Check all entries for authorities, powers of attorney, etc., with list of authorities held.

See that proper entries have been made in deposit receipt account in the general ledger for all receipts issued and paid since last inspection.

Examine indorsements on receipts paid since last inspection, and see that they are tied up and sealed with the inspector's private seal.

Examine powers of attorney, resolutions and documents respecting signing officers.

Check date of last certification of each ledger balance.

See that certificates are properly filled in and signed.

5. Sundries

Compare inspection liability sheets prepared by the staff with liability ledger.

Examine entries in cash item register since date of last inspection, noting any items outstanding an undue length of time.

Ascertain if any items have been put thru as cash items which should have been shown on discount return as trade bills remitted.

See that the following books and records, etc., are properly kept:

Manager's diary

Discrepancy book

Record of lost drafts, stopped checks, etc.

Overdrafts register

Circular book

Overdue debt register

Postage account

Record of examination of bank premises

Character card file

Receipt for duplicate keys, etc.

Rates book

Record of mercantile agency reports received.

The following lists and statements are prepared by the staff and handed to the manager or accountant, and when checked and completed by them given to the inspector:


Assignments of goods

Balance sheet, general ledger

Bank premises, safes and vaults

By-laws, minutes, etc., list of

Comparative statement of condition of branch

Current account balances

Deposit receipts outstanding

Drafts issued accounts

Insurance policies held - fire

Insurance policies held - life

Letters of credit outstanding

Letters of guarantee

Liabilities of customers

Partnership agreement

Past due bills, list of

Powers of attorney, list of

Reports on officers

Securities, collateral

Securities, safe-keeping

Sterling exchange purchased and current

Trade bills remitted, summary of

Verifications, current accounts

Verifications, letters of credit

Verifications, trade and collateral bills remitted

Warehouse receipts, loans on


6. Inspection Liability Return

This return shows every liability in detail whether overdue or not. The names of all obligants should be in strict alphabetical order, and the totals of the loans and trade bills in each account should be shown in the proper column opposite the names of the customers. All securities should be shown in detail with the manager's estimate of values. The following information should appear in the report on each important account:

Names and ages of individuals or partners

Head office authorization and expiry date of credit

Total fire insurance carried both on liquid and fixed assets, and the amount, if any, assigned to the bank

Discussion of customers' position and balance sheet giving copy of the latest statement of affairs and notes as to the changes of importance therein, indicating progress or the reverse

Remarks regarding customers' wills or deeds of partnership, having reference to the way in which the bank would be affected by the death of the customer

In reporting on farmers' and other casual loans, the original date of the transaction must be given, if any portion of the advance has been running for more than twelve months. The object of the loan, time of repayment and source from which the money is to come, should also be stated

The purpose for which a loan has been granted and the source of repayment should be stated - also the probable course of the advance, unless payment is assured at maturity.

In connection with all important accounts the following points should be fully discussed with the manager by the inspector, and the significant features made the subject of correspondence:


Moral character, habits, and business ability

Past record

State of health

Life insurance carried


Is financial progress satisfactory?

Fluctuations in liability and reason for any substantial increase - highest and lowest points of advance monthly for past year

Promptness in meeting obligations

Obligations in connection with interests outside the business, if any

Titles to, and liens or mortgages on property, information, researches, etc.

Value of collateral held

Value of the account or the connection

Any special features or influences which are likely to benefit or be detrimental to the customer or the business.

If a wholesale house:

Distribution and classification of risks in credits to customers, also any recent or anticipated losses Financial responsibility of largest customers Percentage of bills returned unaccepted or unpaid.

Having fully discussed all the outstanding features in the different accounts with the manager, the inspector is in a position to offer a reasonably close valuation of all the accounts, which he does according to the following ratings:

First-class business

Accounts regarded as desirable, but which do not liquidate satisfactorily

Business desirable because of the connection or local conditions, but not on its merits otherwise

Undesirable but probably collectible

Locked up but eventually collectible

Marginal loss probable


A. Secured by mortgage, etc.

B. Interest being set aside as a contingent fund

C. Not producing interest.

On his return to the head office, the inspector takes up with the branch and records by correspondence any objectionable features in the accounts, which he thinks require adjustment or comment.


Of what does a bank inspection consist? How are the securities and cash checked? The ledgers? According to what ratings does the inspector value all the accounts?