APG for LC

General Objectives:1. To check on the reliability of financial

records.

2. To check compliance with the generally accepted auditing standards.

3. To ensure if established policies andcontrols are adequate and consistentlyapplied.

4. To review compliance with laws and

regulatory requirements.

PRELIMINARY AUDIT PROCEDURES:1. Obtain a copy of the approved Table of

Organization (TO) with position descriptionand Operations Manual of the Department.

2. Evaluate the functions handled by assignedofficers/staff against the approved TO andOperations Manual.

3. Inquire and evaluate monitoring tools of the

Department in: Carrying out their functions; Measuring performance of

subordinates; and In complying the regulatory

requirements/external reports 4. Obtain Balance Sheet as of audit cut-off

date and comparative BS as of last year. Prepare the comparative BS and obtain comments of the unit for any significant changes.

5. Inquire and validate access given to

employees to different systems and check compliance to approved security matrix.

APG for LC

IMPORT TRADE TRANSACTIONS a flow of goods/ bringing in of goods into the country from a foreign source. Imports may be paid via:

A. Letters of Credit

B. Documentary Collections Document against Payment (DP) Document against Acceptance (DA) Open Account Arrangement (OA) Direct Remittance Consignment

Documents used in International trade are:1. Transport documents

1.1 Air Waybill is a receipt of goods only, which is issued by an airline company and not a document of title. The goods are delivered to the named consignee once customs clearance has been obtained.

1.2 Bill of Lading (Marine) a marine or ocean bill of lading is a receipt of goods, a contract for carriage and a document of title. It is issued by the actual carrier or his agent and bears evidence that the goods have actually been loaded on board by a named vessel. As a document title, it must be presented to the shipping company to obtain possession of the goods.

1.3 Combined Transport Document is issued when more than one mode of transport is necessary to move goods from a point of departure to a point of final destination (also known as inter-modal or multi-modal transport document).

2. Commercial Documents2.1 Commercial Invoice both a statement of goods shipped and a bill2.2 Packing List sets out the details of the packing of the goods2.3 Inspection Certificate certificate declaring the result of an examination of the goods by a recognized

independent inspection body.2.4 Certificate of Analysis states the ingredients and proportions found by an independent analysis of

merchandise.2.5 Certificate of Weight issued by a specified party usually certifying the gross and net weights of each

packing unit.

3. Official Documents3.1 Certificate of Origin declaration that certain goods originated from a particular country.3.2 Consular Invoice issued by consul of the importers country attesting to the value and origin of goods.

4. Financial DocumentDraft/ Bill of Exchange demand for payment (at sight or usance).

A. IMPORT LETTERS OF CREDIT (LC) - An instrument issued to document an arrangement whereby a bank (Issuing Bank), acting at the request and in accordance with the instructions of a customer (applicant for the credit, buyer or the importer), is to make payment to or to the order of a third party (the beneficiary/seller or the exporter) a predetermined amount of money within a prescribed time limit provided terms and conditions of the credit are complied with.

2 types of Import LC according to Method of payment:

Sight LC - beneficiary gets paid immediately upon presentation of required documents. Usance LC - payable at a specific future time

Import Letters of Credit

1. Obtain subsidiary ledger of outstandingLCs as of cut-off date and compare the

APG for LC

same with GL balance. (LCs opened are booked under Contingentaccounts Sight or Usance LC Outstanding).

AMLA

2. Review of LCs opened vs. Line

2.1 Check whether LC opening was madeagainst clients available LCTR line. Ifvs. other credit lines, secure copy ofapproval.

2.2 Test-check on the proper approval andaccuracy of line encoded.

2.3 No LCs opened for walk-in clients.They must be referred to CorporateBanking Division for properidentification and evaluation of creditworthiness.

3. Observe and check if LC applications arestamped with the date and time of receipt.

Test-check if these are processed withinthe day or next day (if received after cut-off time).

Check also if LC numbers are given toclient only if the documents are complete.

Cir 1389 Sec 9

4. Ensure that the LC was opened on orbefore the date of the shipment with max.validity period of 1 year and that only 1 LCwas opened for each import transaction.

