FDIC Law, Regulations, Related Acts
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1000 - Federal Deposit Insurance Act
SEC. 36. EARLY IDENTIFICATION OF NEEDED IMPROVEMENTS IN
FINANCIAL MANAGEMENT.
(a) Annual Report on Financial Condition and Management.--
(1) REPORT REQUIRED.--Each insured depository
institution shall submit an annual report to the Corporation, the
appropriate Federal banking agency, and any appropriate State bank
supervisor (including any State bank supervisor of a host State).
(2) CONTENTS OF REPORT.--Any annual report required
under paragraph (1) shall contain--
(A) the information required to be provided by--
(i) the institution's management under subsection (b); and
(ii) an independent public accountant under subsections (c) and
(d); and
(B) such other information as the Corporation and the appropriate
Federal banking agency may determine to be necessary to assess the
financial condition and management of the institution.
(3) PUBLIC AVAILABILITY.--Any annual report required
under paragraph (1) shall be available for public inspection.
Notwithstanding the preceding sentence, the Corporation and the
appropriate Federal banking agencies may designate certain information
as privileged and confidential and not available to the public.
[Codified to 12 U.S.C. 1831m(a)]
[Source: Section 2[36(a)] of the Act of September 21, 1950 (Pub.
L. No. 797; 64 Stat. 882), effective September 21, 1950, as added by
section 112(a) of title I of the Act of December 19, 1991 (Pub. L. No.
102--242; 105 Stat. 2242), effective December 31, 1992; as amended by
section 2301(c) of title II of the Act of September 30, 1996 (Pub. L.
No. 104--208; 110 Stat. 3009--420, effective September 30,
1996]
(b) Management Responsibility for Financial Statements and
Internal Controls.--Each insured depository institution shall
prepare--
(1) annual financial statements in accordance with generally
accepted accounting principles and such other disclosure requirements
as the Corporation and the appropriate Federal banking agency may
prescribe; and
(2) a report signed by the chief executive officer and the chief
accounting or financial officer of the institution which contains--
(A) a statement of the management's responsibilities for--
(i) preparing financial statements;
(ii) establishing and maintaining an adequate internal control
structure and procedures for financial reporting; and
(iii) complying with the laws and regulations relating to safety
and soundness which are designated by the Corporation and the
appropriate Federal banking agency; and
(B) an assessment, as of the end of the institution's most recent
fiscal year, of--
(i) the effectiveness of such internal control structure and
procedures; and
(ii) the institution's compliance with the laws and regulations
relating to safety and soundness which are designated by the
Corporation and the appropriate Federal banking agency.
[Codified to 12 U.S.C. 1831m(b)]
[Source: Section 2[36(b)] of the Act of September 21, 1950 (Pub.
L. No. 797; 64 Stat. 882), effective September 21, 1950, as added by
section 112(a) of title I of the Act of December 19, 1991 (Pub. L. No.
102--242; 105 Stat. 2242), effective December 31, 1992; as amended by
section 1603(b)(3)(A) of title XVI of the Act of October 28, 1992 (Pub.
L. No. 102--550; 106 Stat. 4079), effective December 31,
1992]
(c) Internal Control Evaluation and Reporting Requirements for
Independent Public Accountants.--
(1) IN GENERAL.--With respect to any internal control
report required by subsection (b)(2) of any institution, the
institution's independent public accountant shall attest to,
and
report separately on, the assertions of the
institution's management contained in such report.
(2) ATTESTATION REQUIREMENTS.--Any attestation pursuant
to paragraph (1) shall be made in accordance with generally accepted
standards for attestation engagements.
[Codified to 12 U.S.C. 1831m(c)]
[Source: Section 2[36(c)] of the Act of September 21, 1950 (Pub.
L. No. 797; 64 Stat. 882), effective September 21, 1950, as added by
section 112(a) of title I of the Act of December 19, 1991 (Pub. L. No.
102--242; 105 Stat. 2242), effective December 31,
1992]
(d) Annual Independent Audits of Financial Statements.--
(1) AUDITS REQUIRED.--The Corporation, in consultation
with the appropriate Federal banking agencies, shall prescribe
regulations requiring that each insured depository institution shall
have an annual independent audit made of the institution's financial
statements by an independent public accountant in accordance with
generally accepted auditing standards and
section 37.
