Bank Call Report Series: How Good is Your Documentation?

• May 7, 2019
• Amanda Garnett

This week I’m in Minnesota teaching two different call report classes for the ICBA so I thought it would be a great opportunity to go back to basics and write a short blog series on some of the most common issues we hear about in our classes. 

How Good is Your Documentation?

Yesterday, I wrote about how frequently we see bankers “inherit” the call report when someone unexpectedly departs.  One key control in mitigating this risk is ensuring that you have adequate documentation in place each quarter so that the next person can pick up the pieces. 

I like to ask call report preparers whether their documentation would pass the “hit by a bus test”.  If your preparer was unexpectedly gone tomorrow, could someone else at the bank locate the call report documentation from the prior quarter, figure out where the source information came from, and work their way through the next quarter’s call report.  This is a challenge for many banks, large and small, but the better your documentation is, the less painful the recovery when the unexpected happens. 

You can test this within your own bank.  Next time your call report preparer is out for the day, look for the files and spend an hour or two going through them.  

• Does anyone know where the information is stored?
• Can you make heads or tails or where the numbers are coming from? 
• Can you trace the supporting documents to the numbers on the call report that were filed? 

If any of these things are a struggle, it’s probably time to make some changes to your process. 

Types of Documentation to Retain

Banks should maintain copies of the call report and related supporting documentation for at least five years.  The following items should be retained:

• The complete call report that is filed
• All amendments to the call report
• Copies of officer and director signatures as required by the instructions
• Balance sheet and income statements used to prepare the reports
• Loan, investment, and deposit data or reports used to prepare the various schedules
• Copies of quality and validity edit checks generated by the call report software and any information provided to clear those edits

In addition if your call report software is mapped or linked into your general ledger and/or loan and deposit systems, you will also want to ensure that you have support for how the software is pulling the data into the call report software so that the mapping of this data can be reviewed and audited. 

Often times having supporting reports and schedules isn’t enough to be able to pick up where someone left off.  I always encourage preparers to show their work.  The next preparer will want to know, for instance, what specific loan codes are grouped into each line on Schedule RC-C and what general ledger accounts are reported on each line of the Income Statement on Schedule RI.  Whether you prepare a spreadsheet to do these types of groupings or just manually calculate them on a copy of the report, make sure to keep that documentation in your file along with everything else. 

How and Where to Maintain Your Documentation

There is no right way to maintain your documentation.  But there are certainly some guidelines that can help. 

For Paper Files:

• Store the files in a fire proof cabinet or other location where they are secure but also accessible to others that may need to access them
• Use a three ring binder or similar format where all documentation can be organized and stored together
• Organize the documents by call report schedule
• Cross reference between the supporting documents and the call report schedules

For Electronic Files:

• Use a network drive that meets your banks security requirements, but can also be accessed by other employees if needed
• Organize the documents in folders and subfolders or using descriptive titles so they can easily be located
• Ensure that all supporting reports are download from your core system and saved in the call report files as some systems do not retain reports for longer than 12 – 24 months

Maintaining documentation that is well prepared and organized can not only help mitigate risk but also improve your preparation efficiency. 

If you aren’t sure where to start, CLA is here to help.  Please contact us. 

Tags: Call Report, Financial Services General | Comments Off on Bank Call Report Series: How Good is Your Documentation?