mr. Lamaparas (L11)
MORB Section X308 – Past Due Accounts
2016 releases past due in status
 Noted 2 loan accounts released in 2016 but Past
due in status as of 3.31.17 amounting to
P2,913,133.12 (L8)
Migrated Loan accounts
 Noted 3 loan accounts migrated from current to
Past due loans for the month of February 2017
amounting to P889,358.22 (L9)
Write-off folders inventory
 16 write-off folders out of 24 not presented upon
actual inventory (L12)
INTERNAL CONTROL RISK
MORB Section X181.4 (2008 - X171.4) Minimum security
measures
 Unrecorded activities relative to opening and
closing of vault
- Activities inside the vault not recorded
on log book
- Opening and closing of vault door not
recorded on log book
(See Annex C1)
MORB – B on Savings Deposits Section X213.7
 Passbook not returned to the depositors on the
Loans Bookkeeper For correction before month end.
Complied already
Loans Bookkeeper
Loans Already updated last April 12, 2017
Collector
Loans Figures on the check already indicated by the
Processor/Loans client.
Bookkeeper
Under the account of Gonzales, Leonisa who
has 19 lacking pdc issue 12 pdc on 4.19.17 the
client promise to comply the 7 lacking checks
within this month. The other 2 loan accounts
under the name of Lendio, Delia and Baysa,
Helen already contacted and promise to
comply before month end. The rest already
complied.
Signage already made
Branch Manager FULL PAYMENT MADE 4.20.17 under the
account of Huyatid, Florecelle. The account
of Nalogon. Cristina - documents are ready
for forclosure
Branch FULL PAYMENT MADE 4.20.17 under the
Collector/Branch account of Huyatid, Florecelle. ALREADY
Manager TRANSFER TO CURRENT FROM MARCH
UP TO PRESENT under the account of
Gozales, Leonisa. ALREADY RECEIVED
1ST, 2ND, 3RD NOTICE AND ATTY'S
LETTER under the account of Angeles,
Pedrito
Loans Bookkeeper All folders were in the vault except GUERA,
LARRY NEIL who was in the hands of Atty.
January Risonar
We will log book opening and closing of
vault door next time.
Branch Cashier
We have already logbook for passbook
Branch Teller/
 following working day Cashier

- No logbook for receiving and returning

of passbook
- Noted 35 passbook in teller’s custody as
of April 11, 2017

 The following were also noted upon examination

- Noted 17 passbook left in bank older
than 2015
- Noted 1 passbook were already filled
- Noted 7 newly open accounts were
passbook left in the bank after the
opening of account
(See Annex C2)
MORB Section X185.5 (2008 – X163.3) Division of duties and Dual function of Teller at the same time
responsibilities Cashier due to lack of employee.

 Duties of the officer and employee not segregated Branch Cashier

- Cashier can do a withdrawal and deposit

transaction even though the user group is
not in cashier/teller.

MORB Section X185.6 (2008 – X163.6) Dual Control Dual function of Teller at the same time
Cashier due to lack of employee.
 The work of one (1) person is not verified by a OIC/Branch Cashier
second person

- Cash withdrawal above P10,000.00 up to

P100,000.00 transacted by the cashier
without verification or override by a
second person .

Manual on Cash Operation Section 24 – Registries We will update registries for the year 2017.

 No registries performed Branch Cashier

- Cashier’s Check upon transaction

registration
- Certificate of Time Deposits upon
transaction registration

 Registries format not based on cash manual

operation Branch Cashier
We will follow the correct format of
- Issuance of Checkbook registries.
- Official Receipt
- Cashier’s Check upon issuance
- Certificate of Time Deposits upon
issuance

PROCESSING RISK

MORB Section X214 – Withdrawals Complied already.

 Accepting withdrawal slips to effect withdrawals Branch Teller
of savings deposits

- Date not properly filled up (year)

- Validated on blank withdrawal slip
instead on filled in withdrawal slip
- Withdrawal slip not validated
(See Annex C3)
Manual on Cash Operation Section 21 – Determination of Branch Cashier Already paid dated January 16,2017 with OR
Fidelity Bonds #17063 (Loans) and (Cashier)

 Employees handling cash not totally bonded

- Fidelity bond of Cashier and Loan staff

not yet paid

Manual on Cash Operation Section 5.2 – Opening of time ~Cancelled CTD already attached the
deposit accounts original copy.

 Issuance of CTD’s with deficiencies New Accounts

~CTD completely signed by Ms. Fiel
~CTD # 295 & 296 already file.
- Cancelled CTD where original copy not
 on file
-
CTD not completely singed
-
CTD not on file
(See Annex C4)
ACCOUNTING AND REPORTING RISK

MORB Section X185.1 – Proper Accounting Records We will not use sundry credit and debit
Accounting account next next time.
- Frequent use of Sundry Credit and Debit Accounts Bookkeeper
(See Annex A1 & A2)
Accounting Manual §1.1 Basic Elements of Internal ~Already signed by Ms. Paco
Accounting Control ~Detached already the customer & file copy.
 Existence of adequate records and documents Accounting
(Item No. 4) – Proof Sheet deficiencies Bookkeeper

- CC not signed by payee

- Customer and file copy of CTD not kept
separately to Cashier and NAC’s File.

(See Annex A3)

SECURITY RISK
Violation on MORB X181.5 - Minumum Security measures

 One CCTV (channel 7) was defective during actual

checking. Branch Manager SEND REQUEST C/O OF SIR MARK

 Security code of the bank not changed despite of

many resigned employees knowing the code. Branch Manager SEND REQUEST C/O OF SIR MARK

 Not changed safe vault door combination despite Branch Manager SEND REQUEST C/O OF SIR MARK
of resigned previous OIC and transferred previous
Branch Cashier

Significant Observations:

 Insurance remittances branch copies not properly Loans Insurance already filed.
filed Bookkeeper/Loans
Processor

 Customer, file, posting and accounting copy of Accounting Customer,file & posting copy already
credit and debit advices not properly segregated. Bookkeeper detached.
We will attached cash transfer slips on CDR
 Cash transfer slip not attached on cashier’s daily Branch Cashier
record summary

Comments/Replies and expected time table to comply noted deficiencies must be submitted within five (5) working days upon
receipt of the audit report.

Audited By: Noted by:

RAYMOND M. ROSAL GERONIMO H. PADAS III MS. MARILOU E. YBAŇEZ

Junior Officer - IAD IAD-Staff VP-IAD

RUSSEL A. TAHIL RAFAEL L. SANCHEZ III

IAD-Staff IAD-Staff

DONNA E. SALARDA
IAD-Staff