(2) SCOPE OF AUDIT.--In connection with any audit under
this subsection, the independent public accountant shall determine and
report whether the financial statements of the institution--
(A) are presented fairly in accordance with generally accepted
accounting principles; and
(B) comply with such other disclosure requirements as the
Corporation and the appropriate Federal banking agency may prescribe.
(3) REQUIREMENTS FOR INSURED SUBSIDIARIES OF HOLDING
COMPANIES.--The requirements for an independent audit under this
subsection may be satisfied for insured depository institutions that
are subsidiaries of a holding company by an independent audit of the
holding company.
[Codified to 12 U.S.C. 1831m(d)]
[Source: Section 2[36(d)] of the Act of September 21, 1950 (Pub.
L. No. 797; 64 Stat. 882), effective September 21, 1950, as added by
section 112(a) of title I of the Act of December 19, 1991 (Pub. L. No.
102--242; 105 Stat. 2242), effective December 31,
1992]
(e) [Repealed]
[Codified to 12 U.S.C. 1831m(e)]
[Source: Section 2[36(e)] of the Act of September 21, 1950 (Pub.
L. No. 797; 64 Stat. 882), effective September 21, 1950, as added by
section 112(a) of title I of the Act of December 19, 1991 (Pub. L. No.
102--242; 105 Stat. 2242), effective December 31, 1992; as repealed by
section 2301(a) of title II of the Act of September 30, 1996 (Pub. L.
No. 104--208; 110 Stat. 3009--419, effective September 30,
1996]
(f) Form and Content of Reports and Auditing Standards.--
(1) IN GENERAL.--The scope of each report by an
independent public accountant pursuant to this section, and the
procedures followed in preparing such report, shall meet or exceed the
scope and procedures required by generally accepted auditing standards
and other applicable standards recognized by the Corporation.
(2) CONSULTATION.--The Corporation shall consult with
the other appropriate Federal banking agencies in implementing this
subsection.
[Codified to 12 U.S.C. 1831m(f)]
[Source: Section 2[36(f)] of the Act of September 21, 1950 (Pub.
L. No. 797; 64 Stat. 882), effective September 21, 1950, as added by
section 112(a) of title I of the Act of December 19, 1991 (Pub. L. No.
102--242; 105 Stat. 2242), effective December 31,
1992]
(g) Improved Accountability.--
(1) INDEPENDENT AUDIT COMMITTEE.--
(A) ESTABLISHMENT.--Each insured depository institution
(to which this section applies) shall have an independent audit
committee entirely made up of outside directors who are independent of
management of the institution, except as provided in subparagraph (D),
and who satisfy any specific requirements the Corporation may
establish.
(B) DUTIES.--An independent audit committee's duties
shall include reviewing with management and the independent public
accountant the basis for the reports issued under subsections (b)(2),
(c), and (d).
(C) CRITERIA APPLICABLE TO COMMITTEES OF LARGE INSURED
DEPOSITORY INSTITUTIONS.--In the case of each insured depository
institution which the Corporation determines to be a large institution,
the audit committee required by subparagraph (A) shall--
(i) include members with banking or related financial management
expertise;
(ii) have access to the committee's own outside counsel; and
(iii) not include any large customers of the institution.
(D) EXEMPTION AUTHORITY.--
(i) IN GENERAL.--An appropriate Federal banking agency
may, by order or regulation, permit the independent audit committee of
an insured depository institution to be made up of less than all, but
no fewer than a majority of, outside directors, if the agency
determines that the institution has encountered hardships in retaining
and recruiting a sufficient number of competent outside directors to
serve on the internal audit committee of the institution.
(ii) FACTORS TO BE CONSIDERED.--In determining whether
an insured depository institution has encountered hardships referred to
in clause (i), the appropriate Federal banking agency shall consider
factors such as the size of the institution, and whether the
institution has made a good faith effort to elect or name additional
competent outside directors to the board of directors of the
institution who may serve on the internal audit committee.
