Balance Sheet The Basis Of Inspection

To form the basis of his examination, the inspector immediately calls for a balance sheet. So the books have to be closed and all the closing entries, commonly made on balance days, have to be put through, even if only one day has elapsed since the last previous balance day. Although he requires the balance sheet for his basis, the inspector does not wait for its completion, but proceeds to examine the cash. If he has an assistant, the assistant will take the teller's cash, and the inspector himself the treasury cash. If he is alone, he puts a seal on the treasury and begins to examine the teller's cash. The teller should remain present in the box all the time of the examination. He is responsible for his balance, and nobody, not even an inspector, must be given the opportunity to take anything without the teller's knowledge. The inspector takes the balance book and checks off all the specifications. He takes nothing for granted, splits open the paper cartridges of silver, to see that no fraud is concealed, and, when he has examined everything, and found that the sum claimed to be there is actually there; and that the balance agrees with the cash book, he seals up the deposits to go out to the other banks in town next morning, and encloses a letter requesting the other banks' officers to advise him (the inspector) if any of the cheques included in the deposit are dishonored.

When the teller's cash is counted, the inspector examines the treasury cash; and from that he proceeds to all the other items of the securities. He continues until he has satisfied himself that every item on both sides of the balance sheet is correct.

Examination Of Loans And Discounts

The examination of the loans and discounts is especially thorough. An officer is set to work to make a complete statement, from the discount diary, of every bill discounted, arranged in order of maturity. The sheets on which the record is made are added; the totals must agree with the balance of loans, trade bills, or other class of bills as shown in the balance sheet. The sheets are handed to the inspector, duly balanced. On receiving them he instructs his assistant, if he has one, to check the additions; if he has no assistant, he checks them himself. Then he takes the sheets and checks off with the record every bill in the bill-case, carefully scrutinizing the signatures and other details of each bill. If anything strikes him as peculiar or unusual he asks explanations of the manager, or sends notices to the parties concerned.

He is careful to see that all bills are properly drawn, and that the bank has a clear title to them. This examination takes a long time at all branches where the discount business is heavy. Until the examination is completed the inspector keeps all the bills in his possession to prevent substitution of securities. When he has checked off every item on the sheets there will remain the remitted bills, which he cannot examine because they are held by the bank's correspondents in various towns and cities.