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    Bank Inspection
    Bank Inspection
    Bank Inspection
    Ebook174 pages2 hours

    Bank Inspection

    By ROSELINE OLUWATOYIN OLUITAN

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    About this ebook

    The book is designed for undergraduates and professionals who needs to understand the rudiments of the practise of banking. The book focuses on the procedure for carrying out banking activities and elaborates these procedures on a departmental basis. It promises to be a guide for young professionals who desire to understand quickly the procedure within the system. It also helps the customers to understand the procedure that takes place within the system and what they should expect for each banking transaction.
    The book ends with a detailed procedure for inspection. It can be a guide for branch operatives to prepare ahead of their branch inspection and also as an insight into the possible areas into which the inspection team may wish to look. Conclusively, the book will be useful for students of banking, practioners and customers alike. It is an eye opener and a revealer of hitherto cloudy areas of banking practice.
    LanguageEnglish
    PublisherAuthorHouse UK
    Release dateJan 24, 2012
    ISBN9781467882903
    Bank Inspection
    Author

    ROSELINE OLUWATOYIN OLUITAN

    Roseline ia a professional banker with about two decades of practical banking experience. She holds Bachelor and Master’s degree in Banking & Finance and recently obtained doctoral degree in Economics & Finance from Brunel University, West London. She is an Associate of the Chartered Institute of Bankers of Nigeria and is currently a lecturer in the Department of Accounting & Finance, Lagos State University in Nigeria. She brings her wealth of experience both in the industry and as a lecturer to bear in the writing of this book.

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      Book preview

      Bank Inspection - ROSELINE OLUWATOYIN OLUITAN

      © 2012 by Roseline Oluwatoyin Oluitan. All rights reserved.

      No part of this book may be reproduced, stored in a retrieval system, or transmitted by any means without the written permission of the author.

      First published by AuthorHouse 01/11/2012

      ISBN: 978-1-4678-8289-7 (sc)

      ISBN: 978-1-4678-8290-3 (ebk)

      Printed in the United States of America

      Any people depicted in stock imagery provided by Thinkstock are models,

      and such images are being used for illustrative purposes only.

      Certain stock imagery © Thinkstock.

      Because of the dynamic nature of the Internet, any web addresses or links contained in this book may have changed since publication and may no longer be valid. The views expressed in this work are solely those of the author and do not necessarily reflect the views of the publisher, and the publisher hereby disclaims any responsibility for them.

      Contents

      DEDICATION

      PREFACE

      CHAPTER 1

      CHAPTER 2

      CHAPTER 3

      CHAPTER 4

      CHAPTER 5

      CHAPTER 6

      CHAPTER 7

      CHAPTER 8

      CHAPTER 9

      CHAPTER 10

      BIBLIOGRAPHY

      DEDICATION

      This book is dedicated to

      GOD ALMIGHTY

      The Alpha & Omega

      PREFACE

      Banks constitute a vital source of economic growth and the need to ensure that the sector is well operated to garner the appropriate respect cannot be over-emphasised. This necessitates the importance of bank inspection as a mandatory exercise within the industry. It is not only in terms of commanding public acceptance and respect, but also living up to expectation as a pivotal organ for growth. To ensure fruition of this laudable objective, the industry is under the watchful eye of the regulatory authorities to ensure that the various policies are strictly adhered to, while executing their operational modalities. Banks therefore create inspection department to serve as internal watchdog in a bit to prevent the sledge hammer of the regulatory authorities in case of non-compliance.

      In addition to that, the stock—in-trade of the industry is money which makes it an attractive ground for fraudulent activities, errors and omission. The inspector therefore serves to ensure that such ugly occurrences are minimized, if not prevented, as it will be a drain on profit. By and large, inspection as a duty has come to stay in the banking industry hence students and workers alike will need to be well versed to be able to cope with such assignment if it comes their way. In the light of this, the book serves as channel for knowledge on bank inspection, its essence and methodology. It will therefore be a useful tool for students, researchers and practitioners on the field. The Nigerian banking environment has been used for describing situations in the book.

      At this point, I must express my profound appreciation to my mentor in academics, noting in particular Prof. Ibi Ajayi, Prof. Adedoyin Soyibo and Prof. Demola Oyejide. Similarly I am grateful to the Dean of Faculty of Management Sciences Lagos State University for the continued guidance and support and also my colleagues in the faculty who continuously serve as a source of inspiration; I say a big thank you.

      Also I appreciate the efforts of my secretary; Miss Nike Lawal who typed the manuscripts used for producing this text. Above all I am grateful to my entire household starting from my loving husband and my beautiful daughter Bimbo. I love you all.

      Lastly, all glory is unto God for His grace, power and knowledge that saw me through the production of this text. Thank you and God Bless.

      ROSELINE OLUWATOYIN OLUITAN

      CHAPTER 1

      Essence Of Inspection

      The stock in trade of the banking system which is money has made the industry vulnerable to vagaries of sharp and fraudulent practices. Similarly, the banking industry is highly regulated to ensure that they live up to expectation of promoting growth and also enhance banking habit. To ensure conformity with this directive, the banking industry becomes one arm that is focused upon by the government through the regulatory-authorities.