Cir 1389 Sec 9;Cir407

Cir 1389Appendix 1

MAAB dated 09.26.90

5. Review of the documentation:

Check whether LC opening was supportedby the following:

a. Duly accomplished LC application

b. Firm offer/Pro-forma Invoicecontaining information on specificquantity of the importation, unit costand total cost, completedescription/specification of thecommodity and Phil. StandardCommodity Classification code

c. Permits/clearances from appropriategovernment agencies, wheneverapplicable (for regulated commodities)

d. Duly accomplished Import EntryDeclaration Form (IED) which serve asbasis for payment of advance duties

APG for LC

as required under PD 1853

6. Check if the deficiencies in the LCapplication relative to the following werereferred to the client for regularization:6.1 Incomplete name and/or address of

importer and exporter

6.2 Amount does not tally in theproforma invoice or equivalentdocuments

6.3 Term of shipment, term of paymentand/or manner of shipment notindicated

6.4 Incomplete merchandise descriptionor too detailed &/or inconsistent withsupporting documents

6.5 Shipping/expiry dates &/or mode ofadvising LC not properly indicated

6.6 Incorrect CB Commodity Code

6.7 Alterations not duly signed by theclient/authorized signatories

7. Compare details of LC opened per SWIFTmessage vs. AAILC.

8. Compare the signature of theclient/authorized signatories on theApplication and Agreement of IrrevocableLetter of Credit (AAILC) against thesignature card/authorized signatories perBoard resolution. Check if signatureverified by the Unit.

CB Cir. No. 1389 Sec 9

9. In case of LC Amendment, look for theauthorized and verified instructions fromthe customer.

1.1Ascertain that no existing regulationsprohibit the amendment required.

1.2Appropriate approval if pertained toincrease in amount or extension ofexpiry date

1.3Check if extension of LC validity ofmore than one (1) year should haveprior CB approval if payment of theLC is to be sourced from the bankingsystem

APG for LC

1.4Ascertain that the reimbursing bankwas duly notified for any increase/decrease in amount of the LC.

1.5 Check if corresponding charges forthe amendments were collected.

CPG No. 004/2004

10. Check submission of marine insurancecoverage

10.1 Open Policy up to the line limit10.2 Cover Note- to be submitted within

one week after LC opening providedgoods have not been shipped (for C&F, FOB and FAS shipments)

10.3 Compare details against LCapplication

10.4 Issued by an accredited insurancecompany, otherwise proper approvalobtained.

BSP Cir. No.909 Sec 9

Cir 844

11 Test-check on the computation of chargesand accuracy of amount collected andbooking for the LC opening:

11.1Advance Customs Duties (amountcollected based on the amountindicated in the IED).

11.2Opening charges (see Policy Manual)11.3Cash LC/ Marginal Deposit (if required)

USC No. 265/99

12 Check whether clean-up of expired LCs isbeing made at least once every quarter:Items to be checked:

12.1 LCs with nominal balance (less than10% of the LC amount) should becancelled if already expired for 60days or more

12.2 LCs fully unutilized or withsubstantial balances should becancelled if already expired for morethan 90 days, provided;

12.3 No BL endorsement has been made12.4 No Bank Guarantee has been issued12.5 No Inward Bills for Collection (IBC)

or Acceptance is outstanding

Shipside Bonds/Bank Guarantee (arrival ofgoods to destination before the documents)

There are times that the goods reach theirdestination before the documents. The Bankcan issue a shipping guarantee in favor of theshipping company authorizing the release of thegoods to the importer against the Banksundertaking to deliver the original Bill ofLading.

APG for LC

The amount shall be carried in the books (undercontingent account Bank Guarantees) at thelocal currency equivalent of the shipment at thebanks booking rate permissible within the forexband and shall be reversed upon surrender tothe bank of the shipside bonds duly cancelled. 1. Obtain subsidiary ledger of outstanding

shipping guaranty as at audit cut-off dateand tally the same against GL/FCCLbalances.

