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Returned Checks Audit Work Program

This document outlines an audit work program to review how returned checks are handled. The objectives are to ensure checks with insufficient funds are properly handled. The work program details administrative tasks like planning, reporting, and documentation. It also describes preliminary field work like identifying contacts and understanding processes. Finally, it lists detailed audit procedures like reviewing policies, testing controls, verifying charges are applied for returned checks, and ensuring unusual transactions are monitored. The overall goal is to assess whether returned checks are properly approved, accounts closed for frequent returned checks, and clients notified of returned checks.

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348 views

Returned Checks Audit Work Program

This document outlines an audit work program to review how returned checks are handled. The objectives are to ensure checks with insufficient funds are properly handled. The work program details administrative tasks like planning, reporting, and documentation. It also describes preliminary field work like identifying contacts and understanding processes. Finally, it lists detailed audit procedures like reviewing policies, testing controls, verifying charges are applied for returned checks, and ensuring unusual transactions are monitored. The overall goal is to assess whether returned checks are properly approved, accounts closed for frequent returned checks, and clients notified of returned checks.

Uploaded by

ozlem
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as DOCX, PDF, TXT or read online on Scribd
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RETURNED CHECKS AUDIT WORK PROGRAM

PROJECT TEAM (LIST MEMBERS)

Project Timing Date Comments

Planning

Fieldwork

Report Issuance (Local)

Report Issuance (Worldwide)

AUDIT OBJECTIVES

Objective Comments Initial

• The purpose is to ensure that checks


presented on accounts with insufficient
funds are properly handled.

Time Audit Step Initial WP Ref

Administration

Planning

• Discuss the nature and scope of the audit with key ABC personnel.

• Discuss timing with key management.

• Schedule timing with the auditee.

• Finalize the audit program.

• Schedule staffing as appropriate.

Reporting

• Create summary scorecards for each process reviewed.

• Using the standard report template, create the internal audit report
(including a compilation of findings resulting from the work performed).

• Hold closing meetings with key company management to review draft


internal audit reports and findings.

• Publish and distribute a final report.

1 Source: www.knowledgeleader.com
Time Audit Step Initial WP Ref

Other Administrative

• Compile test work and key support data into a work paper binder and
include a binder index of key information.

• Include a final budget vs. actual (BVA) summary for the job in the work
paper binder.

• Include a copy of the final report in the work paper binder.

• Discuss job economics with the internal audit manager, as necessary.

• Follow up on satisfaction surveys.

• Submit a report to the internal audit report database.

• File the work papers in the internal audit file room.

Preliminary Field Work

• Identify key contacts for audit areas.

• Obtain and document an understanding of the overall operating


organization structure. Consider the following areas:
− Personnel: Organization charts, the total number of
personnel, divisions, job descriptions, etc.
− Transactions: The volume/value of various transaction types
processed.
− Systems: Application modules, interfaces, tracking systems
and related management reporting.
− “Customers”: Who are the key external and internal
customers for the process?

• Obtain electronic copies of relevant files to facilitate testing and


process analysis as considered necessary.

Detailed Audit Procedures

Understand the Process

• Conduct interviews with key individuals to gain an understanding of


the process.

• Create process maps to visualize the flow of information and to


identify key points of control and risk.

• Review relevant written departmental policies and procedures/goals


and objectives.

• Evaluate current practices against known best practices.

• Interview key management in the department to gain an


understanding of the workflow within each area. Document the

2 Source: www.knowledgeleader.com
Time Audit Step Initial WP Ref

discussion.

Description of Test Procedures

• Review and assess the controls and procedures concerning debits to


client accounts via presenting a check.

• Determine whether an automated process that identifies all accounts


that would go into overdraft exists and ensure that there is an
approve/disapprove decision documented in writing.

• Make it illegal (certain markets) for clients to write checks against


accounts with insufficient funds and require that such attempted
transactions be reported.

• If the office under review is subject to such requirements, ensure that


it complies.

• Determine what standard charges are levied for returned checks and
samples (indicate scope). Verify that it has been applied.

• If the office routinely returns checks unpaid (in some markets this is
negligible), ensure that there is a regular review of accounts for which
returned checks are frequent to determine if the account/relationship
should be closed.

• Outward returned checks are checks drawn on accounts compiled at


the branch, which are returned because of a stop payment, insufficient
funds, stale date, unknown signature, etc. Determine whether the
following items have occurred:

− Checks returned for financial reasons are always approved by


authorized officials.

− Accounts are closed if the account holders frequently draw


checks that must be returned for financial reasons.

− Suitable charges are levied on returned checks.

− Unusual transactions are not noted.

• Inward returned checks are checks received from clients for a deposit
but are returned unpaid by the drawee bank. Review and ascertain
that the following tasks have occurred:

− The account officer is notified when a client repeatedly


deposits checks that are later returned unpaid.

− Clients are promptly advised of any inward returned checks.

− Drawings are not allowed against uncollected funds without


proper approval.

− Fund availability dates are assigned per management

3 Source: www.knowledgeleader.com
Time Audit Step Initial WP Ref

guidelines.

− Unusual transactions are monitored.

− Management periodically reviewed the register.

4 Source: www.knowledgeleader.com

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