FEATURE Protecting Employees


FROM FRAUD ACCUSATIONS Bert Purdy, CPA, CTFA, Partner | BKD


Community banks often use “excellent customer service” or a similar phrase in their marketing efforts, internal training, or mission statements. One can walk into almost any community bank branch and feel that drive to provide good customer service. Throughout my career providing risk management, external


audit, and internal audit services to community banks, I’ve had hundreds of conversations and written hundreds of findings related to the lack of dual control within a bank’s branch.


The following is a common situation within community bank branches:


The main vault door is on a timer, and at least two personnel must be present to open the vault. The combination is split in two, and each present employee knows one half of that combination. Once the main door is opened in the morning, the bank uses a day gate that is locked by a single key. It is bank policy that two employees are required to enter the vault. If money needs to be purchased or sold from/to the vault for a teller drawer, the teller and one other employee should enter the vault together. While this situation is ideal, in reality, it is common for a teller


to obtain the key to the day gate and access the vault to buy money because a customer wants cash in a certain amount and a specific order of denominations the teller does not currently have in the drawer. So, in the name of customer service, the teller accesses the vault without anyone else present. When I’ve broached this dual control issue with employees in the past, the answer is always the same: “That would not be good


customer service. We may have to wait for another employee to become available, so it’s OK to enter the vault alone.” It’s in the name of customer service, so it must be fine, right?


Consider the following scenario:


A surprise vault count is performed at 4 p.m. by the internal audi- tor and an officer without teller responsibilities. After counting the vault cash three times, it is determined to be short by $10,000. The vault was counted the prior evening by two tellers and was found to be in balance. The internal auditor notifies the bank president of the shortage,


and they start combing through the video feed to see who accessed the vault during the day. Of the three tellers working that day, one teller accessed the vault alone two times. Can you guess who will be the first employee suspected of taking that missing $10,000? When I walk through this scenario with bankers, they realize


that suspicion of stealing money from the bank is not worth the few minutes saved in the name of customer service. I recommend reviewing your dual control procedures for


accessing the vault, ATM, bank-used safe deposit boxes, negotiable items, and spare keys (including unsold safe deposit box keys). If the bank’s dual control policy can be circumvented because the locking mechanisms do not physically require dual control, it may be worth the money to change those locking mechanisms to enforce dual control. As an employee, I would want to do everything in my power to


always be above reproach. Once employees understand it is for their security, they will likely buy in to the concept of security over service.


When I walk through


this scenario with bankers, they realize that suspicion


of stealing money from the bank is not worth the few


minutes saved in the name of customer service.


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