Smooth Operator: Audits - Stewart · Smooth Operator: Audits - Before, During and After Angela...

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


Angela Fling & Laurie Teston


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


Debit Files … • Under-collected • Over-disbursed • Disbursement error

Trial Balance


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:

[email protected]

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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Recordings

www.stewart.com/texas

Under “Texas TIPS” tab

• Other current courses available

Certificates

• Processing can take up to 10 business days.

• Contact us if you haven’t received your

certificate after the allotted processing time.

[email protected]

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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

For Questions/Comments Email

[email protected]

or

[email protected] 65
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Smooth Operator: Audits - Stewart · Smooth Operator: Audits - Before, During and After Angela...

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