(2) REVIEW OF QUARTERLY REPORTS OF LARGE INSURED DEPOSITORY
INSTITUTIONS.--
(A) IN GENERAL.--In the case of any insured depository
institution which the Corporation has determined to be a large
institution, the Corporation may require the independent public
accountant retained by such institution to perform reviews of the
institution's quarterly financial reports in accordance with procedures
agreed upon by the Corporation.
(B) REPORT TO AUDIT COMMITTEE.--The independent public
accountant referred to in subparagraph (A) shall provide the audit
committee of the insured depository institution with reports on the
reviews under such subparagraph and the audit committee shall provide
such reports to the Corporation, any appropriate Federal banking
agency, and any appropriate State bank supervisor.
(C) LIMITATION ON NOTICE.--Reports provided under
subparagraph (B) shall be only for the information and use of the
insured depository institution, the Corporation, any appropriate
Federal banking agency, and any State bank supervisor that received the
report.
(D) NOTICE TO INSTITUTION.--The Corporation shall
promptly notify an insured depository institution, in writing, of a
determination pursuant to subparagraph (A) to require a review of such
institution's quarterly financial reports.
(3) QUALIFICATIONS OF INDEPENDENT PUBLIC ACCOUNTANTS.--
(A) IN GENERAL.--All audit services required by this
section shall be performed only by an independent public accountant
who--
(i) has agreed to provide related working papers, policies, and
procedures to the Corporation, any appropriate Federal banking agency,
and any State bank supervisor, if requested; and
(ii) has received a peer review that meets guidelines acceptable
to the Corporation.
(B) REPORTS ON PEER REVIEWS.--Reports on peer reviews
shall be filed with the Corporation and made available for public
inspection.
(4) ENFORCEMENT ACTIONS.--
(A) IN GENERAL.--In addition to any authority contained
in
section 8, the Corporation
or an appropriate Federal banking agency may remove, suspend, or bar an
independent public accountant, upon a showing of good cause, from
performing audit services required by this section.
(B) JOINT RULEMAKING.--The appropriate Federal banking
agencies shall jointly issue rules of practice to implement this
paragraph.
(5) NOTICE BY ACCOUNTANT OF TERMINATION OF SERVICES.--
Any independent public accountant performing an audit under this
section who subsequently ceases to be the accountant for the
institution shall promptly notify the Corporation and each appropriate
Federal banking agency pursuant to such rules as the Corporation and
each appropriate Federal banking agency shall prescribe.
[Codified to 12 U.S.C. 1831m(g)]
[Source: Section 2[36(g)] of the Act of September 21, 1950 (Pub.
L. No. 797; 64 Stat. 882), effective September 21, 1950, as added by
section 112(a) of title I of the Act of December 19, 1991 (Pub. L. No.
102--242; 105 Stat. 2242), effective December 31, 1992; as amended by
section 1603(b)(3)(B) and (C) of title XVI of the Act of October 28,
1992 (Pub. L. No. 102--550; 106 Stat. 4079), effective December 31,
1992; as amended by section 314(b) of title III of the Act of September
23, 1994 (Pub. L. No. 103--325; 108 Stat. 2222), effective September
23, 1994; section 2301(b) of title II of the Act of September 30, 1996
(Pub. L. No. 104--208; 110 Stat. 3009--419, effective September 30,
1996]
(h) Exchange of Reports and Information.--
(1) REPORT TO THE INDEPENDENT AUDITOR.--
(A) IN GENERAL.--Each insured depository institution
which has engaged the services of an independent auditor to audit such
institution shall transmit to the auditor a copy of the most recent
report of condition made by the institution (pursuant to this Act or
any other provision of law) and a copy of the most recent report of
examination received by the institution.
(B) ADDITIONAL INFORMATION.--In addition to the copies
of the reports required to be provided under subparagraph (A), each
insured depository institution shall provide the auditor with--
(i) a copy of any supervisory memorandum of understanding with
such institution and any written agreement between such institution and
any appropriate Federal banking agency or any appropriate State bank
supervisor which is in effect during the period covered by the audit;
and
(ii) a report of--
(I) any action initiated or taken by the appropriate Federal
banking agency or the Corporation during such period under subsection
(a), (b), (c), (e), (g), (i), (s), or (t) of section 8;
(II) any action taken by any appropriate State bank supervisor
under State law which is similar to any action referred to in subclause
(I); or
(III) any assessment of any civil money penalty under any other
provision of law with respect to the institution or any
institution-affiliated party.
