Obj. 2, 3 Pacific Bank provides loans to businesses in the community through its Commercial Lending Department. Small loans (less than $100,000) may be approved by an individual loan officer, while larger loans (greater than $100,000) must be approved by a board of loan officers. Once a loan is approved, the funds are made available to the loan applicant under agreed-upon terms. Pacific Bank has instituted a policy whereby its president has the individual authority to approve loans up to $5,000,000. The president believes that this policy will allow flexibility to approve loans to valued clients much quicker than under the previous policy. As an internal auditor of Pacific Bank, how would you respond to this change in policy?

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Obj. 2, 3 Pacific Bank provides loans to businesses in the community
through its Commercial Lending Department. Small loans (less than
$100,000) may be approved by an individual loan officer, while larger
loans (greater than $100,000) must be approved by a board of loan
officers. Once a loan is approved, the funds are made available to the
loan applicant under agreed-upon terms. Pacific Bank has instituted a
policy whereby its president has the individual authority to approve
loans up to $5,000,000. The president believes that this policy will allow
flexibility to approve loans to valued clients much quicker than under
the previous policy.
As an internal auditor of Pacific Bank, how would you
respond to this change in policy?
Transcribed Image Text:Obj. 2, 3 Pacific Bank provides loans to businesses in the community through its Commercial Lending Department. Small loans (less than $100,000) may be approved by an individual loan officer, while larger loans (greater than $100,000) must be approved by a board of loan officers. Once a loan is approved, the funds are made available to the loan applicant under agreed-upon terms. Pacific Bank has instituted a policy whereby its president has the individual authority to approve loans up to $5,000,000. The president believes that this policy will allow flexibility to approve loans to valued clients much quicker than under the previous policy. As an internal auditor of Pacific Bank, how would you respond to this change in policy?
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