Internal Control Procedures
The loan department in a bank is subject to regulation. Internal auditors work for the bank to
ensure that the loan department complies with requirements. The internal auditors must verify
that each car loan file has a note signed by the maker, verification of insurance, and a title issued
by the state that names the bank as co-owner.
1. Explain why the bank and the regulatory agency are concerned with these documents.
2. Describe the internal control procedures that should be in place to ensure that these documents
are obtained and safeguarded.