2. Check whether a register was beingmaintained for all shipping guarantyissued.

3. Verify whether issuances of shippingguaranty were limited only to clients withLC/TR lines and L/Cs with 100% cover.

4. Ascertain whether the following weresubmitted by the client in support of theapplication for SG (all required documentsshall be signed only by the clientsauthorized signatories):

Letter of Indemnity Trust Receipt (in case client has no TR

line, ascertain whether full payment ofthe Customer Liability Account (CLS)was required prior to the issuance ofthe SG.)

Copy of Bill of Lading Copy of Commercial Invoice Steamship Guaranty (Undertaking for

release of cargo accomplished byshipping agency and singed by client.)

Undertaking for discrepancies Form 104 (Surrender of Original BL) Accepted Draft Signed Across (for

Usance LC/DA only)

5. Verify whether the SGs issued werestamped with protective clause asfollows:It is understood and agreed that the liability ofthe undersigned bank in no event, shall not bein excess of $_____, the invoice value indicatedherein which liability shall be extinguished upon

APG for LC

the production and surrender of the proper billor bills of lading or the expiration of one yearfrom date hereof whichever shall first occur.

It is further understood and agreed that allterms and stipulation not related to the releaseof the merchandise under guaranty are herebydeemed inapplicable in the event of asettlement of our liability, the place of paymentwill be in Metro Manila, Philippines.

6. Check if bank guaranty issued correspondto the amount (at the same foreigncurrency) and other information againstTR, LC, bill of lading and commercialinvoice.

7. Ascertain correctness of the chargescollected from the client.

8. Review outstanding items for more than30 days from issue date and checkwhether the unit has already receivedoriginal documents but not yet presentedto the shipping company for cancellation.

Note: Bank guaranties must be cancelled within 30days from receipt of the original shipping documentsor shall be automatically cancelled at maturity, whichis one year from date of issuance.

APG for LC

Import Bills (upon negotiation of the LC)Upon receipt of documents, the issuing bankrechecks them and if satisfied that they comply withthe LC terms and conditions, it presents the same tothe importer/client for payment. The accounts usedto record the receivable of the bank fromimporter/client (representing the value of the importbills presented by the paying bank for negotiation)are:

Customers Liability Under Import Bills(CLIB) this account is debited for all importbills drawn under a sight LC (payable by theimporter/client upon presentation by the issuingbank) upon receipt of debit advice or documentsfrom the negotiation bank. Contra accountcredited is Due to FX Banks (nostro) forpayment to correspondent bank.

Customers Liability Under Acceptances-Foreign (CLUAF) this account is debited forall import bills drawn under a Usance LC(payable at certain date after acceptance) uponacceptance of the draft by the importer. Acontra account, Outstanding Acceptances isalso set up by the bank representing its liabilityto the paying bank for the drafts drawn.

1. Obtain subsidiary ledgers and compare thesame with the GL balance as of audit cut-off date. Reconcile any difference noted.

Note: Should be booked in FX currency;conversion to Peso Import Bill s not allowed.

2. Inquire and check on the safekeeping ofdocuments (including drafts) receivedunder a credit during and at end of day.

Documents not processed/ released shouldbe held in custody by a designated clerkand kept under joint custody at the end ofday (fire-proof vault).

Cir 1389Sec 9

3. Test check items booked as to:

3.1 Completeness of documentation (cable, draft, bill of lading/airway bill, commercial invoice, insurance).

3.2 Timeliness of booking.

3.4 Compliance with the terms and conditions set forth in the LC.

3.5 Compliance with the Uniform Customs and Practices on Documentary Credits.

APG for LC

3.6 Requirement of pre-shipment inspection/Clean report of findings (CRF) is strictly observed, whenever applicable.

4. In case of discrepancy, determine if thefollowing procedures were made:

Note: Booking of LCs with discrepancies remainsunder contingent account Inward Bills forCollection. Reversal and booking to CLIB/CLUAF isupon acceptance of client of the discrepancies.

4.1 Discrepancy notice was sent to negotiation bank within seven (7) banking days from receipt of documents.

4.2 Discrepancy letter was sent to client for conformity. If no approval was received from the client, the negotiating bank should be immediately informed.

