Pub. 8 2013-2014 Issue 6

www.nebankers.org 16 Extraordinary Service for Extraordinary Members. a Bank Used an eXcel spread- sheet to balance its correspon- dent account. Each week the items recorded in the bank records, but not yet recorded by the correspondent bank (and vice versa), were listed on a spreadsheet. The total of the reconciling items plus the amount shown in the account by the correspon- dent bank was compared to the amount the bank showed in its general ledger for the correspondent account. The balancing function was rotated regularly between three different peo- ple. Occasional balancing problems led to the discovery of inadvertent errors that were quickly corrected. When a new employee was being trained to help with the balancing of the correspondent account, the employee started by deleting all of the prior entries on the spreadsheet and questioned why the total in one column was $67,000 instead of zero. In researching the ques- tion, the trainer found that someone had buried a fixed number in a formula which added an extra $67,000 to the total on one side of the spreadsheet. The bank employees then used a calculator to add up the columns on the previously printed reconciling spread- sheets. They found that one column had not added up properly for more than nine months and the amount of the dif- ference had grown over time. It was then determined that one of the employees, who sometimes recon- ciled the correspondent account, had been stealing money. She was hiding the theft by debiting the correspondent SECURITY OFFICER’S BY-WORD Does It Add Up? Always Verify! charles m. towle, President, Kansas Bankers Surety Co. account the day before she was sched- uled to balance the correspondent ac- count and then changing the formula so that the total would be the actual total of the reconciling items plus the amount she stole. As long as no one added up the columns by hand, it appeared the correspondent account was in balance. At another bank, during a routine exam, a meticulous examiner added up the demand deposit accounts and came up with a total of more than $3 million more than the control total shown on the DDA General Ledger of the bank. The bank was asked to provide its regular reconciliations of the deposit accounts to the control total, which appeared to always balance. The bank generated its normal balancing report and the sub- sidiary ledger totals appeared to balance with the control totals in the general ledger. But when the bank examiner added up the individual totals of the various different types of demand de- posit accounts, he came up with a much higher number. It was determined the report pro- grams had been modified so when the sum of the various types of demand de- posit accounts were totaled, the formula also subtracted a specific amount. This forced the total amount to agree with the bank’s general ledger control totals. The bank actually had more than $3 million in customer deposit accounts than it car- ried in its general ledger as the demand deposit account control total. Further investigation revealed that over a period of several years, a bank officer had been causing money to be wired to an account he had set up in another bank. That account had a similar name to the bank’s discount broker part- ner. When the wires were completed, he would complete debit and credit tickets crediting the Fed Wire account and directly debiting the DDA General Ledger control total without debiting any deposit account. He would then edit the formula for the report function that added up the various types of demand