New Jersey Administrative Code
Title 3 - BANKING
Chapter 7 - SAFE AND SOUND METHODS OF BANKING
Subchapter 3 - EXAMINATION OF BANKS AND SAVINGS BANKS UNDER DIRECTION OF BOARD OF DIRECTORS, BOARD OF MANAGERS OR BOARD OF TRUSTEES
Section 3:7-3.9 - Audit program

i. Cash shall be counted and reconciled with the general ledger control;

ii. Cash items shall be inspected, checked for propriety, reconciled to general ledger control and clearance of larger items shall be checked;

iii. Clearings and exchanges shall be confirmed. Large items shall be followed to disposition;

iv. Obtain direct confirmation of account balances with other banks; reconcile confirmed balance with general ledger controls, and check authenticity and disposition of reconciling items.

i. Prepare or obtain a listing of investment securities and reconcile with general ledger controls;

ii. Account for securities owned by inspection, if on hand, or by confirmation if held in safekeeping elsewhere;

iii. Verify bank's records of pledged securities with safekeeping custodian;

iv. Ascertain the market value of securities owned, as of the examination date, or as of a recent pricing. Check authenticity of purchases and sales to supporting documentation and investment authority approved by the board of directors;

v. Review procedures with respect to amortization of premiums and accretion of discounts.

i. Prepare or obtain a listing of the liability ledger and reconcile with general ledger controls;

ii. Notes shall be reviewed for proper officer of board approval;

iii. Collateral and side collateral shall be examined, evaluated and verified to appropriate records including wholesale obligations if carried in loan department;

iv. Participation and/or service agreements shall be reviewed and amounts shall be confirmed and reconciled to appropriate records;

v. Prepare or obtain a listing of past due accounts. Review to the extent deemed appropriate to ascertain collectibility and that past due listings and reports are regularly submitted to the board and are prepared in accordance with standards established by the board.

i. Prepare or obtain a listing of the liability ledger and reconcile with general ledger controls. Escrow balances shall also be listed or obtained and reconciled to the respective controls.

ii. Inspect necessary documentation including approvals;

iii. Participation and/or service agreements shall be reviewed and amounts shall be confirmed and reconciled to appropriate records;

iv. Prepare or obtain a listing of past due accounts including tax or other such delinquencies. Review to the extent deemed appropriate to ascertain collectibility and that past due listings and reports are regularly submitted to the board and are prepared in accordance with standards established by the board.

i. Prepare or obtain a listing of the liability ledger and reconcile with the general ledger controls;

ii. Notes shall be reviewed for proper officer of board approval. Other related documents shall be examined;

iii. Prepare or obtain a listing of past due accounts. Review to the extent deemed appropriate to ascertain collectibility and that past due listings and reports are regularly submitted to the board and are prepared in accordance with standards established by the board;

iv. Collateral shall be examined, evaluated and verified to appropriate records including wholesale obligations if carried in this department;

v. Participation and/or service agreements shall be reviewed and amounts shall be confirmed and reconciled to appropriate records.

i. Documents evidencing ownership or leases covering leaseholds shall be examined on all new properties or leaseholds;

ii. Changes in these accounts shall be checked to determine propriety and/or authorization;

iii. Insurance policies and tax receipts shall be inspected;

iv. Ascertain that the board has conducted its annual review of insurance coverages so as to insure adequacy of coverage.

i. A list of accounts shall be prepared or obtained and reconciled to the general ledger controls. Reconciling items shall be reviewed and investigated to the extent deemed appropriate;

ii. Review procedures with respect to dormant or inactive accounts;

iii. Overdrafts shall be reviewed. Ascertain that regular overdraft reports are being made to the board in accordance with standards established by the board. The procedures used in preparing such reports shall be reviewed to determine compliance;

iv. Due to bank and treasury tax and loan accounts shall be confirmed and reconciled;

v. Accounts of directors, officers and employees shall be reviewed, including those accounts in which they have an interest.

i. A list of open items shall be made or obtained and reconciled to the general ledger. Checks subsequently presented and paid shall be checked against the listing;

ii. Review procedures with regard to controls over unissued checks.

i. A listing of accounts shall be prepared or obtained and reconciled to general ledger controls;

ii. Review procedure with respect to dormant or inactive accounts;

iii. Interest and dividend credits to accounts shall be reviewed;

iv. Accounts of directors, officers and employees shall be reviewed, including those accounts in which they have an interest.

i. A listing of outstanding shares reflected on the stockholders ledger shall be prepared or obtained and reconciled to appropriate controls;

ii. Purchases and sales of certificates shall be tested;

iii. Review procedures with respect to control of unissued certificates;

iv. Entries to these accounts shall be tested for propriety and authorization;

v. Debt outstanding shall be reviewed including check of performance on amortization program and confirmation with lender if deemed necessary.

i. The probable liability, if any, on claims or lawsuits pending shall be requested from the bank's attorney;

ii. Letters of credit shall be reviewed and substantial items shall be confirmed.

i. The minutes of the meetings of the board of directors and committees thereof shall be examined and major resolutions reviewed to determine if actions taken were in accord with such resolutions;

ii. Director's and officer's obligations shall be reviewed for approvals.

i. Prepare listing of account balances of the various trust and custody accounts (including corporate trust and escrow accounts), and reconcile with respective control accounts. Deposit accounts shall be confirmed and reconciled;

ii. Review overdrafts in trust cash accounts as to authorization and collectibility;

iii. Review selected personal trust accounts and corporate trust accounts to ascertain that the administration of the account is in conformity with the governing instrument. The review should include:

iv. The assets of other accounts, other than those accounts reviewed for conformity, shall be inspected and checked to proper records;

v. Review the minutes of the trust committee to ascertain that trust accounts are being reviewed and that trust accounts acquired or closed had been approved;

vi. Review final accountings on accounts.

i. The review of internal operating procedures and controls as they relate to the data processing department shall encompass at least the following items, or analogous items, but not necessarily be limited to the specific areas outlined:

i. The review of internal operating procedures and controls as they relate to data processing servicers shall encompass at least the following items, or analogous items, but not necessarily be limited to the specific areas outlined: