Bank Account Entry with Best Practices

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Automated Clearing House is a system that banks use for those interested in getting house loans. The ACH program sends information about payments made to vendors by suppliers. The importance of the AHC program was to ensure best practices.

Employees could access the bank account forms and setup their accounts for dealing with a supplier. They could setup the account and assign that bank account to those of existing suppliers. This best practice enables an employee to know whether a supplier has paid via ACH or not. At the same time, this allowed people to create fake bank accounts due to lack of best practices. After creating fake accounts, they were assigned to supplier companies through the bank form. As a result many companies paid into fictitious bank accounts. Therefore, best practices were needed to ensure prevention of the opportunity to commit fraud.

In order to handle this problem, two approaches were taken to implement best practices. These included:

  1. The role of the person  with the capability to preserve the account information in the bank needed to be discussed in-dept
  2. Data entry had to be reviewed thoroughly

First of all, this leads us to the most important question. Who can preserve bank account entries and maintain them with best practices?  The best way to answer this question is by identifying the qualities of the person that SHOULD NOT be given these responsibilities.

Since Suppliers are also assigned the bank information on accounts, therefore people that can access the supplier form should not be allowed bank information in the ACH form. This is what allows them to create fictitious accounts. The process of data entry about bank accounts must be handled as a clerical best practice. It must be involved an approved form or email and must be performed by someone without access to processes like; beginning the process of requisition, preparing purchase orders, ensuring payments are made or recording invoices.

Secondly, we need to know how the data review must be done to make it detailed. As a best practice, the account information and related data can be included in the key controls. Therefore companies must establish a process or method to validate the entered data for best practices. It must be accurate, complete and timely. There are two options for this:

  1. Developing a custom system for workflow requiring secondary approval of entered data. The data will first be presented by the supplier or employee. Then it will be passed on to an approver who will enter the data. After this, a second verifier will assess the accuracy of the data entry.
  2. There could be a manual method of controlling the process of data entry. The filled forms will need to be entered manually by a first person, and then reviewed for approval by a second person. However, this is not a best practice for adequate auditing.

To ensure proper entry of data, there is a need to assign duties as assignments to those employees that play an important role in account entry. This is a recommended best practice for banks. There are other issues related to entry of data for bank accounts and assignments in banks.

Further reading: Corporate Governance | Audit | Performance Improvement

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