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TO:
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CHIEF EXECUTIVE OFFICER
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SUBJECT:
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FDIC Proposes Amendment to
Annual
Audit and Reporting Requirements (Part 363)
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On January 31, 1995, the FDIC Board of Directors
proposed the attached amendment to the agency's annual independent audit and
reporting requirements (Part 363) that would provide relief from duplicative
reporting and audit committee requirements for certain sound, well-managed banks.
The proposed amendment would implement Section 314(a) of the Riegle Community
Development and Regulatory Improvement Act of 1994.
In general, existing rules require an
institution with $500 million or more in total assets to have an annual
independent audit of its financial statements, to have an independent
evaluation of its internal controls for financial reporting and compliance
with designated laws, and to have an independent audit committee. Related
reports also are required to be filed. These rules are part of an
independent early warning system mandated by Congress in 1991.
The FDIC's proposed amendment would
cover any institution that:
The proposal states
that any such institution could use the audit
committee of its holding company and file its
holding company's annual report. That would provide
relief for any institution with $9 billion or more
in total assets because it previously had to file a
separate report and have its own audit committee.
These aspects of the FDIC proposal may affect
approximately 70 institutions.
The vast
majority of institutions report on a
calendar year basis and are now in the
process of preparing annual reports for
1994. In order to make the process less
burdensome, the FDIC will not object if an
institution chooses to follow the provisions
of this proposal now instead of waiting for
final rules to be adopted. An institution
using the holding company exception
should file with the FDIC two copies of any
annual report and a letter identifying all
institutions to which it applies. This
material should go to the Regional Director
of the FDIC's Division of Supervision
responsible for the location where the lead
institution is headquartered. In addition,
two copies should be supplied to each
institution's primary federal or state
regulator. An institution filing any
report just for itself should send
it to the FDIC regional office responsible
for the location of the institution's main
office, whether or not the institution is a
subsidiary of a holding company. A list of
FDIC regional directors and addresses is
attached.
The
proposed amendment also would
streamline and reformat the
agreed-upon procedures for
determining compliance with
designated laws and regulations
(Schedule A to Appendix A of the
guidelines). This aspect of the
amendment, which would affect about
1,000 banks, is intended to make the
procedures more efficient and less
burdensome for institutions and
accountants to implement. The
proposal also would revise and
correct certain wording in the
regulations to reduce the burden of
compliance on insured institutions.
The FDIC will accept
comments on the proposed
amendment through April 17,
1995. For more information,
please contact Doris L.
Marsh, an Examination
Specialist in the Division
of Supervision, at (202)
898-8905.
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Stanley
J.
Poling
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Director
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Attachments:
PDF
Format
(75 kb, PDF
help
or hard
copy),
Text
Format
Regional
Offices
Distribution:
Selected
Insured
Banks
and
Savings
Associations
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