1. Identify the red flags/risks in these procedures which could provide opportunities for fraudulent activity.

2. Are there any controls in place to mitagate those risks? A) what controls can you identify to mitigate each risk? B) Sugeest recommendations to improve the teller operations to minimize the opportunity for fraudulent activity.

 Banking and Financial Institutions: Theft of Cash on Hand/Theft of Cash Receipts Cash Safeguards

The bank branch under review, located close to the US-Mexico border, has 8-10 tellers working under the supervision of a head teller and an assistant manager. The policy states that tellers should have a maximum of $5000 in their drawer at the end of the day. During the day, the tellers receive deposits in local currency and in foreign currency (specifically, euros and pesos), they cash and deposit checks, and they process loan payments and cash withdrawals. While cashing checks or processing cash withdrawals, the tellers verify the signature of the customer with the signature in the system, or they compare the signature with the signature on the customer’s driver’s license or other government-issued picture identification.

The tellers have the authority to cash checks of up to $5000 without having a supervisor review the transaction. The bank gets very busy when it opens and right before closing, especially on Mondays, Fridays, and Saturdays, so sometimes the head teller will give a teller the override code if she is busy working her own cash drawer. At the end of the day, the tellers check their individual cash balances in the system and verify that with a count of the actual cash in their drawers. The system also provides a check total, which should agree to the total checks in the teller’s bin. Each teller verifies the cash transaction report with individual checks, deposit slips, and withdrawal slips in order to make sure that the deposits and withdrawals are made from the correct customer account. They also cross-check the currency exchange rate and applied processing fees. If a drawer is short/over, the record of the teller and out of balance amount is kept in a log by the Branch Manager.

Every Thursday morning, one of the supervisors counts the cash drawer of each teller before they begin to wait on customers, and verifies it with what the system says should be in the drawer. If the cash drawer limit of $5000 is exceeded, the excess cash is handed over to the supervisor. A record of the transfer of the cash from teller to supervisor is kept by both individuals, with the signatures on the cash transfer slip indicating verification of the transferred amount. The cash box of each teller is locked with dual keys, with one key held by the teller and the other key by the supervisor. The cash boxes are then locked in the vault room. The vault room also has dual lock system; one key is maintained by the supervisor and the other key is maintained by the Branch Manager. At times after the tellers lock their cash box, they leave them unattended and rush home. However, it is the duty of the teller to make sure his/her cash box is locked in the vault room. The next morning the tellers come together with their supervisor to collect their cash boxes.