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2010 Annual Report

V. Management Control

Material Weaknesses

Material weaknesses are control shortcomings in operations or systems that, among other things, severely impair or threaten the organization’s ability to accomplish its mission or to prepare timely, accurate financial statements or reports. The shortcomings are of sufficient magnitude that the Corporation is obliged to report them to external stakeholders.

At the end of the 2009 audit, GAO identified a material weakness in the loss-share estimation processes and a significant deficiency in the information technology security area. Subsequent implementation of enhanced controls has eliminated the material weakness and the significant deficiency.

To determine the existence of material weaknesses, the FDIC has assessed the results of management evaluations and external audits of the Corporation’s risk management and internal control systems conducted in 2010, as well as management actions taken to address issues identified in these audits and evaluations. Based on this assessment and application of other criteria, the FDIC concludes that no material weaknesses existed within the Corporation’s operations for 2010.

Additionally, FDIC management will continue to focus on high priority areas, including implementation of Dodd-Frank Act, the Program Management Office organizations, IT systems security, resolution of bank failures, and privacy, among others.

Last Updated 5/5/2011 communications@fdic.gov