EC - 263
EXAMINING ISSUANCE
Comptroller of the Currency
Administrator of National Banks
Type:  Examining Circular
Subject:  SMS Documentation Policy

TO:  Department and Division Heads and All Examining and Legal Personnel


PURPOSE

This issuance establishes content, format and update requirements for
documenting supervisory information in the Supervisory Monitoring System
(SMS). It also explains how the supervisory cycle is documented in SMS.

REFERENCES

This issuance replaces SMS guidance contained in EB 87-1 (REV), which is
hereby rescinded. This issuance should be read in conjunction with EC 258,
OCC Supervision Policy.

BACKGROUND

SMS is an automated system OCC personnel use to record and communicate
narrative and statistical information on institutions of supervisory
interest to the OCC. It is the OCC's primary source of information about
the supervisory strategy, current condition and compliance performance of
each bank. OCC personnel document the scope, findings and conclusions of
supervisory activities; commitments made by the institution; progress in
implementing corrective actions; and OCC follow-up and monitoring of an
institution in SMS.

All levels of OCC personnel and other federal bank regulators use SMS to
review the condition of individual institutions or groups of institutions.
The system documents the supervisory cycle (see EC 258) with concise
summaries of an institution's supervisory profile and activities. SMS is
not an electronic version of the working papers. Detailed supporting
documentation should be maintained in working papers at appropriate duty
locations.

STANDARDS FOR INFORMATION ENTRY IN SMS

This issuance details the information to be entered in SMS concerning
institutions of supervisory interest to the OCC, including banks, holding
companies, federal branches/agencies of foreign banks and independent data
processing servicers. That information can relate to examination
activities, legal questions, accounting opinions, corporate applications
and enforcement actions.

All OCC personnel, including examiners, attorneys, accountants, and
corporate analysts, must record findings and conclusions in SMS (or other
systems accessible through SMS) when they are relevant to the supervision
of an institution. Information must be complete, accurate and timely since
it is used by all OCC personnel and other regulatory agencies. The
attachment to this issuance details documentation requirements for SMS.

All OCC personnel must record narrative information in SMS to summarize
findings and conclusions concerning institutions of supervisory interest
to the OCC. Narratives should be concise and summary in nature. It is
important to record all required information, but it is also important not
to obscure that information with excessive detail. The risk posed by the
institution generally dictates the volume of information that should be
entered in SMS.

All OCC personnel must review and update statistical information in SMS
while recording findings and conclusions material to the supervision of
any institution of supervisory interest to the OCC. Portfolio managers are
responsible for ensuring that statistical information in SMS on their
assigned institutions is complete, accurate and timely.

No OCC office may require additional documentation in SMS that is
inconsistent with this issuance or that applies to all banks supervised by
that office. However, OCC offices may establish operating procedures
regarding entry of information into SMS and may require additional
pertinent information to be entered in SMS for individual banks, on an
exception basis. Any such requirements established by OCC offices must not
reduce users' ability to quickly find pertinent information.

DOCUMENTING THE SUPERVISORY CYCLE IN SMS

The supervisory cycle begins with an assessment of risk areas in an
institution. The portfolio manager then reviews and updates the
institution's supervisory profile in the Overall Summary Comments (OSC)
application of SMS. Throughout the supervisory cycle, the portfolio
manager reviews and updates the Background, Condition and Strategy
comments.

As an approved supervisory strategy is carried out, examiners open
analyses to document the scope, findings, conclusions and follow-up of
examinations. Analyses are opened for every examination, including
periodic financial and other offsite reviews, performed during the
institution's supervisory cycle. Ratings, loan classifications and
violations of law are recorded in the Supervisory Data application.
Whenever a Report of Examination is issued, it must be documented in the
Tracking application.

All other supervisory activities are summarized in the Other Significant
Events (OSE) application. Examples of activities recorded in OSE include
board meetings, discussions with and examinations by other regulators,
media coverage, chain bank reviews, Supervisory Review Committee
decisions, operating plan exceptions, legal and accounting opinions, early
warning reviews and correspondence from the institution, such as OREO,
dividend and fixed asset requests. Any special supervision activities also
are recorded in the Enforcement Actions application.

The supervisory cycle ends with the completion of all the activities
necessary for a full scope, onsite examination as set out in the
supervisory strategy (see EC 258). The portfolio manager concludes the
supervisory cycle of an institution by recording a full scope, onsite
examination type analysis in SMS. The portfolio manager also verifies that
all required ratings, asset statistics and violations of law, where
applicable, have been updated in the Supervisory Data record. When
required by EC 258, the reviewing official verifies that a report of
examination has been sent to the institution and a board meeting has been
held before finalizing the analysis record.

RESPONSIBLE OFFICE

For further information, contact Supervisory Information, Office of the
Chief National Bank Examiner, (202) 874-5190.



Donald G. Coonley
Acting Senior Deputy Comptroller
Bank Supervision Policy

Clifton A. Poole, Jr.
Acting Senior Deputy Comptroller
Bank Supervision Operations

Attachment 17 pages

Date:  December 14, 1992