4.3 Determine whether documents were released to client only upon acceptance of the discrepancies.

5. Determine whether documents werereleased only after payment for sight LC oronly upon acceptance of the draft forUsance or upon lodging to TR.

Ascertain compliance with policies onrelease of documents.

6. Test-check payment received for settled customers liability accounts. Ascertain accuracy of amount debited to clients account (principal amount paid and negotiation charges)

6.1 Verify outstanding items for more than 15 days. Check if reclassified to Past Due Import Bills account if no approval for extension for another15 days is obtained or to Trust Receipt if converted to TR.

Notes: Clients account debited vs. credit to CLIB for sightLC or Due to FX Banks for usance LC(corresponding set-up to CLUAF and relatedOutstanding Acceptances GL accounts alsoreversed). For usance LC, correspondent bank ispaid on maturity date whether import client pays ornot.

In case of non-payment from importer, contraaccount debited is Past Due Import Bills or TR ifconverted to TR.

APG for LC

CPB 2002/02 8.21.02

7. Check approval of the Unibank Crecom Chairman/President in the following cases (regardless of amount; except when the Usance LC is fully covered by assignment of FCDU deposits):7.1 Usance LC is for a term of more than

180 days even without any TR facility.7.2 Usance term plus the TR term exceeds

180 days.

APG for LC

PD 115 or TR law

Trust Receipts (TR)Under a LC, importer has the option ofauthorizing the Issuing/ Opening Bank to debithis account or request re-financing under a TRAgreement (in peso or dollar denomination).

TR is an agreement, which enables the importerto obtain possession of the merchandise forresale in exchange of a promise to hold themerchandise received in the name of the Bank. Bank retains ownership of the merchandise andimporter is obligated to pay the bank from theproceeds of the sale.

1. Check duly approved Instruction Sheet forthe conversion of IB to TR (no automaticconversion to TR; shall be initiated byclient and coursed thru the AccountOfficer).

Terms of the TR i.e., term, interest rate etcshould tally with CO/IS

2. Check covering Trust Receipt Agreementand ensure the following: 2.1 Duly signed by the client/authorized

signatories and authenticated by an officer.

2.2 Corresponding documentary stamps was affixed.

2.3 Goods under TR and amount tallies with the IB documents

3. Check on accuracy of TR booked (vs. ISfor the Peso conversion). Dollardenominated TR should have properapproval.

Credit pol.category C

CPB No. 93/004;2002/016

CPB 93/004 : 3.12.93

4. Ascertain if TR granted is for a term of notmore than 120 days.

Extension of TR term beyond 120 days(max. of 180 days) subject to the following:

Specified partial payment from 20% to50% as approved by appropriate levelof authority

Any deviation from this policy onpartial payment requires Crecomapproval regardless of amount.

Cumulative usance term (i.e. supplier'sterm plus TR term) shall not exceed180 days.

Extension of FCDU TRs limited to

APG for LC

prime CBD clients subject to Crecomapproval

Conversion of IB to TR by clients withexisting past due subject to appropriateapproval

5. Goods subject of TR4.1 Check whether only goods under

Section 4 of PD No. 115 (TrustReceipt Law) were accepted underthe Trust Receipt Agreement.

4.2 Importation covering capital goods are subject to the following: Drawn vs. approved LCTR line Tenor subject to existing policy on

TR Allowed only for light equipment,

machinery and supplies (spareparts) used for manufacturingoperations.

Dollar denominated TR notallowed

Maximum TR amount shall onlybe up to P 10M. If over P10M,the conversion to TR shall behandled on case-to-case basis.

Note: Long-term financing (e.g., via leasing facilitywith BPI Leasing or via an approved STL/MTL)should be determined even prior to LC opening.The TR shall be allowed only for bridge financingpurposes and shall be subject to the approval of theappropriate approving credit committee to ensurethat the TR, if granted, can be repaid/refinancedupon its maturity by a longer term credit facility.

