The Collateral Deposit Process

In this case study, five participants take part in the process depositing a collateral in a bank. They include the customer, loan officer, collateral records clerk, vault custodian and the vault attendant. Once the customers takes a loan, they have to provide a security or a collateral, which they turn to their loan officers. The loan officer receives the collateral and ensures it gets to the vault custodian. Together with the vault custodian, the role of the vault attendant is to ensure the correct collateral is deposited and its location noted. The collateral records clerk keeps records for follow-up purposes.

            For security and precision, the process has more complexities. On receiving the collateral, the loan officer prepares four color-coded receipts. The customer goes away with the pink receipt. The white receipt is forwarded to the collateral records clerk. The yellow receipt is discarded. Together with the collateral, the loan officer goes with the blue receipt to the vault custodian.

To ensure it is indeed the correct collateral than has been brought, the vault custodian compares the description in the blue receipt to the collateral and signs it in the event that they match. Next, the vault attendant attaches a tag on the collateral and takes it along with the receipt to the vault attendant. The vault attendant also does confirmation comparisons between the receipt and the collateral. With the help of the vault custodian, the vault attendant safely deposits the collateral within. After noting its position, the vault attendant signs the blue copy of the receipt. In the end, the blue receipt ends in the hands of the collateral records clerk who compares it to the previously forwarded white receipt and puts them in a permanent file if they match. With such a detailed process, the chances of error or confusing collaterals from different customers are almost zero (Hall, 2001).

The list below shows procedures undertaken by each participant.

Customer

1. Takes loan
2. Turns collateral to a loan’s officer
3. Goes away with pink receipt

Loans officer

1. Receives collateral
2. Prepares four coded receipts describing the collateral: pink, white, blue and yellow
3. Gives the pink receipt to the customer
4. Forwards the white receipt to the collateral records clerk
5. Together with the blue receipt, he or she forwards the collateral to the vault custodian
6. Helps the vault custodian cross check the collateral against the blue receipt

Vault custodian

1. Receives the collateral together with the blue receipt from the loans officer
2. Checks the collateral against the blue receipt in the presence of the loans officer
3. Signs the blue receipt if the description therein matches the collateral
4. Attaches a tag to the collateral
5. Forwards the collateral and the blue receipt to the vault attendant
6. Helps the vault attendant deposit the collateral

Vault attendant

1. Receives the collateral and the blue receipt from the vault custodian
2. Cross checks if the collateral matches the records on the receipt
3. In the event that the records match, the vault attendant then deposits the collateral with the help of the vault custodian
4. Notes the location of the collateral on the blue copy and signs it
5. Forwards blue copy to the collateral records clerk

Collateral record clerk

1. Receives white receipt from the loans officer
2. Logs the receipt
3. Receives the blue receipt from the vault attendant
4. Checks the white and blue receipts for a match,
5. If the receipts match, he or she puts them in a permanent file.

References

Hall, J. A. (2001). Accounting information systems. Cincinnati, OH: South-Western College Pub.