Fraud Identification Training Sept-Oct 2022

CASE STUDY 3

You request a meeting with AVP Terguyst to discuss the reconcilement sheets. AVP Terguyst is very accommodating, yet somewhat elusive when fielding your direct questions. He relates that you probably don't fully understand how the CardPlus system works and that timing differences, which cause out-of-balance situations, are typical with the system. He further relates that he has too many duties at the bank and often does not have the time to record his entries on the system. AVP Terguyst concedes that documenting his reconcilements is important, and that moving forward, he will make a concerted effort to do so. He also agrees to provide you with written explanations for his balancing adjustments on the latest reconcilement sheet. You conclude from your discussion with AVP Terguyst that he has full electronic access to the bank's computer system and the stand-alone credit card system. This latest revelation does little to enhance your comfort level with regard to the bank's accounting procedures and controls. While discussing your findings with the Examiner in Charge (EIC), she relates that CardPlus services a number of banks in the area and she does not remember delays in processing causing a balancing problem. You decide to look a little more closely at AVP Terguyst's recently provided written explanations for his balancing entries. You request that bookkeeping run an activity report of the general ledger credit card loan account for the week to compare the entries with the CardPlus journal system report. Your review discloses that total postings on the CardPlus system do not balance with the general ledger because the bank's income accounts were not credited. Additionally, you note that there were a number of payments posted to individual cardholder accounts without corresponding entries to any general ledger accounts. You discuss your findings and concerns with the EIC. The EIC agrees that this situation requires further research. You and the EIC describe what you have found with the bank's Chief Operations Officer and request that the bank's internal auditor and bookkeeping department research the credit card accounts where the suspicious transactions are being posted.

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