(2) REPORTS TO BANKING AGENCIES.--
(A) INDEPENDENT AUDITOR REPORTS.--Each insured
depository institution shall provide to the Corporation, any
appropriate Federal banking agency, and any appropriate State bank
supervisor, a copy of each audit report and any qualification to such
report, any management letter, and any other report within 15 days of
receipt of any such report, qualification, or letter from the
institution's independent auditors.
(B) NOTICE OF CHANGE OF AUDITOR.--Each insured
depository institution shall provide written notification to the
Corporation, the appropriate Federal banking agency, and any
appropriate State bank supervisor of the resignation or dismissal of
the
institution's independent auditor or the
engagement of a new independent auditor by the institution, including a
statement of the reasons for such change within 15 calendar days of the
occurrence of the event.
[Codified to 12 U.S.C. 1831m(h)]
[Source: Section 2[36(h)] of the Act of September 21, 1950 (Pub.
L. No. 797; 64 Stat. 882), effective September 21, 1950, as added by
section 112(a) of title I of the Act of December 19, 1991 (Pub. L. No.
102--242; 105 Stat. 2242), effective December 31,
1992]
(i) Requirements for Insured Subsidiaries of Holding
Companies.--
(1) IN GENERAL.--Except with respect to any audit
requirements established under or pursuant to subsection (d), the
requirements of this section may be satisfied for insured depository
institutions that are subsidiaries of a holding company, if--
(A) services and functions comparable to those required under
this section are provided at the holding company level; and
(B) the institution--
(i) has total assets, as of the beginning of such fiscal year, of
less than $5,000,000,000; or
(ii) has--
(I) total assets, as of the beginning of such fiscal year, of
$5,000,000,000, or more; and
(II) a CAMEL composite rating of 1 or 2 under the Uniform
Financial Institutions Rating System (or an equivalent rating by any
such agency under a comparable rating system) as of the most recent
examination of such institution by the Corporation or the appropriate
Federal banking agency.
(2) LARGE INSTITUTIONS.--For purposes of this
subsection, in the case of an insured depository institution described
in paragraph (1)(B)(ii) that the Corporation determines to be a large
institution, the audit committee of the holding company of such an
institution shall not include any large customers of the institution.
(3) APPLICABILITY BASED ON RISK TO FUND.--The
appropriate Federal banking agency may require an institution with
total assets in excess of $9,000,000,000 to comply with this section,
notwithstanding the exemption provided by this subsection, if it
determines that such exemption would create a significant risk to the
Deposit Insurance Fund if applied to that institution.
[Codified to 12 U.S.C. 1831m(i)]
[Source: Section 2[36(i)] of the Act of September 21, 1950 (Pub.
L. No. 797; 64 Stat. 882), effective September 21, 1950, as added by
section 112(a) of title I of the Act of December 19, 1991 (Pub. L. No.
102--242; 105 Stat. 2242), effective December 31, 1992; as amended by
section 314(a) of title III of the Act of September 23, 1994 (Pub. L.
No. 103--325; 108 Stat. 2221), effective September 23, 1994; section
8(a)(34) of the Act of February 15, 2006 (Pub. L. No. 109--173; 119
Stat. 3615), effective date shall take effect on the day of the merger
of the Bank Insurance Fund and the Savings Association Insurance Fund
pursuant to the Federal Deposit Insurance Reform Act of
2005]
(j) Exemption for Small Depository Institutions.--This
section shall not apply with respect to any fiscal year of any insured
depository institution the total assets of which, as of the beginning
of such fiscal year, are less than the greater of--
(1) $150,000,000; or
(2) such amount (in excess of $150,000,000) as the Corporation
may prescribe by regulation.
