MORNBFI Vol. 1 - Planters Development Bank

APP. Q-508.12.31these transactions particularly thoseinvolving substantial amounts, should beapproved by two (2) authorized officers.VII. Number Control1. Sequence number controls shouldbe incorporated in the accounting systemsand should be used in registering notes,in issuing official checks and in othersimilar situations. Number control shouldbe policed by a person designated bysenior management who should bedetached from the particular operationsinvolved.2. The following are the forms,instruments and accounts that should benumber-controlled:a. Checks;b. Promissory notes and othercommercial papers;c. Official and provisional receipts;d. Certificate of stocks;e. Loan accounts; andf. Expense vouchers.VIII. Rotation of Duties1. The duties of personnel handlingcash, securities and bookkeeping recordsshould be rotated.2. Rotation assignment should beirregular, unannounced and long enoughto permit disclosure of irregularities ormanipulations.IX. Independence of the Internal Auditor1. The position of internal auditorshould be provided for in the by-lawstogether with the duties andresponsibilities, scope and objectives ofinternal auditing.2. The internal auditor should reportdirectly to the Audit Committee.3. The internal auditor should notinstall nor develop procedures, preparerecords or engage in other activities whichhe normally reviews or appraises.X. Direct Verification1. Direct verification shall mean theconfirmation of account or records by directcorrespondence/visits with the institution'scustomers.2. The following accounts, amongothers, should be subject to direct verificationby the internal auditing staff at least once ayear:a. Balances of loans and creditaccommodations of borrowers;b. Outstanding balances of borrowingsand other liabilities;c. Outstanding balances of receivables/payables; andd. Collaterals securing said accounts.XI. Other Internal Control Standards1. Investmentsa. Investment limits and a list ofaccredited companies as approved by theBoard of Directors or by its Credit Committeeshould be established as a guide for investingin any FI engaged in money market trading.b. Investments should be secured byassets approved by the Board of Directorsor by its Credit Committee.c. Checks representing placements ofinvestments should be released only uponreceipt of either the deposit substituteinstrument or the underlying securities ordocuments of title.2. Miscellaneousa. Loan applications and relateddocuments should be spot-checked to insuretheir authenticity, including verification ofname, residence, employment and currentreputation of the borrowers.b. No employee should be permittedto process transaction affecting his ownaccount.c. Cashiers and other employeeshaving contact with customers should beprohibited from preparing depositsubstitute tickets or other records for thecustomers.Manual of Regulations for Non-Bank Financial InstitutionsQ RegulationsAppendix Q-5 - Page 3