6. Check if goods under TR are covered withfire insurance policy. Items to be checkedon the insurance policy: 5.1 Issued by accredited insurance

company; otherwise with proper approval

5.2 Not expired5.3 Description of goods under TR tallies

with insurance5.4 Amount of the insurance equal to the

amount of the TR.5.5 Duly endorsed in favor of the bank5.6 OR for the premium payment.

7. Verify if the following charges werecollected:6.1 Interest at approved rates from date

of IB booking/acceptance to date of TR conversion

6.2 Penalty

APG for LC

6.3 Principal amount (upon liquidation ofthe TR)

8. Check and evaluate referral of unpaid TRson due date to the AO. Inquire on status/remedial management on account. Checkcorresponding booking to Past Due TRand/or Items in Litigation (if case is filedagainst client).

B. DOCUMENTARY COLLECTIONS

An Operation by which a bank collects payment on behalf of the seller/ exporter by delivering the documents tothe buyer/ importer against payment or acceptance of a draft either via:

1) Document against Payment (DP) bank advise importer of the receipt of the complete original shippingdocuments and shall effect the release of said documents to importer upon receipt of payment. Bankshall remit payment to the seller thru the correspondent bank abroad.

2) Document against Acceptance (DA) shipping documents are released to the importer by the localbank thru the sellers bank upon the importers acceptance of the sellers bill of exchange obligatingimporter to pay for the shipment at some future date.

3) Open Account arrangement (OA) - the shipping documents are sent and released by the seller directlyto the importer without coursing the documents thru the banks upon importers promise to pat at somefuture date after shipment.

4) Direct Remittance Exporter sends documents directly to importer. Importer presents copies of thedocuments and an application for foreign exchange to the bank when ready to pay. Bank then remitsproceeds to exporter according to instructions.

5) Consignment goods are not sold to importer but entrusted only by exporter to importer to sell. Title ofgoods remains with exporter until sold.

DA/DP/OA/Direct remittance transactions are booked under contingent account Inward Bills for Collectionwith sub-classification if DP/DA/OA.

AUDIT PROCEDURES

1. Obtain subsidiary ledger of all outstandinginward bills for collection and tally thesame against GL balance as of audit cut-off date.

2. Check whether documents received werestamped with a date of receipt andrecorded in the register (with IB referenceno.).

3. Determine whether all items recorded perregister were booked to its proper GLaccounts.

Cir 419 Sec 11

4. Check compliance on the required reporting of importations under DA or OA arrangements (daily schedule is sent to UCAD who prepares the report to BSP cc IOD).

APG for LC

5. Ascertain that foreign drafts were signed by the importer to indicate acceptance for DA arrangement.

Check for the: Date of acceptance Date of maturity Initial by an officer to indicate

authenticity/ validity of importers signature.

6. Determine whether documents were released only after acceptance of draft under (IBC-DA) or upon payment (IBC-DP).

7. Determine whether a billing statement was prepared 10 days before maturity date (based on correct selling rate for the day).

CB Cir No.419 series 2004

8. Check existence of Records of GoodsImporter (RGI) submitted by the importer.(For OA, DA)

Should be dulyaccomplished/ signed by the importerand assigned with reference BankReference No.

Submitted to BSPwithin 5 banking days after the end ofthe reference week

Importations listed inthe RGI should tally with those of theDA documents.

9. Ascertain that correspondent bank wasadvised of the acceptance of draft/discrepancies by the importer by way ofthe Advice of Maturity (AM-DA).

10. Ascertain that letter of authority to debitthe account was on file for payment madeagainst debit to importers account(supported by an IS). Check if the same issignature verified.

11. Determine if payment of collection itemswere covered with receipts. Test checkcomputation of total value of collection andcharges.

12. Test check if remittance schedule werestamped paid on the date of payment.

APG for LC

13. Investigate items which remainedoutstanding for a considerable length oftime

OTHER PRODUCTSStand-by LC Domestic and ForeignIssuing bank acts only as the guarantor to a Foreign Loan or Performance bond. May be drawn only when debtor (accountee) defaults in his payment (in case of loan) or obligation (in case of a performance bond). Standby LCs issued are booked under contingent account Stand by LC.

