Annual Independent Audits and Reporting Requirements Amendments to Part 363
FIL-119-2005 November 28, 2005
The FDIC has amended Part 363 of its regulations by raising the asset-size threshold from $500 million to $1 billion for internal control assessments by management and external auditors. For institutions between $500 million and $1 billion in assets, only a majority, rather than all, of the members of the audit committee, who must be outside directors, must be independent of management. The final rule is effective December 28, 2005.
The FDIC has amended its annual audit and reporting requirements, including the audit committee requirements, which apply to insured institutions with $500 million or more in total assets ("covered institutions").
As amended, for covered institutions with between $500 million and $1 billion in total assets, management is no longer required to assess and report on the effectiveness of internal control over financial reporting, the external auditors are no longer required to examine and attest to management's internal control assertions, and only a majority of the outside directors on the audit committee must be independent of management.
The amendments provide relief from these requirements to covered institutions with total assets of less than $1 billion only for purposes of Part 363. These covered institutions must continue to fully comply with the remaining provisions of Part 363, including the annual financial statement audit requirement.
The amendments do not relieve public covered institutions from their obligations to comply with the provisions of the Sarbanes-Oxley Act and the Securities and Exchange Commission's implementing rules on internal control reporting by management and external auditors and, if applicable, audit committee independence.
The amendments take effect December 28, 2005, and apply to institutions whose fiscal years end on or after September 30, 2005.
FDIC-Insured Institutions With $500 Million or More in Total Assets