      In essence, any bank that fails to comply with the regulatory authorities directives as stipulated periodically usually faces stiff penalty which may sometimes end in closure / withdrawal of licenses. To this end, banks have a method expected to be followed in executing their daily operations which are written. (Manual of Operations). To avoid sanction and also ensure conformity with the written manual of operation, it becomes imperative that a unit/organ of the bank be saddled with the job of serving as the underdog or eye of management in all. The operational strata of the industry.

      This process is accomplished by the term inspection.

      Definition: The advanced Learner’s dictionary defines inspector as a person whose job is to visit schools, factories, institutions etc to check that rules are being obeyed and that standards are acceptable. It involves the mission of looking closely at standards to ensure that everything is satisfactory and that existing rules are being obeyed from the above, we can infer that inspection is the process of visiting job locations with a view of looking closely into the operational modalities and apparatus with a view to ensure that all existing rules are fully obeyed and that set standards are satisfactorily complied with.

      The inspector more or less serves as the eye of management (who cannot for obvious reasons visit all the job locations) to ensure that the business of the bank is conducted in an orderly and efficient manner that ensures adherence to management policies, safeguard assets and secure to a large extent, the accuracy and completeness of records. To ensure that banks apply the stock in trade judiciously, reasonably and reliably, the Banking Act stipulated that all banks must provide returns periodically to account for their activities such that the confidence of the banking populace is not jeopardized while banking habit is enhanced.

      Role of Inspectors

      The importance of inspection as a duty in a financial organization whose stock-in-trade is cash cannot be over-emphasized. However, some of these functions are as listed below:

      – To ensure that the organizational operational modalities conform with laid down procedure and principles of both management and regulatory authorities as specified from time to time.

      – To confirm to management that the laid down procedures are adequate or identify areas that require attention and suggest solutions that can be adopted to solve these problems.

      – To review the operational modalities and other records along with the internal control devices.

      – To prevent errors in operational system.

      – To detect errors in operational system.

      – To prevent fraud in operational system.

      – To detect fraud in operational system.

      – To prevent waste in both human and material resources of the bank.

      – To conduct special investigation for management.

      – To review efficiency and effectiveness of internal control devices for operational activities.

      INSPECTOR’S SKILL

      The inspector must be skilled to be able to achieve the desired goal placed before him by the management. Some of the required skills are:

      – Self confidence: He must be sure of himself.

      – Objectivity: He must be objective, never biased in handling issues.

      – Integrity: He must be a person of good conduct and mannerism that commands the respect of others within the bank.

      – Honesty: He must be known for saying the truth, never giving in for material consideration at the expense of honesty.

      – Thorough knowledge of the job: He must be well versed in the modus operandi of banking and also be able to explain the later connectivity of each department / section and records.

      – Good educational background: He must be educated enough to communicate understand and interpret issues, record and issues, records and actions. The intellectual capability must he adequate.

      – Aptitude for figures: This is at best advisory because more often he has to play with figures to confirm compliance with standards and that there are no omission or hidden figures.

      – Curiosity: An inspector must demonstrate curiousness in solving issues but never suspicious until fully determined.

      – Impartial: He must be seen too exercise fair judgment never tilting to or show favoritism in decision making.

      CHAPTER 2

      Internal Control

      INTRODUCTION

      The Auditing Standard and Guidelines defines Internal Control as "the whole system of controls, financial and otherwise, established by the Management in order to carry on the business of enterprise in an orderly and efficient manner, ensure adherence to management policies, safeguard the assets and secure as far as possible the completeness and accuracy of the records. The Internal Control systems in the Banks do not differ from the definition. Stated above, however there may be different approaches to the same goal and the system, method or approach to be adopted will depend on the nature and size of a Bank. The responsibility for which method of internal control system to be adopted is the responsibility of the Management which must have put the operating cost of a particular system and the expected benefits into consideration.

      The background of and Internal Control Procedures lies with a proper INTERNAL CHECK & BALANCES which can been defined as "The control of the day to day transactions which function continuously as part of the routine system whereby the work of one person is proved independently or is complementary to the work of another with the object of preventing or early detection of errors and frauds.

      ESSENTIALS OF EFFECTIVE

      INTERNAL CONTROL

      Before any organization can achieve an effective internal check or control, the organization must be well structured to allow for effective division of labour so that within the various divisions of the organisation, there is a clear and distinct organigram which allows each person within a section know who he is responsible to and who is responsible to him. The organigram must be such that nobody is left out however insignificant his position may be. Each division must be responsible to an overall head.

      LIMIT OF AUTHORITY—Each person in the hierarchy must know his limit of authority and responsibilities so that frictions and conflicts are reduced to the minimum.

      WELL LAID-OUT MANUAL OF PROCEDURES

      It is essential that the procedure for handling each aspect of the job is well documented in such a manner that from time to time, it can be referred to by the operators for guidance. In this manner, continuity of procedure except when changed, can be achieved. This makes internal control easy and reduces arguments.

      MANAGEMENT SUPERVISION

      The Board of Directors through the management should constantly review the operations

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