Business
Engineering
Math
Science
Social Science
Internal controls for bank lending Pacific Bank provides loans to businesses in the community through its Commercial Lending Department. Small loans (less than $100,000) may be approved by an individual loan officer, while larger loans (greater than $100,000) must be approved by a board of loan officers. Once a loan is approved, the funds are made available to the loan applicant under agreed-upon terms. Pacific Bank has instituted a policy whereby its president has the individual authority to approve loans up to $5,000,000. The president believes that this policy will allow flexibility to approve loans to valued clients much quicker than under the previous policy. As an internal auditor of Pacific Bank, how would you respond to this change in policy?
Financial And Managerial Accounting
Solutions
Financial And Managerial Accounting
Internal controls for bank lending
Pacific Bank provides loans to businesses in the community through its Commercial Lending Department. Small loans (less than $100,000) may be approved by an individual loan officer, while larger loans (greater than $100,000) must be approved by a board of loan officers. Once a loan is approved, the funds are made available to the loan applicant under agreed-upon terms. Pacific Bank has instituted a policy whereby its president has the individual authority to approve loans up to $5,000,000. The president believes that this policy will allow flexibility to approve loans to valued clients much quicker than under the previous policy.
As an internal auditor of Pacific Bank, how would you respond to this change in policy?
State the response as an internal auditor to the change in policy
Explanation of Solution
Internal Control: Internal control refers to the policies, and plans of the business organization along with other measures with a view to safeguard its assets, encourage the employees to adhere to the plans, to improve on the operational efficiency, and to ensure correct and reliable accounting information. Internal control is a process which ensures continuous reliability of accomplishment of a company’s objectives, related to operations, financial reporting, and in conformity with laws and regulations.
The following are the some of the internal control procedures:
- • Competent personnel, rotating duties, and mandatory vacations
- • Separating responsibilities for related operations
- • Separating operations, custody of assets, and accounting
- • Proofs and security measures
An internal auditor needs to discourage the change in policy...
Chapter 7 Solutions
Additional Business Textbook Solutions
Cornerstones of Financial Accounting
Corporate Financial Accounting
Financial & Managerial Accounting
Accounting Information Systems
ECON: MICRO4 (New, Engaging Titles from 4LTR Press)
Principles of Macroeconomics (MindTap Course List)
Probability and Statistics for Engineering and the Sciences
Principles of Economics (MindTap Course List)
Fundamentals of Financial Management, Concise Edition (MindTap Course List)
Principles of Microeconomics (MindTap Course List)
Brief Principles of Macroeconomics (MindTap Course List)
Essentials of Business Communication (MindTap Course List)
Fundamentals of Financial Management (MindTap Course List)
Foundations of Business (MindTap Course List)
Fundamentals Of Financial Management, Concise Edition (mindtap Course List)
STATISTICS F/BUSINESS+ECONOMICS-TEXT
College Accounting, Chapters 1-27
Financial Accounting
Management, Loose-Leaf Version
Essentials of Economics (MindTap Course List)
Intermediate Accounting: Reporting And Analysis
Managerial Accounting: The Cornerstone of Business Decision-Making
College Accounting (Book Only): A Career Approach
Accounting Information Systems
MKTG 12:STUDENT ED.-TEXT
Contemporary Marketing
Financial & Managerial Accounting
Financial Accounting
College Accounting, Chapters 1-27 (New in Accounting from Heintz and Parry)
Accounting (Text Only)
College Accounting (Book Only): A Career Approach
Fundamentals of Financial Management, Concise Edition (with Thomson ONE - Business School Edition, 1 term (6 months) Printed Access Card) (MindTap Course List)
Principles of Macroeconomics (MindTap Course List)
Statistics for Business & Economics, Revised (MindTap Course List)
Pkg Acc Infor Systems MS VISIO CD
Fundamentals of Financial Management (MindTap Course List)
Exploring Economics
PAYROLL ACCT.,2019 ED.(LL)-TEXT
Survey of Accounting (Accounting I)
Corporate Financial Accounting
Economics (MindTap Course List)
Practical Management Science
Purchasing and Supply Chain Management
Cornerstones of Cost Management (Cornerstones Series)
Economics For Today
Macroeconomics
Managerial Accounting
Macroeconomics: Private and Public Choice (MindTap Course List)
Understanding Management (MindTap Course List)
Principles of Microeconomics
Microeconomics: Private and Public Choice (MindTap Course List)
Micro Economics For Today
MACROECONOMICS FOR TODAY
Economics: Private and Public Choice (MindTap Course List)