1. Obtain subsidiary ledgers of outstandingStand-by LC and tally the same with GLbalance as at audit cut-off date.

2. Make an inventory of outstanding Stand-byLC based on subsidiary ledger.

Application for Stand-by LC and comparethe same against LC opened. Check ifduly signed by an authorized signatory ofthe bank.

CPG 98/003

3. Verify if with specific approval for theStandby LC. Obtain copy of the CreditOffering which should include the:3.1 Purpose3.2 Amount3.3 Beneficiary3.4 Expiry Date (may go beyond the

expiry of the approved line providedthat the Standby LC line is stilloperative at the time of the LCopening).

3.5 Terms and conditions of the availmentof LC in case of a drawdown by thebeneficiary

MOR Sec X347.1 & .2

4. Ensure that party who opened the StandbyLC does not have any past due obligationfor the 90-day period preceding the date ofissuance of LC.

5. Check if the standard Standby LC formwas used; otherwise it should be subjectedto legal review.

6. Check if the terms and conditions asspecified in the LC were strictlyimplemented i.e., amount, interests orpenalty etc.

7. Determine whether issuance of a Stand-by

APG for LC

LC FX had prior clearance and approval ofCB through the Management of ExternalDebt and Investment Accounts Department(MEDIAD) (CAG Memo 083/83).

8. Ascertain whether LC opened hasspecified an expiry date.

CPG 98/003

9. Check if the required fees/charges werecollected from the client (subject tocommitment fee).

10. Inquire and validate any Standby LC paiddue to applicants default in respect of anobligation owed to the beneficiary.

Review and evaluate handling/ booking.

MOR Sec X347.1

11. Check compliance to the monthly report ofDomestic Standby LCs issued andoutstanding.

Ensure timeliness and completeness of

information as required.

Export LC

1. Obtain subsidiary ledger (SL) of alloutstanding export LC and tally the samewith GL balance as of audit cut-off date.

2. Make an inventory of confirmed export LCbased on SL.

3. Check if supported with Purchase Order orSales Contract

4. Check outstanding items if maximumvalidity period of 90 days from date ofissue is observed, inclusive of extensionsprovided that the expiry date does not gobeyond the delivery period specified in theLC, PO or SC

Export Bills Purchased

Outright purchase/ immediate credit of paymentto the exporter prior to receipt of payment fromthe Reimbursing Bank.

1. Obtain SL of outstanding EBP and tally thesame with GL balance as of audit cut-offdate.

2. Determine whether items purchased is

APG for LC

within clients EBP Line and the same isproperly earmarked. If no line is available,check if the purchase was covered withinstruction sheet duly approved byappropriate lending body.

3. Check whether the following documentswere submitted by the clients prior topurchase of Export Bills:a. Original copy of Export Letters of

Credit (ELC) together with:

Draft Comm

ercial Invoice Purch

ase Order/ Firm Offer Insura

nce Certificate (if any) Letter

of Indemnity from the client dulysignature verified.

Suchother documents required by ELC.

b. The following documents requiredinternally by CB and other governmentagencies: Inform

ation Sheet Report

of Foreign Sales Export

Declaration Custo

m Invoice

c. If a bank other than BPI was named asnegotiating bank in the ELC determinewhether: Check notation on the covering

ELC for partial negotiation withother bank.

Confirm with named negotiationbank for possible partialnegotiation not noted per ELC.

4. Check documents submitted and ascertainthat all terms and conditions of the creditwere complied with.

5. Check correctness of the computation ofproceeds taking into account the proprietyof exchange rate used and collection of the

APG for LC

required bank charges (such as interestrate, documentary stamps, postage, cablecharges, etc.).

6. Trace disposition of proceeds of itemspurchased.

7. Ascertain whether dishonored/ returneditems were immediately debited to clientsdeposit account, taking into considerationthe following: Exchange rate Maximum selling rate Interest applicable rate collected from

date of negotiation to date of actualpayment by the exporter.

8. Documents purchased should becouriered/ air mailed to the correspondentbank within 24 hours from date of booking.

9. Past Due Export BillsCheck booking:9.1 Sight drafts lodged to past due if w/o

payment after 45 calendar daysfrom booking date.

