Business — Banking — Management — Marketing & Sales


Category: Strategy Implementation

The importance of a framework of procedures and controls

In any type of company, there is a need of clear definitions of functions and processes, which are detailed in a manual of procedures. Such a manual ensures, if used, that the processes, duties, controls are the same in all the entities of the company. It brings consistency and safety to an organisation. The best-managed western banks usually show a strong organisation, with the procedure manual being often called “the Bible”.

However, it could happen that the actual process is different from what is described in the book. The real life of the bank does not correspond to the scheme privileged by the management. It could be due to the inadequacy or obsolescence of the procedure manual. It could also be the consequence of habits difficult to change, even if the changes will be positive for the company.

That is why it is fundamental, on one side, to design a procedures manual dealing effectively with the day-to-day practical issues of the various departments of a bank and, on the other side, to regularly control the overall process to see if the procedures are actually enforced.

Scope of the procedures

Procedures should describe things such as:

The allocation of duties and responsibilities in all the administrative areas, such as back-office, accounting and settlements (which department is in charge of what).

The precise processes of all the administrative tasks (for instance, the documents to fill in, the input of an operation into the system, the double checking).

The organisation of the authorisation process (which departments are in charge of giving the authorisations, what to do in case of a specific operation).

The format of the reports, their frequency and their destination.

What to do in case of a problem, the departments and people to inform.

For instance, at a branch level, the process of a specific product will be the following:

To conclude an operation on that product with a client, the salesperson will use the document XXX (standard document for the all bank for this product), fill it in with all the required information, and ask the client to sign and date the document.

The document will then be passed to the back-office for a double-checking.

The operation will be input in the system, under the screen YYY. Once input, check the confirmation printed by the system, and send a copy to the customer, another copy being kept in the back-office files.

Enforcement of the procedures

Clear signals have to be sent by the head-office to push he entities to apply the procedures and their update versions. It is under the responsibility of the entity’s manager to do so. He can delegate it to the operation manager or to the controller, if there is any in the branch.

Permanent checking that the procedures are up-to-date and correctly followed

A bank will make sure that any new activity, a change in the organisation or in the systems, involving changes in the way the people work, is reflected in an adaptation of the procedures. The procedure manual is an alive document, enriched methodically and regularly. The respect of the procedures is to be checked at a local level, within the branch, and by the audits run by the central audit function of the bank.

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