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FDIC Federal Register Citations
From: Carl Chatto [mailto:cchatto@maine.rr.com]
Sent: Tuesday, September 13, 2005 9:44 PM
To: Comments
Subject: Annual Independent Audits and Reporting Requirements RIN 3064-AC91
FEDERAL DEPOSIT INSURANCE CORPORATION
Thank you for allowing me the opportunity to comment on the proposed
rule making for the Annual Independent Audits and Reporting Requirements.
I am a partner in a regional CPA firm with approximately twenty bank
clients for which we perform audits. I support the proposed changes in
their entirety. As cited in the Federal register, increasing the asset
size threshold to $1 billion would only reduce the coverage from 90% of
insured institutions to 86% coverage. This coverage ratio is still
significantly higher than the 75% ratio at the time the Part 363
requirements were introduced in 1991.
It is important to note that banks falling below this threshold are
still subject to some review of their internal controls. Regulatory
safety and soundness examinations will still be conducted at these
banks. Also, Appendix A to Part 364Standards for Safety and Soundness
Part II.B. requires an internal audit function. The OCC and OTS have
similar requirements.
I would add that time is of the essence as we are approaching the time
when a number of banks and their independent auditors will need to
determine whether the Part 363 reporting requirements will apply for 2005.
To avoid this timing issue in the future, I propose that future
increases to the dollar threshold be incorporated into the regulations
now, so that the uncertainty can be eliminated. For instance, I suggest
that a $250 million increase in the threshold be scheduled for every
five years.
Thank you again for allowing me to comment.
Sincerely,
Carl Chatto
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