Smooth Operator: Audits - Before, During and After
Angela Fling and
Laurie Teston
The webinar will begin shortly.
In order to obtain a CE Certificate or CLE Credit, you must listen to the webinar for a minimum
of 55 minutes obtain the password (provided at
the end of the presentation) follow the instructions as given
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ATTORNEY INFORMATION
Because of opinions expressed by the Texas Department
of Insurance (TDI) concerning rebates, legal credit is
available only to:
Attorneys who own title agencies that are Stewart Title
Guaranty Agents
Attorneys employed by a title insurance agent licensed
with Stewart Title Guaranty or Stewart entities
Fee attorneys who have an Escrow Officer license
through a Stewart Title Agent or Stewart entity
We welcome any other lawyers to listen, but cannot provide
continuing education credit to you.
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Smooth Operator:
Audits – Before,
During and After
Angela Fling Agency Services Manager
Central Texas Division
Stewart Title Guaranty Company
Laurie Teston Agency Services Manager
East Texas Division
Stewart Title Guaranty Company
Angela Fling & Laurie Teston
Stewart Title Guaranty Company
What to expect before, during, and after an audit.
Segment will include
• General Audit Information
• Underwriter Audits
• Annual Trust Fund Audit (aka Annual Audit)
• Texas Department of Insurance Audits
General Audit Information
Audit Purpose and Scope
•Proper forms & Administrative compliance
•Charges
•Directions •Statuatory Framework for Title Insurance
Insurance Code Procedural
Rules
Exhibits & Promulgated
Forms
Administrative Rules
Rate Rules
To Break it down
• Underwriters Determine when and what they audit. Many use some sort of risk evaluation model. – Section 2651.251-253
• Texas Department of Insurance – Comprehensive audit or Limited Scope. – New agents in the first 6-8 months of business. – Generally audited every two years.
• Annual Escrow Audit Snapshot of the year based on your FYE
Types of Audits
Short Funny Commentary
No Loitering PLEASE
Time Limit:
Auditors: 1 day Closings: 20 minutes
Walk-in guests: 5 minutes
Your cooperation is appreciated! Title Company Management
Types of Audits
Authority
Encrypt/Secure Data
It’s ALL about that base… Licenses CE Insurance Plant query Wind-down plan/Solvency Last Quarterly Tax Report TIGA reports Policy data Underwriter remittances Stat reports Escrow & Operating accounts # of escrow accounts Authorized signers Escrow Account Reconciliations
#muchmore
What is a Three-Way Reconciliation
A three-way reconciliation is an accounting of all transactions
between the bank, the books and the sum of file ledgers (trial
balance/open file listing)
.
Bank
File Ledgers Books
Trial Balance – list of all the transactions related to a file or
settlement. These are typically summarized on a ‘Trial Balance’ or ‘Open File Listing’
Trial Balance
GF 20161 1/10/2016 $500.00 GF 20179 12/28/2017 $49,000.00 GF 20181 1/26/2018 $75,000.00 GF 20182 1/15/2018 $300.16 GF 20183 12/30/2017 ($50.00) GF 20187 1/18/2018 $500.00 Total: $125,250.16
Trial Balance – list of all the transactions related to a file or
settlement. These are typically summarized on a ‘Trial Balance’ or ‘Open File Listing’
Trial Balance
GF 20161 1/10/2016 $500.00 GF 20179 12/28/2017 $49,000.00 GF 20181 1/26/2018 $75,000.00 GF 20182 1/15/2018 $300.16 GF 20183 12/30/2017 ($50.00) GF 20187 1/18/2018 $500.00 Total: $125,250.16
Trial Balance
GF 20161 1/10/2016 $500.00 GF 20179 12/28/2017 $49,000.00 GF 20181 1/26/2018 $75,000.00 GF 20182 1/15/2018 $300.16 GF 20183 12/30/2017 ($50.00) GF 20187 1/18/2018 $500.00 Total: $125,250.16
Debit Files … • Under-collected • Over-disbursed • Disbursement error
Trial Balance
GF 20161 1/10/2016 $500.00 GF 20179 12/28/2017 $49,000.00 GF 20181 1/26/2018 $75,000.00 GF 20182 1/15/2018 $300.16 GF 20183 12/30/2017 ($50.00) GF 20187 1/18/2018 $500.00 Total: $125,250.16
Last activity date … • Dormant file • Reason • Management oversight
Book Balance –
lists all of the transactions posted to the ledger. These include checks,
incoming/outgoing wire transfers, deposits and internal transfers between client ledgers.
Book Balance –
lists all of the transactions posted to the ledger. These include checks,
incoming/outgoing wire transfers, deposits and internal transfers between client ledgers.
