Evening star., 1934-06-16

THE Auditors
Part in Directors Examinations" said
in part:
AS one phase of program OF audit
and control and as means OF IN
forming directors of conditions and
operations. I recommend without
qualification the directors examina-
ton, provided it is properly conceived
and Systematically and 1nte!lsentLy
performed. The majority of directors
examinations in the past. most BANK
ers will admit, were pro forma per-
formanceS; very seldom we're they
taken seriously by the directors
themselves of bv the executives of the
bank. The routine duties of veriflca-
ton were often delegated to such an
extent that employees or department
heads we're auditing their own work.
II want to make the broad state
ment that if a directors examination
is to be of any value it must originate
as state of. mind with the executives
and directors of the bank. To be en-
tirely successful. the internal bank
examination must have the enthusi-
astic support and cooperation OF
every one affected AS a means to
that end I suggest that the president
and other executive officers of your
bank must be sold on such ideas.
Urged by Controller.
There is nothing in the national
bank act that requires that directors
make examinations of their banks.
The Office of the controller of the cur
rency does, however. recommend that
every national banking association in
corporate in its bylaws an article
calling for an examination by COM
mittee of the board of directors semi
annually or annually, preferably the
former.
There are two methods of eXamin-
ing that are generally used The first
is where the committee members per-
sonally perform the functions of eX-
aminers. The second is where the
committee employs independent ac-
countants to make the examination in
its behalf Both methods have their
advantages. The principal benefit of
the directors personally making the
examination must necessarily lie in
the fact that as the work progresses
the members of the committee in
dividually have the opportunity to
become familiar with the type of in
vestmentS and with the names and
character of borrowers. Further,
know of 70 better way of sustaining
the interest of directors in the affairs
of the bank.
I cannot overemphasize the funda-
mental importance of a complete audit
program. 1t is absolutely essential
that the scope of the examination be
predetermined. A carefully oevcl-
oped program insures the complete
coverage of all accounts and depart
ments in the bank.
Auditors Vital Function.
Assuming that the directors per-
sonally are acting as the Examining
Committee, I suggest that this pro-
gram be approved by the committee
before it is made effective. Remember
at all times that it is a directors
examination that is being made-not
the auditors. The directors sign the
report and it is their responsibility.
Consequently. they are entitled to
know the plans and suggested pro-
cedure from the beginning However,
want to emphasize that there is
the necessity for leadership and con-
tlnuouS control of all phases of the
examination. This, to my mind, is
the auditors function.
With respect to your audit pro-
gram and your method of rotation, as
established previous to the dats of
examination. do not let any corven-
tional program take the place OF your
judgment or intelligence. The sr-
rangement and order of work 10 be
done and accounts to be covered will
change and should change materially
from one examination to the next
so avoid Standardization as far as
possible, for it has been said that
Whatever is standardized is killed
Finally, let me urge this-ap-
proach your problems with an open
mind. Generally, ideas do not i'm
prove with age. Those that proved
themselves in the past may have done
so because they suited earlier condi-
tions. The efficient man altels his
viewpoint to conform with circum-
stances as they arise" Mr.. Linn
CODCluQeQ.
Best Advertising Medium.
The American Institute of Banking
was told that well-preSented news
paper advertising was known to be
the best medium for Reaching the
public.
g. Fred Berger, treasurer Cf the
Norristown-Penn Trust Co. of Norris
town, Pa made the assertion in
urging that banks conduct a we'll
organized characterization campaign
through advertising and publicity
Let the public know you and your
business, if you would minimize the
danger of bank runs" he said in say
ing that this was lessua which
should have been learned from the
bank holiday in 1888. Banks which
were able to carry on during that
time, he said, derived their strength
from knowledge and faitn the public
had in their management and policies
pAv tn DIT TNNpT AcTn