A large public company financial institution with over $11 billion in assets and approximately $800 million in revenue had a breakdown in reconciliation procedures for automated processing of transactions by an outsourced processor. The Bank required expertise and resources to resolve control weaknesses and to investigate unreconciled prior year processing errors and irregularities.
A large public company financial institution with over $11 billion in assets and approximately $800 million in revenue had a breakdown in reconciliation procedures for automated processing of transactions by an outsourced processor. The Bank was listed on the New York Stock Exchange and one of the largest holders of fiduciary assets in the United States. The bank required documentation of procedures and controls to identify and resolve control weaknesses in items processing and then had to investigate and reconcile prior year processing errors and irregularities to the satisfaction of Bank management, and State and FDIC bank examiners.Accounting and Business Consultant’s Engagement Role:
We were engaged by the Controller’s Group and Chief Financial Officer to work with the Chief Operating Officer, and the IT and Items Processing Departments to understand and document the procedures and flow of transactions through the process and to identify control gaps with a plan for remediation. Thereafter, we were engaged to reconcile out of balance transactions for a 2-year period to comply with audit and regulatory requirements.Engagement Results:
We documented procedures and identified control weaknesses and a remediation plan. We worked with management to implement the plan, including automated system reconciliation controls, and verified that controls implemented were operating as intended. After control weaknesses were remediated, we manually reconciled out of balance transactions for a 2-year prior period. This resulted in collection of significant amounts due from other banks and in a large settlement with the outsourced vendor after proving gross negligence. The Controller’s Group was very pleased with the results and engaged one of our consultants for several more years as Bank Reconciliation Project Specialist. Eventually, our consultant was hired permanently at the Bank.