Month-End Cash Shortage and a Same-Day Credit Request
On the last working day of the quarter, the Rawalpindi branch closes with physical vault cash of PKR 1,86,40,500 against a book balance of PKR 1,86,88,000. Teller A's drawer is short by PKR 12,000, Teller B's by PKR 9,500, and PKR 26,000 remains unexplained. Two tellers are on leave and a trainee operated a drawer under supervision. A long-standing customer presents a cheque for PKR 2,750,000 drawn on another branch and demands same-day credit for a supplier payment; the clearing cut-off passed 25 minutes ago. Internal audit also emails that dual custody of the vault was not maintained on two dates last month. The branch manager must stabilise controls, answer the customer, and report upwards without hiding the shortage.
1. What immediate control actions would you take before the branch opens next morning, and why?
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Secure and recount. Seal the vault and cash drawers, then recount before two independent officers. Reconcile teller cash against vouchers and system entries line by line. Do not make any adjustment until the recount and voucher review are documented.
Preserve evidence. Secure CCTV footage for the affected dates, original vouchers, ATM/ cash recycler logs and the trainee's transaction slip. Obtain written statements from the tellers and supervisor. Keep the trainee away from cash handling until the inquiry establishes whether the difference is error, theft or process failure.
Do not conceal. A cash shortage must not be parked in a suspense account or covered by staff contribution. Report the shortage immediately to the area operations head and internal audit. Restore dual custody at once and appoint an independent vault custodian.
Root-cause review. Check whether the audit exception on dual custody is linked to the shortage. The priority is evidence preservation and control restoration, not speed of adjustment.
2. How would you respond to the customer's request for same-day credit, and what alternatives can you offer without breaching clearing rules?
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The cheque cannot be credited merely because the customer is long-standing or because the supplier payment is urgent. It was presented after the clearing cut-off and is drawn on another branch. Same-day credit would create a provisional credit exposure and could breach clearing and reconciliation controls.
I would explain the cut-off clearly, give the customer the next available clearing time, and document the request. If the customer has sufficient funds in another account or can arrange an RTGS transfer, I would offer that route. I would not use a branch suspense account, temporary overdraft or internal account to accommodate the request. If the customer is dissatisfied, I would escalate to the branch head or complaints desk rather than make an exception that other customers cannot see.
3. What should be reported to head office and audit, and what disciplinary or training steps are appropriate?
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The report should state the book balance, physical balance, teller-wise differences, unexplained amount, timeline, staff on duty, CCTV preservation and the audit exception on dual custody. It should avoid conclusions before the inquiry, but it must not understate the shortage. The area operations head, internal audit and HR should receive it.
Disciplinary action should follow the inquiry, not precede it. If negligence is established, proportionate action may include warning, retraining or restriction of cash duties. If there is evidence of misappropriation, the matter should go to the fraud/ investigation unit and, where appropriate, law enforcement. Branch-wide retraining on dual custody, teller balancing and end-of-day reconciliation is necessary. The manager should also verify that the trainee was properly supervised and that leave cover did not leave the vault without two authorised officers.