Book Balance activity … • Completeness • Computer vs manual • Wires documented
Bank Balance – list the ending balance at the statement bank statement closing date and the transactions which have been presented for deposit for
withdrawal within the period.
Adjusted Bank Balance – Bank balance adjusted by Banked not Booked
and Booked not Banked items.
Banked not Booked
• Bank Charges
• Unauthorized charges
• Clearing errors
Booked not Banked
• Deposits in transit
• Outstanding checks
• Wires in transit (in/out)
Banked not Booked
• Deposit funds in the bank to cover bank charges
• Work with bank on fraudulent activity
Booked not Banked
• Deposits in transit – clear bank timely
• Outstanding checks – high priority items clear timely, attempt to contact payees
• Wires in transit – should be rare
Prepared by … • Segregation of duties • In-house or outsourced • Options
Reviewed by … • Segregation of duties • Management oversight • Options
Dates … • Timeliness • Options
• Settlement statement or CD agrees to file ledger • Disbursements cleared before funds are deposited • Payoff clearing timely • Payoff statement agrees to payoff sent • Evidence of invoices supporting disbursements • Evidence of title search • Updated search • Tax search • Requirements on commitment satisfied • Recording timeliness • High liability approval
Guaranty File Review
Underwriter Audit or Review
• Who does it?
– Underwriter audit staff
– Assignees
• What is the process? – Information is requested
– Review and analysis is performed
– Exit interview conducted
– Report is issued
Underwriter Audit or Review
Annual Trust Fund Audit “Annual Audit”
• Who does it? – Independent CPA (Section 2651.154)
• What guides it? – The Texas Department of Insurance
– Every fiscal year end have an annual audit done, pay for it, turn it into TDI & Underwriter.
• What is the process? – CPA collects the data, reviews, analyzes and issues a report.
The rules can be found in (Title 11, Chapter 2651, 151-157)
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Texas Department of Insurance (TDI) Audit
• Who does it?
– Auditors/Examiners at the Texas Department of Insurance
– Paid for by the Title Insurance Guaranty Association
– QTR Reports listed on the web
http://www.tdi.texas.gov/reports/report8.html
http://www.tdi.texas.gov/reports/report8.html
Texas Department of Insurance Audit
• What is the process?
http://www.tdi.texas.gov/title/titleaud.html
https://urldefense.proofpoint.com/v2/url?u=http-3A__www.tdi.texas.gov_title_titleaud.html&d=DwMFAw&c=A2I0cd0yeEKQCn3mv-g-KzOAX7YMnpExrKRXrh8neX0&r=1lMI2dng8SCFdetPhV8_Q1oblJrMZCP27Kngp1ptZzE&m=f7LrKmJN5RuTy-V3cvAlVQcs-TJTtQ8JvGXglOGmBpM&s=oTwzI8-9KZv_sShnUseEF6jdYxoALg9OdY3umvSBOZI&e=
Feedback from Agents
“Be prepared”
“..every auditor is different..”
“..origination is key..”
• Train with Check lists for file documentation • Sample checklist shared by Cassandra M. Evatt
Comanche County Abstract Company
• Be Careful with Electronic file storage as Naming convention is critical
Recap of todays webinar
• General Audit Information
• Underwriter Audits
• Annual Trust Fund Audit (aka Annual Audit)
• Texas Department of Insurance Audits
Handout Information
• The following 7 slides will be posted as printable handouts along with the slides and audio of this presentation within the next 10 business days.
Per the TDI and the State Bar, in order to obtain a CE Certificate or CLE Credit you must:
– listen to the webinar for a minimum of 55 minutes
– obtain the password (provided at the end of the presentation)
– follow the instructions as given
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To Receive CE Credit Each individual seeking credit hours must send their own certificate request to:
Please include the following information: • Provide only this Presentation Name in the Subject Line of your e-mail – “Smooth
Operator: Audits” In the body of your e-mail: • Name of Participant (as it appears on your Escrow Officer License); • Presentation PASSWORD given at the end of the webinar; • License Number Only (located on left side of Escrow Officer Certificate of License –
for example: License Number: 1234567-890123)
For Attorney CLE Credit also include: • Texas State Bar Number • Affiliation with Stewart
– Employed by Stewart Title Guaranty Company; – an affiliate; or – a Stewart agent
For more details, see the CE and CLE FAQs at:
http://www.stewart.com/en/stg/texas/education/texas-tips/ce-cle-faqs.html
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Certificates
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• Contact us if you haven’t received your
certificate after the allotted processing time.
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http://www.stewart.com/texasmailto:[email protected]
Join us for the next Texas TIPS webinar!
September 20, 2018
Title Issues of the Peculiar Variety: Over Burdening of Homestead,
Mezzanine vs. 2-Story Restrictions
John Rothermel
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