9.2 Usance drafts lodged to past due ifw/o payment 3 calendar days frommaturity date.

Outward Bills for Collection (OBC) FXSending of export documents to the IssuingBank for collection.

1. Obtain subsidiary ledger of outstandingOBCs as of cut-off date and compare thesame with GL/FCCL balances.

2. Make an inventory of outstanding items(remittance schedule) based on the SLobtained.

3. Determine whether item sent for collectionwas properly accounted for by assigning acontrol number.

4. Verify whether items received for collectionwere sent/ mailed to their respectivedrawees within 24 hours upon receiptthereof.

5. Test-check validity of collection itemsalready paid. Determine if paid/ credited toexporter and only upon receipt of paymentfrom the Reimbursing Bank.

APG for LC

6. In case of dishonored collected items,check if exporters/ sellers/ depositors werebilled when applicable for commission,postage, documentary stamps and suchbillings were promptly paid.

7. Investigate items, which remainedunrealized/ uncollected for a considerablelength of time.

Cir 1389

USC2002/001

Crediting of FCDU accounts for Trade-related Foreign Exchange (FX) sale

8. Check compliance to the following:

Underlying transaction is trade-related andlimited to OA/Direct remittance orDocument against Payment without Draft

Remittance to final beneficiary is on sameday of FX sale

Client submits all the documentaryrequirements and is included in the list ofclients with Treasury to have their FCDUaccounts credited for proceeds of FX salefor trade related txn.

9. Check confirmation sent by IOD toTreasury if documents submitted by clientswere complete and proper.

10. Verify if the amount of FX sold byTreasury does not exceed the amountindicated in the commercial invoice.

11. Check if IODs processing of outwardremittance (should be done on same daythe FX proceeds have been credited to theclients FCDU account).

12. Check if all copies of the trade documentswere stamped with the phrase FX Soldand cable confirmation in the respectiveclients folder.

Note: Above transactions are coursed thru Treasury.However, the review of the completeness andorderliness of documents of clients is handled byIOD who should inform Treasury if documents werein accordance with the BSP requirement. Treasuryhandles debiting of clients peso account for thepayment and crediting of the importer-clients FCDUaccount for the proceeds of sale.

OTHER FUNCTIONSCABLE SECTION

APG for LC

1. Ascertain whether computer terminalswere properly safeguarded againstunauthorized access. Observe logging inthe MERVA system and check complianceto Confidentiality of Encoder/ Officers

password Logging-off of computer terminals

when not in use.

2. Inquire and evaluate procedures inmonitoring including distribution andreconciliation of incoming SWIFTmessages.

Test-check to validate.

3. Ascertain whether control in the use ofswift facility were strictly observed: Authorization of second officer on

outgoing payment messagesamounting to $5,000 and above.

Total outgoing messages per TrafficReconciliation were accounted againstduplicate copies of messagesapproved by officer.

No sending of message type (MT) 202 (authority to remit funds to a thirdbank) to avoid double payment ofImport Bills.

Collection and accounting of Custom DutiesUnit uses the PAS system in reporting the customduties collected to Bureau of Customs and theEFTIS system for the remittance of the customduties to BSP.

1. Obtain logbook maintained for IEIRDreceived for the day to determine that alldocuments received for the day wereprocessed (including the transactions ofthe Offsite Receiving Units or ORUs).

2. Check accuracy of amount encoded in thePAS system against supporting IEIRD.Amount validated in the IEIRD should tallywith the amount of assessment by BOCper IEIRD.

3. Check if amount of customs duties weredebited to clients account prior to releaseof validated IEIRD to client

4. Obtain totals of customs duties collectedfor the day (via lotus notes for ORUs)

APG for LC

including the collections for Head OfficeIOD and compare against DCAsresponded (for ORUs).

Check corresponding booking to Due toCB- Bureau of Customs and Due to CB-CB Circular 909 accounts for final andadvance duties collected, respectively.

5. Check if collections of customs duties areremitted to CB After 10 banking days for Advance and

Final Customs Duties After 1 week (every Tuesday) for ImportProcessing Fees (IPF).

