1. Head Office Bookkeeping

A distinction must be made between the head office and the main office of a bank. By head office is always meant the executive office of the bank, while the main office, tho generally in the same building, is simply a branch office. Notwithstanding its size and importance, its relations to head office are exactly the same as the most distant branch so far as routine matters and operations are concerned. Its business, like that of other branches, is with the public. The head office, on the other hand, transacts no actual business with the public, and its bookkeeping consists principally of combining and analyzing the statements sent in from the various branches. Practically all this work is done in the chief accountant's department. The machinery, however, is suprisingly simple considering the work it accomplishes.

The immediate books of the head office consist of a general ledger, a cash book, a correspondents' ledger with controlling account in the general ledger, and the stock transfer books.

2. General Ledger

The head office general ledger contains accounts for all the assets and liabilities of the bank which are not included in the branch statements: such as capital, surplus, undivided profits, head office investments, general expense account and the like.

At the end of each month every branch sends in an exact balance sheet of its general ledger. These statements are all summarized in specially ruled books or sheets under the various headings of the accounts, and, when combined with the balance sheet of the head office general ledger, give the complete statement of the bank's business required by the Bank Act.

Attention is called to the fact that after allowing for the amount due to or from the head office itself, the combined debit and credit balances of all branch clearing accounts (Pages 177-179) will exactly offset each other with the exception of the items in transit. These outstanding items are analyzed and allotted to their several destinations or accounts, and there is consequently no branch clearings account balance shown in either the government report or the annual reports.

3. Correspondents' Ledgers

Every bank finds it necessary, for exchange and other purposes, to carry accounts with correspondents in Great Britain, the United States and other parts of the world. For simplicity and directness of accounting some of these accounts are frequently carried at the head office, and the various debits and credits from the branches are passed thru the branch clearings account as later explained (Section 18, Chapter IV (The Bank Act (Continued)) (Branch Books And Records. 1. Bank Accounting)). As the entries reach the head office they are posted direct from the slips to the several bank accounts in a special ledger. Statements of the accounts are received from the various correspondents weekly, and in many cases daily, and the accounts are kept in constant adjustment - any item outstanding an undue length of time being-made the subject of immediate inquiry.

4. Statistical Books

Apart from the shareholders' ledger and the stock transfer books which, for convenience to the public, are generally kept in the main office, all the books used in the head office are principally of a statistical or analytical nature. The profit and loss returns from the different branches are all carefully analyzed in relation to the amount of business done and the capital employed. Daily circulation returns are compiled, and a close watch kept on the movement of the bank's liquid assets. Special funds, in connection with guarantees, pensions and the like, are also administered from this department.

5. Branch Clearings

The checking of the branch clearings statements received from the branches is also in charge of the chief accountant. The method is very simple. An ordinary filing clip is kept for each branch; when a statement is received, the entries are ticked off as far as possible against the entries on other branch statements, and it is then filed on its clip to await delayed corresponding entries. As the entries on each sheet are completely marked off, a diagonal line is drawn across the statement, and whenever a balance is struck by the department these dead sheets are filed away in bundles. Some banks arrange the clips in alphabetical order, but the best way is to arrange them first by provinces, as naturally the majority of the entries are between branches in the same province. The checking is also more concentrated under the latter system.

6. Stock Books, Etc.

In the shareholders' or stock ledger an account is kept with each shareholder in which are recorded all shares bought and sold. The amounts entered in the account represent the par value of the shares, and the sum of all the balances in this ledger will equal the amount of the paid-up capital of the bank.

The shares of a bank are transferable only on the books of the bank; these are known as "Transfer Books." Each page of the transfer book is in the form of a legal document by which one person agrees to transfer a certain number of shares standing in his name to another person who agrees to accept the shares. The transfer must be executed by both parties in person or by a properly executed power of attorney appointing some one to act for them. The entries in the stock ledger are made direct from the transfer book.

The other books used in the stock department are a "Register of Stock Certificates Issued" and a "Dividend Register." The stock certificates issued are not transferable and need not be presented when a transfer is made.

Dividends are usually paid quarterly by check to shareholders of record on certain dates, and the dividend register is simply a record of the payees and amounts of checks issued.

A bank may keep transfer registers in other provinces than that in which the head office is situated. The books consist of a stock ledger (a duplicate being kept at the head office), in which is kept the accounts of shareholders residing within the province, a transfer book and a register of stock certificates issued. The head office is advised regularly of all transfers made, and altho certificates are issued at the branch office, all dividend checks are issued at the head office.