Loan Settlement Audit Program

Bayport Financial Services Head office Section Scope

AUDIT PROGRAME FINANCE DPT. Prepared by Outright settlement, Refunds and Loan closures/destruction. April – October 2009

Reviewed by

Schedule ref

J. Mfumya

A: Outright settlement Audit objective: To ensure the accuracy, validity and completeness of outright settlements made Risks: 1) Clients being overpaid when outright settlement is made 2) Consultants’ misrepresentation leading to reputation risk 3) Reputation risk due to complaints from clients settled their loans and yet deductions not stopped Audit tests Extract an outright settlement report from Baylend and select a sample of loans greater or equal to TZS 600,000 settled from April to October 2009 and ensure the following:1) If

client settles balance as a result of consultants’ misrepresentation, quoted amount is equal to outstanding capital including admin fee plus two month interest (individual outright settlement as per Baylend). Otherwise if no complaints, settlement amount is equal to collectable amount less deductions pending at employer.

2) Approved loan settlement form bearing settlement amount from Head office was sent to the respective branch and signed by the client as an evidence of accepting quoted settlement balance thereon. 3) Client deposited agreed settlement balance in the company bank account within the stipulated timeframe and salary slip submitted to the admin manager. 4) Settlements made beyond stipulated timeframe were refunded to respective clients by cheque and clients advised to make fresh application. 5) Head office admin manager closed client account in Baylend

after receiving all relevant documentation from the branch. 6) Head office admin manager contacted the treasury to stop further deduction from client payroll to avoid refunds and complaints. 7) Analytically compare loans settled during the period under audit and loans settled during the same period one year before.

Done by and date

W/P Ref

B: Refunds Objective: To ensure the accuracy, validity and completeness of refunds Risks: 1) Incorrect amounts being refunded to clients 2) Fraudulent claims for refunds being made by clients or employees. Audit tests Select a sample of refunds made between April and October 2009 and perform the following audit tests:1) Review a customer refund receipt form to ensure that branch

manager filled it with all necessary information. 2) Client’s bank ID card, employee ID card and salary slip(s) for month(s) over deducted are attached. 3) Ensure that head office administration officer verified the accuracy of the amount filled in the refund receipt form. 4) Ensure that the head office administration manager verified refund receipt form and signed refund approval document as an evidence of approval. 5) Cash requisition form was prepared and verified by the accountant. 6) The cash requisition form was approved by CFO before cash is

remitted to the head office administration officer. 7) Ensure that the head office administration officer deposited refunded money into client’s bank account and deposit slip submitted to finance department for verification. 8) Client’s account in Baylend is updated/posted with refunded

amount 9) The head office administration manager did resubmission to avoid incorrect deduction being made again. 10) Compare total refunds made during the period under audit from refunds made the same period but one year before.

Done by and date

W/P Ref.

C: Loan closures Objective: To ensure that accuracy, validity and completeness of loans closed/destroyed. Risks: 1) Fraud and theft may occur 2) Inforation technology/loss of data Audit test Select a sample of loans destroyed between April and October inclusive and ensure the following:1) A statement was printed from Baylend and attached to the loan

contract to be destroyed. 2) The administration manager initialled the statement as evidence

of approval for the loan destroyed in Baylend 3) The administration manager has explained the reason for destroying the loan.

Done by and date

W/P Ref.