Case:
Review the case study and complete the following steps regarding the collateral deposit process:
Identify each of the participants and define their role in the process.
Identify the procedures performed by each of the participants. Break down the procedures into the smallest step possible.
Create a detailed procedure list per participant. You will use this information to perform the next step .
Case Study
Dan Matt, a junior auditor for Kramp and Company was assigned the responsibility of conducting a preliminary application review of a client bank's loan department operations. Dan created a flowchart and explanation of the loan process and turned it over to his senior. He was writing up his assessment of the process from his notes when his senior interrupted and asked what happened to the collateral received on the loans. Dan recognized the significance of this omission and agreed to check it out right away.
Collateral Deposit Process
Collateral can be anything of value acceptable to the bank but it typically some type of security. Dan found that customers turn over any collateral to their loan officer, who prepares and signs the next in sequence in a pre-numbered four-part form that describes the collateral and serves as receipt. Each copy of the form is a different color to facilitate identification. The customer receives the original of the collateral receipt form, which is pink. The second or white copy of the form is sent directly to the collateral records clerk, who logs it in. The loan officer takes the third or blue copy to the vault custodian along with the collateral. The fourth or yellow copy is cancelled and discarded. The vault custodian compares the blue copy of the receipt with the collateral in the loan officer's presence. If they agree, the vault custodian signs the blue copy. The vault custodian then attaches a tag to the collateral and carries it and the blue copy of the collateral receipt to the vault attendant. The vault attendant also compares the description on the blue copy with the tagged collateral. If they match, the attendant also compares the description on the blue copy with the tagged collateral. If they match, the vault attendant opens the vault and jointly with the vault custodian deposits the collateral within. The vault attendant notes the location on the blue copy and signs it. The completed blue copy is then taken by the vault attendant to the collateral clerk. Until the blue copy is received, the collateral clerk keeps the unmatched white copy, filed numerically in a suspense file as a reminder for follow-up purposes.
On receiving the blue copy from the vault attendant, the collateral clerk compares it to the white copy previously received directly from the loan officer. If the blue and white copies match, the collateral clerk completes the entry in the collateral register in numerical order. The white copy and the blue copy of the collateral receipt are placed in a permanent file by name. Any differences are resolved with the loan officer's assistance.
Writing Requirements (APA format):
1 to 2 pages (approx. 300 words per page), not including title page or references page
1-inch margins
Double spaced
12-point Times New Roman font
Title page with topic and name of student
References page (as applicable)
Reference: Chapter- Introduction to Transaction Processing.