A general examination is a process that is designed to aid a bank or similar financial institution in providing a detailed report of the institution’s operations to a regulatory agency. The exact policies and procedures used in the examination will vary somewhat, depending on the banking laws that apply in the jurisdiction where the institution is located. The general idea is to make sure that the financial institution is in full compliance with current banking regulations, and that there are no questions regarding the propriety of the way that the institution processes and documents transactions.
Conducting a general examination involves scrutinizing the operations of the bank on several different levels. Various types of financial statements, including bank reconciliation statements, are examined and compared to the accounting records of the institution. In addition, managers are interviewed to ascertain their knowledge and proficiency with current regulations and standards, and how those standards are implemented within the culture of the bank. Along with managers, the individual or team assigned to conduct the general examination may also interview other bank employees, making sure they also are aware of all standards and policies that relate to the operation of the bank in general, and their assigned duties in particular.
The frequency of a general examination will vary, depending on governmental regulations that are in force in a given jurisdiction. Many jurisdictions utilize a system whereby each bank within its borders undergoes this type of examination once every two years. This is often considered sufficient to ensure the bank is conducting business properly and also to identify any small issues that may need correction before those issues can have any type of negative impact on the general operations of the institution. Many nations also have regulations in place that make it possible to conduct an interim general examination if there is evidence that a given bank may be deviating from regulatory standards that apply in the area.
Both private banking and universal banking concerns take part in a general examination on some type of recurring basis. The scope of the examination is typically influenced by the variety of banking services offered by the institution. This means that private banking concerns, which tend to offer a limited range of services, will find the examination is completed in a shorter period of time. Universal banking institutions, which are common in European countries, tend to offer a more eclectic suite of financial services, and may require additional time to successfully complete the examination.
