Pub. 4 2015 Issue 7

Call KBS (785) 228- 0000 to discuss this article and other loss prevention topics or products to help protect your bottom line. twitter.com/kbsforbanks linkedin.com/company/kbsforbanks Subscribe at http://tinyurl.com/kbssubscribe An auditing firm was hired to reconcile every transaction in the account for the past four years. It found that some transactions were inadvertently posted to a different internal account at the bank, and those transactions were corrected. It also determined that the Fed received two outgoing cash letters for about $300,000 and $120,000, but the Fed never credited the bank. Such errors by the Fed are unusual, but in that period of time, a disaster had caused the Fed to use a backup facility, and the Fed had accidentally credited two other banks for this bank’s two cash letters. The Fed refused to credit the bank for the errors, citing the one-year error-correction rule. The bank tried working directly with the other banks to correct the errors. The community bank that had received the $300,000 cooperated by returning the overage it had received. The other large bank had its attorneys handle the matter. They refused to cooperate, citing the Fed one-year rules and an applicable statute of limitation. Reconciling and balancing the correspondent account and verifying all items held in each suspense account is a reasonably simple process if done regularly. Any discrepancies can be found and corrected quickly. Time after time, we’ve seen instances in which bank employees fell behind in balancing the correspondent account or clearing items from suspense accounts, which resulted in the task of reconciling and balancing becoming unbearably complicated. When employees are struggling with this task, it’s time to call in auditors to verify the reconciliations and trace the origin of the discrepancies. Once the accounts are fully reconciled and balanced correctly, the employees need to be trained to keep these tasks up-to-date to avoid the process becoming unbearable once again. Completely balancing and reconciling the correspondent accounts and all suspense accounts and having a second person completely reconcile and balance each account monthly can be a reasonably simple task that helps prevent large embezzlements and corrects mistakes before they become huge problems. Connect with us on social media: Gain access to enhanced KBS content: Have a second employee completely balance and reconcile the accounts monthly can prevent mistakes from becoming disasters. “ ”