[Codified to 12 U.S.C. 1831m(j)]
[Source: Section 2[36(j)] of the Act of September 21,
1950 (Pub. L. No. 797; 64 Stat. 882), effective September 21, 1950, as
added by section 112(a) of title I of the Act of December 19, 1991
(Pub. L. No. 102--242; 105 Stat. 2242), effective December 31,
1992]
SEC. 36A. REPORTS OF INFORMATION REGARDING SAFETY AND SOUNDNESS
OF DEPOSITORY INSTITUTIONS.--
(a) Reports to appropriate Federal banking agencies--
(1) IN GENERAL--The Attorney General, the Secretary of
the Treasury, and the head of any other agency or instrumentality of
the United States shall, unless otherwise prohibited by law, disclose
to the appropriate Federal banking agency any information that the
Attorney General, the Secretary of the Treasury, or such agency head
believes raises significant concerns regarding the safety or soundness
of any depository institution doing business in the United States.
(2) EXCEPTIONS--
(A) INTELLIGENCE INFORMATION
(i) IN GENERAL--The Director of Central Intelligence
shall disclose to the Attorney General or the Secretary of the Treasury
any intelligence information that would otherwise be reported to an
appropriate Federal banking agency pursuant to paragraph (1). After
consultation with the Director of Central Intelligence, the Attorney
General or the Secretary of the Treasury, shall disclose the
intelligence information to the appropriate Federal banking agency.
(ii) PROCEDURES FOR RECEIPT OF INTELLIGENCE
INFORMATION--Each appropriate Federal banking agency, in
consultation with the Director of Central Intelligence, shall establish
procedures for receipt of intelligence information that are adequate to
protect the intelligence information.
(B) CRIMINAL INVESTIGATIONS, SAFETY OF GOVERNMENT
INVESTIGATORS, INFORMANTS, AND WITNESSES--If the Attorney General,
the Secretary of the Treasury or their respective designees determines
that the disclosure of information pursuant to paragraph (1) may
jeopardize a pending civil investigation or litigation, or a pending
criminal investigation or prosecution, may result in serious bodily
injury or death to Government employees, informants, witnesses or their
respective families, or may disclose sensitive investigative techniques
and methods, the Attorney General or the Secretary of the Treasury
shall--
(i) provide the appropriate Federal banking agency a description
of the information that is as specific as possible without jeopardizing
the investigation, litigation, or prosecution, threatening serious
bodily injury or death to Government employees, informants, or
witnesses, or their respective families, or disclosing sensitive
investigation techniques and methods; and
(ii) permit a full review of the information by the Federal
banking agency at a location and under procedures that the Attorney
General determines will ensure the effective protection of the
information while permitting the Federal banking agency to ensure the
safety and soundness of any depository institution.
(C) GRAND JURY INVESTIGATION; CRIMINAL PROCEDURE
PARAGRAPH (1) SHALL NOT--
(i) apply to the receipt of information by an agency or
instrumentality in connection with a pending grand jury investigation;
or
(ii) be construed to require disclosure of information prohibited
by rule 6 of the Federal Rules of Criminal
Procedure.
(b) Procedures for receipt of disclosure reports--
(1) IN GENERAL--Within 90 days after October 28, 1992,
each appropriate Federal banking agency shall establish procedures for
receipt of a disclosure report by an agency or instrumentality made in
accordance with subsection (a)(i) of this section. The procedures
established in accordance with this subsection shall ensure adequate
protection of information disclosed, including access control and
information accountability.
(2) PROCDURES RELATED TO EACH DISCLOSURE REPORT--Upon
receipt of a report in accordance with subsection (a)(1) of this
section, the appropriate Federal banking agency shall--
(A) consult with the agency or instrumentality that made the
disclosure regarding the adequacy of the procedures established
pursuant to paragraph (1), and
(B) adjust the procedures to ensure adequate protection of the
information disclosed.
(c) Effect on agencies--This section does not impose an
affirmative duty on the Attorney General, the Secretary of the
Treasury, or the head of any agency or instrumentality of the United
States to collect new or to review existing
information.
(d) Definitions--For purposes of this section, the terms
"appropriate Federal banking agency" and "depository
institution" have the same meanings as in section 1818 of this
title.
[Codified to 12 U.S.C. 1831m--1]
[Section 1542 of title XV of the Act of October 28, 1992 (Pub. L.
No. 102--550; 106 Stat. 4067), effective October 28, 1992; section
1001(f) of title X of the Act of November 10, 1998; 112 Stat. 3292),
effective November 10, 1998]
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