AUDITING AND INSPECTING CASH
TRANSACTIONS & VAULT ROOM OPERATIONS IN A BANK
Although every bank or financial institution values greatly its human resources, nonetheless the bank’s main life-wire in its daily operations is “Cash”. Without adequate cash no bank or financial institution can operate successfully. Cash transaction management therefore should be considered an important assignment by any visiting Auditor or Inspector. The Cash transaction taking place within the bank premises should be examined alongside the cash being received from the bank’s cash centre/Central Bank of Nigeria office in the area where the bank situates.
INTERNAL CASH TRANSACTION
This involves cash being received by the cashier from either the bank’s cash reserve or Bank’s customers. Involved also is the cash payment made to customers and cash transfers made by cashiers to the bank branch reserve. Experience shows that cashiers and cash custodians exercise great care the moment Auditors/Inspectors presence is registered in their premises. To ensure that regulations guiding cash transactions are adequately enforced, the Auditor/Inspector should, upon arrival at the branch, request for and take joint control of the branch cash safe/strong room. He should preferably sign for the set of keys held by the junior cash custodian. Until the cash position of the branch is ascertained later in the day, he should be part of the receipts and withdrawals of cash by the branch cashiers though under the watchful observation of the cash custodian whose key he is holding. Since experience has revealed that often the cashier’s Till and Petty cash left with the Accountant or Head Operations Support are abused, there is need for immediate checking of the actual petty cash held along with its relative register. Any unaccounted difference between the physical cash and the register should be noted. The. Auditor/Inspector has to confirm that the Cashier’s Till is not made up with any “suspense voucher” or any “I. 0. U” item.
Where this is observed, an immediate explanation should be obtained. There should also be immediate check of the postage box along with the postage register to ensure the two items balance. The cashbook in use by the cashier has to be examined to ensure that receipts of cash and transfers of cash are (a) recorded correctly and (b) signed for jointly by the cashier and all the cash custodians.
Confirm also that previous days recordings in the cash book were balanced and checked by an officer on daily basis. The Auditor/Inspector should be convinced that paid cash vouchers are being promptly recorded and none is suppressed while cash cheques are observed to have been signed twice at the reverse side by the cash beneficiaries. Where a branch has an appointed note checker, the register in use has to be examined to ensure receipts and transfers of uncounted and counted cash are properly/correctly recorded and signed for by the note checker and all the cash custodians. Sight shall not be lost of the fact that wrappers used by both the cashiers and the note checkers have to be signed fully by those concerned. Cash Transactions in the range of N50,000 and above should be recorded in separate registers and called over by the Manager.
EXTERNAL CASH TRANSACTIONS
We are aware that at certain periods of the month, the branch may be short of cash and to enable it carry, its functions effectively, it may seek cash indents from its cash centre or even Central Bank of Nigeria. Conversely a branch may have need to evacuate excess cash held to another branch or cash centre. For effective cash security and management, the Auditor/Inspector must have evidence to show that the bank’s approved form for cash evacuation has been used. Such form in file must be confirmed to have:
a) Full signatures of the branch manager and Accountant evacuating the cash
b) Full signatures of the manager and Accountant of the receiving branch after the transaction.
c) Amount and specification of the cash being received or evacuated.
d) Total amount of cash embossed on the dispatch form for security reasons.
e) Date of evacuation and date of receipt.
In addition to the above provision, the Auditor or inspectors must report any cash evacuation, which was not escorted by armed policemen. For effective security of the cash, it is recommended that two cars be engaged for the cash movements: one carries the cash, bank officials and some armed policemen while the second carries armed policemen only. The box housing the cash being evacuated has to be metal and not wooden box; locked and chained to the specie van. Duplicate key to the padlocks must be confirmed to be in the custody of the receiving branch and not accessed to the escorting Supervisor/officer. Receipt of such evacuated cash must not be made in the open. The specie van must be driven to a secured area of the bank and attended to promptly.
VAULT ROOM OPERATIONS:
The vault room is the apartment where
the bank cash is stacked preferably in fire-proof cash safes. The
Auditor/Inspector is expected to report where cash is seen to be stacked on the
bare floor of the vault room or kept in unlock able receptacle. The vault room
must be under lock and key when cash transaction is in operation and also when
it is not in use. Operation in the vault room must be dually controlled. Only
one cashier at a time should be entertained in the vault room. For effective
control of the cash, the “Small Reserve Book” must be ensured to remain in the
vault room at all times. Any withdrawal from the vault must be recorded at the
time of the transaction in the Small Reserve book and not after the
transaction.
Identification number of the cashier as well as the cash specification must be
correctly recorded in the book indicating whether it is “Cash in” or “Cash
out”. Such recording has to be fully signed for jointly by the cashier and the
cash Small Reserve books. It is important to note that cash in the vault room
is stacked denomination by denomination.
Physical checking of the Vault/Reserve
amount must be made on daily basis and the balance as tabulated in the Big
Reserve sheet signed fully by the Manager and the Accountant/Head Operations
Support. Past records have to be examined by the Auditor/Inspector to confirm
that the bank branch cash has been balancing. Evidence must be shown to confirm
that daily vault/Reserve balance is being reported to the Assistant General
Manager (Treasury) and copied to the Regional Head of Operations. Where there
was observed unreported cash shortage by the branch, the Auditor/inspector must
not delay in drawing special report for the attention of the Head office.
Specic padlock and duplicate key found outside the vault room must be queried.
So also, cash indents from cashiers and cash transfers not made direct to the
vault/Reserve as indents from one cashier to another has to be discouraged. The
register of padlocks and keys has to be examined weekly by the manager
evidenced by his initials and dates of examination. While at the branch, the
Auditor/Inspector must tactfully observe and confirm that the vault Room is
finally locked at the close of business in accordance with the combination
setting for the branch. However the combination setting has to be broken,
whenever the Manager is leaving the branch premises no matter the shortness of
the duration.
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