Life’s Lessons Learned #50: Audit Department

Farmers National Bank, Lancaster PA

Farmers National Bank, Lancaster PA

This beautiful old building was the main office of the Farmer National Bank (originally the Farmers Trust Company). It was located on the corner of Duke and King Streets. This bank merged with the Lancaster County National Bank to form Lancaster County Farmers National Bank (LCFNB). With the merger this building was converted to the bank’s Trust Department Office. I never got far enough in the management-training program to experience the Trust Department. However, the second floor rear of this building (see above) also housed the bank’s Audit Department. Sam Bomberger, a highly competent and respected banker, led this department. I went there shortly after my stay with the Mortgage Department, and was very welcome, because they were about to audit the Mortgage Department. I was the only one in the Audit Department who was familiar with the recently computerized Mortgage Department’s accounting system.

I also took part in a surprise audit of the Main Office teller’s cash. The day before that teller audit, as they were leaving the bank for the night, the tellers were told to come in 30 minutes early the next morning. In the morning, the staff of the Audit Department greeted them as they entered the bank, and went with each teller to the vault for their cash drawer, and then to their windows. There, the auditor counted and verified the cash in each cash drawer. As we started to do the counts, Sam bellowed out from the center of the office, “Where are your kitties!” One by one, the tellers then showed the auditor at their window their stash of small change – their “kitties” – that they used to balance their drawer when they counted out at the end of the day. It all added up to probably less than $10.00, but each teller had one. Sam walked up to Fiona Diffenderfer, the teller who had trained me, and said, “Where is it, Fiona?” She smiled and reached over to her vertical, metal, change holder, and shook it. It rattled! She then dumped a couple of dollars in coins out of the bottom of the tray.

There was a bit of excitement with this cash audit. In addition to the individual cash drawers, there were also two “floater drawers”. These were cash drawers used by part-time tellers when they worked at the main office. A number of different tellers used these two drawers, and records were kept of who was the last teller to use each drawer. One of the “floater drawers” was found to be thousands of dollars short. When she was contacted, the part-time teller who had last used and counted this drawer actually had a heart attack! The bank announced to the tellers that the FBI would be called in, and that each of the tellers was expected to take a lie detector test. I’m not sure if this was actually what would happen, but it was unnecessary. Quietly, the head teller admitted that he had taken the cash. Surprisingly, he was neither fired nor prosecuted. Apparently there was a compelling and sad family reason why he took the funds, and he made arrangements to repay the money. This never made the press. It was kept within the bank. This was one of several examples of institutional behavior over the years that made me respect my employer.

A special project was given to me while with the auditors. I was asked to develop, a bank policy and procedure for the charging off of bad loans, and one for periodic follow up for recovery. As part of this project I spent a good deal of time reviewing the past history of charged off loans at each of the two predecessor banks. During this effort I discovered a file for my great-great grandfather. I knew from my family research that he had been secretary of a watch manufacturing company at the end of the nineteenth century. That company had been reorganized as Hamilton Watch. My great-great grandfather, as a part of the reorganization, was the only one of the three investors in the Lancaster Watch Company (I now own three of the failed company’s watches) to retain stock in the newly formed company. During the great recession he borrowed money and used the Hamilton Watch stock as collateral. When he was unable to repay the loan, the stock was sold to partially do so. Later, when the bank was much larger, and I was in charge of the Credit Department (more on this in an upcoming blog), a separate department was established in the Commercial Loan Department to work on loan recovery from charged off commercial loans. My friend, who’s unfortunate bachelor party and stay at my apartment above Givant’s was described in an earlier blog, was put in charge of this department.

I don’t remember how long I was in the Audit Department, but it was one of the better learning experiences during my time as a management trainee.

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