Can we trust the bank?

Imagine the shock of finding that two additional and unknown names have been added to the signatories on the organisation’s bank account! 

Recently, one of our clients discovered, through the annual audit checks, that this had occurred. They had not requested any change to their bank mandate during the year and the bank could not provide any documentary evidence to support the addition of the signatories. The bank claimed that it was simply a clerical error due to the change-over to a new system.  The names added seemed to be variations of the name of a previous signatory who had been removed by the organisation some time ago.

Coincidentally, a similar thing happened with the Ziyo bank account. In our case, too, another unrelated person’s name suddenly appeared as a signatory on the bank account, also apparently due to some clerical error!

Is there some foul play afoot or have the banks’ systems become inaccurate and unreliable?   Do you have a similar experience to report?   Please share your experience.

To minimise the risk of interference with your banking mandate and to safeguard your funds, we recommend that you:

• Check the organisation’s bank mandates every six months to ensure that only authorised signatories are included and that previous signatories have been removed as instructed.

• Report any irregularities through the bank’s own management structures and, if no satisfactory answers are received, report the matter to the ombudsman for banking services (http://www.obssa.co.za/).

• Do not ever leave the control of an NPO bank account, including the authorisation of bank mandates, in the hands of only one person.

• Ensure that the bank mandate itself states that it may only be changed with the authorisation of two existing authorised signatories.

Ensuring that there is adequate control and protection of money in the bank, and, indeed, over all assets of the organisation, is the responsibility of the governing body (board) of the organisation.  We urge board members to take this responsibility seriously and ensure that bank mandates are managed and reviewed on an ongoing basis.

To share your experiences or request more tips on the management and control of bank accounts and other assets, please contact Ziyo.