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Home > News & Events > Inactive Financial Institution Letters
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Inactive Financial Institution Letters |
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FIL-72-98
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The Federal Deposit Insurance Corporation (FDIC), in partnership with state banking
authorities, completed its first round of on-site Year 2000 assessments on May 29,
1998. The first phase of the supervisory process focused primarily on the Year 2000
project management awareness and assessment phases. Most financial institutions,
service providers and software vendors are now in the process of completing the
renovation phase and initiating validation. Testing is considered the most critical
phase of the Year 2000 project and, because of its importance, the FDIC will
complete a second round of Year 2000 on-site reviews.
On-site assessments of service providers, software vendors and institutions
with in-house programming will be completed by December 31, 1998. On-site
assessments of serviced and turnkey institutions will be completed by March
31, 1999.
The on-site assessments may be conducted as part of a regularly
scheduled Safety and Soundness or Information Systems examination,
or as a separate visitation. Upon completion of the assessment,
examiners will again categorize the organization's efforts as
"Satisfactory," "Needs Improvement," or
"Unsatisfactory." At the conclusion of the assessment, the
examiner-in-charge will meet with the board of Directors, a committee thereof,
or senior management representatives to discuss the assessment
findings, as appropriate. The examiner will meet with a quorum
of the board of Directors
for institutions assessed as "Needs Improvement"
or "Unsatisfactory."
Examiners may be contacting financial institutions,
service providers and software vendors for a copy of
their testing plans, which were to be completed by
June 30, 1998. These testing plans will be used to
assist in planning and scheduling reviews. Examiners
may expedite pre-assessment planning by reviewing an
institution's testing plans. However, the examiner
will not serve as a consultant to these plans.
The FDIC will use supervisory actions for
institutions assessed as less than
satisfactory due to the criticality of
testing and contingency planning to the
success of Year 2000 projects. The FDIC
intends to mandate supervisory action for
virtually all institutions assessed less
than satisfactory. In addition, the FDIC
will consider a change in a component or
composite rating if identified deficiencies
so warrant. The FDIC will also consider the
impact of Year 2000 readiness risk factors
in the assignment of any insured financial
institution's supervisory subgroup and when
processing applications.
Revised Workprogram
The Federal Financial
Institutions Examination
Council's (FFIEC) Task Force
on Supervision has issued
the attached Year 2000
Workprogram Phase II for use
during a second round of
on-site Year 2000
assessments. The procedures
are designed to focus on the
adequacy of the
institution's plans and
processes for achieving Year
2000 readiness, with
particular emphasis on the
final phases of the Year
2000 project-testing and
implementation-and on the
institution's contingency
plans.
The Workprogram is
intended to assist
the examiner:
The FFIEC
has
previously
issued Year
2000
guidance on
the
following
topics:
project
management;
business
risk; due
diligence
concerning
service
provider and
software
vendor
readiness;
impact on
customers;
testing;
customer
awareness
programs;
and
contingency
planning.
These papers
should be
reviewed to
ensure
compliance
with the
current
guidance.
Critical
dates
included in
the testing
and customer
impact
papers
should be
met. Each
board of
Directors
should
continue
its
close
oversight
of the
financial
institution's
Year
2000
readiness
efforts.
The
institution's
management
is
encouraged
to
actively
utilize
the
services
of its
internal
audit
process
and
external
audit
programs.
A
well-coordinated
review
and
reporting
process
should
substantially
lessen
the risk
that
problems
will go
undetected.
For
more
information,
please
contact
your
Division
of
Supervision
regional
office.
Distribution:
FDIC-Supervised
Banks
(Commercial
and
Savings)
NOTE:
Paper
copies
of
FDIC
financial
institution
letters
may
be
obtained
through
the
FDIC's
Public
Information
Center,
801
17th
Street,
NW,
Room
100,
Washington,
DC
20434
(800-276-6003
or
(703)
562-2200).
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Last Updated 03/06/2008 | communications@fdic.gov |