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5000 - Statements of Policy
{{10-31-01 p.5367}}
INTERAGENCY POLICY STATEMENT ON COORDINATION AND COMMUNICATION
BETWEEN EXTERNAL AUDITORS AND EXAMINERS 1
The federal bank and thrift regulatory agencies are issuing this
policy statement to improve the coordination and communication between
external auditors and examiners. This policy statement provides
guidelines regarding information that should be provided by depository
institutions to their external auditors and meetings between external
auditors and examiners in connection with safety and soundness
examinations.
Coordination of External Audits and Examinations
In most cases, the federal bank and thrift regulatory agencies
provide institutions with advance notice of the starting date(s) of
full-scope or other examinations. When notified, institutions are
encouraged to promptly advise their external auditors of the date(s)
and scope of supervisory examinations in order to facilitate the
auditors' planning and scheduling of audit work. The external auditors
may also advise the appropriate regulatory agency regarding the planned
dates for the auditing work on the institution's premises in order to
facilitate coordination with the examiners.
Some institutions prefer that audit work be completed at different
times from examination work in order to reduce demands upon their staff
members and facilities. On the other hand, some institutions prefer to
have audit work and examination work performed during similar periods
in order to limit the impact of these efforts on the institutions'
operations to certain times during the year. By knowing in advance when
examinations are planned, institutions have the flexibility to work
with their external auditors to schedule audit work concurrent with
examinations or at separate times.
Other Information Provided By the Institution
Consistent with prior practice, a depository institution should
provide its external auditors with a copy of certain reports and
supervisory documents, including:
The most recent regulatory Report of Condition (i.e.,
"Call Reports" for banks, and "Thrift Financial Reports"
for savings institutions);
The most recent examination report and pertinent
correspondence received from its regulator(s);
Any supervisory memorandum of understanding with the
institution that has been put into effect since the beginning of the
period covered by the audit;
Any written agreement between a federal or state
banking agency and the institution that has been put into effect since
the beginning of the period covered by the audit; and
A report of:
-- Any actions initiated or undertaken by a federal banking
agency since the beginning of the period covered by the audit under
certain subsections of section 8 of the
Federal Deposit Insurance Act, 2
or any similar action taken by an appropriate state bank supervisor
under state law; and
-- Any civil money penalty assessed under any other provision
of law with respect to the depository institution or any
institution-affiliated party, since the beginning of the period covered
by the audit.
External Auditor Attendance at Meetings Between Management and
Examiners
Generally, the federal bank and thrift regulatory agencies encourage
auditors to attend examination exit conferences upon completion of
field work or other meetings between
{{10-31-01 p.5368}}supervisory examiners and an
institution's management or Board of Directors (or a committee thereof)
at which examination findings are discussed that are relevant to the
scope of the audit. When other conferences between examiners and
management are scheduled (i.e., that do not involve examination
findings that are relevant to the scope of the external auditor's
work), the institution shall first obtain the approval of the
appropriate federal bank or thrift regulatory agency in order for the
auditor to attend the meetings. This policy does not preclude the
federal bank and thrift regulatory agencies from holding meetings with
the management of depository institutions without auditor attendance or
from requiring that the auditor attend only certain portions of the
meetings.
Depository institutions should ensure that their external auditors
are informed in a timely manner of scheduled exit conferences and other
relevant meetings with examiners and of the agencies' policies
regarding auditor attendance at such meetings.
Meetings and Discussions Between External Auditors and Examiners
An auditor may request a meeting with any or all of the appropriate
federal bank and thrift regulatory agencies that are involved in the
supervision of the institution or its holding company during, or after
completion of, examinations in order to inquire about supervisory
matters relevant to the institution under audit. External auditors
should provide an agenda in advance to the agencies that will attend
these meetings. The federal bank and thrift regulatory agencies will
generally request that management of the institution under audit be
represented at the meeting. In this regard, examiners generally will
only discuss with an auditor examination findings that have been
presented to the depository institution's management.
In certain cases, external auditors may wish to discuss with
regulators matters relevant to the institution under audit at meetings
without the representation from the institution's management. External
auditors may request such confidential meetings with any or all of the
federal bank and thrift regulatory agencies, and the agencies may also
request such meetings with the external auditor.
Confidentiality of Supervisory Information
While the policies of the federal bank and thrift regulatory
agencies permit external auditors to have access to the previously
mentioned information on depository institutions under audit,
institutions and their auditors are reminded that information contained
in examination reports, inspection reports, and supervisory
discussions--including any summaries or quotations--is confidential
supervisory information and must not be disclosed to any party without
the written permission of the appropriate federal or thrift regulatory
agency. Unauthorized disclosure of confidential supervisory information
may subject the auditor to civil and criminal actions and fines and
other penalties.
[Source: FDIC Financial Institutions Letter
(FIL-57-92), dated July 24, 1992]
1The agencies issuing this policy statement are the Board of
Governors of the Federal Reserve System, the Federal Deposit Insurance
Corporation, the Office of the Comptroller of the Currency, and the
Office of Thrift Supervision. Go Back to Text
2Section 112 of the Federal Deposit Insurance Corporation
Improvement Act of 1991 includes a requirement that the institution
provide its external auditors with a report of any action initiated or
taken by a federal banking agency during the period under audit under
subsection (a), (b), (c), (e), (g), (i), (s) or (t) of section 8 of the
Federal Deposit Insurance Act (12
U.S.C. 1817). Go Back to Text
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