Collateral Withdrawal

Dan Matt drew up a flowchart for the depositing of collateral (Problem 57) and turned it over to his senior. The senior inquired if collateral was only deposited and never withdrawn. Dan realized he had not followed the collateral process through to its completion. He still had to investigate the withdrawal of collateral that resulted when the loan was paid. Dan found that the customer initiates the withdrawal of collateral by presenting the pink receipt copy to the loan officer. The loan officer forwards the customer’s request for return of the collateral to the collateral clerk, who prepares a pre-numbered, four- part withdrawal form. Each copy of the form is a different color to facilitate its distribution. The original (pink) copy of the request is sent back to the loan officer, the second (blue) copy is sent to the vault custodian, and the third (white) copy is filed by the collateral clerk with the deposit form. Again, the yellow or fourth copy is discarded. The vault custodian takes the blue copy of the request to the vault attendant, and together they remove the collateral and match it against the request. If they match, both the vault custodian and the vault attendant sign the blue copy of the request. If they are not in agreement, the vault custodian contacts the loan officer to iron out the discrepancy. The signed blue copy is sent back to the loan officer, accompanied by the collateral. The loan officer verifies that everything is proper and then signs the blue copy and turns over the collateral to the customer. The customer, after verifying that the collateral is correct, signs the pink copy of the request, which had been on file with the loan officer. Then both the blue and the pink copies are returned to the collateral clerk. The collateral clerk matches the two copies of the request to the white copy in his file. If they are all in agreement, he records the return of the collateral in his log, staples the copies together, and files them in the completed file by number.

Required

a. Prepare an analytic flowchart of the collateral withdrawal process using the description given in the case.

b. Prepare the application controls matrix for the process, using the form shown in Figure 4.9.

c. List any apparent weaknesses in the collateral withdrawal process as described.