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: [Link]
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: [Link]
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: [Link]
Time Audit Step Initial WP Ref
guidelines.
− Unusual transactions are monitored.
− Management periodically reviewed the register.
4 Source: [Link]