6. Check daily reporting to BSP-Treasury ofthe deposit account balance of BOC. Test-check accuracy of computation.

APG for LC

Cir 1389Part 4

REPORTS AND POST VERIFICATION1. Check compliance on reports that are

required to be submitted to CB. Test-checkon correctness of data and timeliness insubmission: Report on Export Negotiations Report on Export Proceeds Received Report on Export Declaration Issued

(with or without FX proceeds)Report on Red Clause and Other Export

Advances Report on Regular LCs opened Report on Negotiations on Regular LCs Report on Confirmation/ Amendments

of LCs Report on DA/OA Availments (with

accomplished Record of Goods Imported) Report on DA/OA repayments Report on FX Remittances under D/P

Imports (including Direct Remittances) Consolidated Daily report on deposits

collected (advance custom duties to BOC). Consolidated Daily Report on

collections of custom duties, taxes andother levies (final and import processingfees).

2. Check prompt reporting to Treasury Groupof the BOC collections and remittance duedates.

ACCOUNTING FUNCTIONS

Due to/from HOBADue to/from BSPDue to/from FX Banks

1. Review tracers/ summary of unreconcileditems. Evaluate monitoring/ review ofthe unit in general of outstanding floatitems for the prompt and correctdisposition of the same.

2. Test-check/ validate on the actualdisposition made. Determine if valid,including correctness of accountingentries passed.

3. Verify nature of significant and longoutstanding float items. Determine actionstaken by the unit to account for the same.Check if referred and followed-up toconcerned units/sections.

APG for LC

4. Coordinate with continual audit and/orUCAD for any related findings regardingthe units outstanding float items.

On MPVR:

1. Check compliance to MPVR requirement.

2. Scan MPVRs and review long outstandingmaterial differences reported by the unit.Check disposition/ adjustments made.

3. Check disclosure in the MPVR any SL/GLdiscrepancies noted as of audit cut-off date.

Other Assets/Other Liabilities

1. Obtain Subsidiary Ledgers and compareagainst GL Balances

2. Ascertain propriety of items composing theaccount and verify authorization thereof.

3. Based on comparative figures of theaccounts from previous to present cut offdate, account for the items causingsignificant increase/decrease of balancesof accounts and determine validity ofbooking/reversal.

4. List items that have remained in theaccount for unreasonable period of timeand secure the departments explanationfor non-disposition

Furniture, Fixtures and Equipment/ Fixed Assets1. Ascertain periodic conduct of inventory.

Obtain copies of inventory report andcomparison against the SL and GLbalances.

2. Check approval, proper booking andaccounting of new acquisitions. Theseshould be physically delivered with the unitand duly recorded in the SL and GL of theunit.

3. Re-perform inventory of assets.

Accounts written-off (contingent account)Nominal value of P1.00 is booked for accountswritten-off

Check any increase in amount from last auditcut-off date. Obtain and review approval for

APG for LC

any additional items written-off.

PERSONNEL

1. Check the actual headcount of the Unit vs.approved plantilla. Check the actualmanpower complement vs. existingmanpower complement on HRD Database.

2. Inquire and evaluate units monitoring andreporting of the attendance of officers andemployees.

3. Test-check on the accuracy of reportedattendance.

4. Check compliance on:4.1 10-day mandatory leaves4.2 Rotation4.3 Conflict of Interest4.4 Proper Office decorum4.5 Sanctions for employees with habitual

tardiness/ other violations.

EXPENSES1. Obtain copy of duly approved budget

2. Inquire and evaluate monitoring of actualversus budget, reporting and process ofsecuring additional budget/ approval forunfavorable budget from the Group Head.

3. Test-check on validity and compliance toproper approval.

INCOME

1. Check for any significant swings in theincome accounts. Account for the reasons.

2. Test-check for the validity and approval ofmaterial reversals made to income (withCAATs for a 3 month period).

INFORMATION SECURITY STANDARDS ANDPOLICIES AND BUSINESS CONTINUTY

Refer to separate APGs as prepared by SNSgroup.