Onsite Review Frequently Asked Questions
1. Who will be notifying my institution of an onsite review and how much advance notice is given?
A FDIC Division of Risk Management Supervision Case Manager will inform the covered depository institutions (CIs) of their selection for testing, and instruct them to contact the Large Bank Deposit Insurance Determination Modernization (LBDIDM) testing team. Notifications will be sent prior to the start of each quarter; the notifications received will give instructions as to whom to contact at the FDIC to schedule testing before stated deadline.
2. Who will serve as the primary points of contact during the review?
The FDIC LBDIDM testing team will be the primary point of contact throughout the preparation, onsite visit, and post-visit activities. Please send an email to DRRLargeBnkDepRule@FDIC.gov should you have any questions regarding your FDIC contacts.
3. When will the FDIC LBDIDM testing team conduct the onsite review?
The timing of the onsite review is selected as a mutually agreeable time between the bank and FDIC. However, the review should be conducted before the end of the quarter.
4. What is the purpose of the reconciliation that is performed?
We perform a three-way reconciliation between the deposit core system(s), the general ledger (GL), and the most recent Call/TFR report. This reconciliation is performed as of the date of the most recently filed Call/TFR report. It allows the FDIC to ensure that all deposit-housing system(s) at the bank comply with this regulation.
5. What do I need to do with the pre-questionnaire¹ ?
The pre-test questionnaire collects preliminary information about a bank's deposit system(s), including contact names, system platform(s), technology service provider (TSP) information, deposit account types, sweep account types, etc. Please answers all questions completely and accurately and submit the completed form back to the LBDIDM testing team at DRRLargeBnkDepRule@FDIC.gov. The completed pre-questionnaire should be sent to the FDIC at least two weeks prior of the scheduled testing date.
6. Do I have to use the reconciliation template to provide reconciliation information?² ?
No. The reconciliation template does not need to be filled out as it is presented. The template is to serve as a tool to help illustrate the various required elements of the reconciliation. You can choose to use your own format and layout. The completed reconciliation template and supporting reports and documents should be sent to the FDIC at least two weeks prior of the scheduled testing date.
7. Does the reconciliation have to be the same as-of date as the data that is being tested?
No. We would like to see the most recent quarter-end date for the core deposit system(s) trial balance reports and GL reports. The reconciliation should tie to the same quarter-end's Call report (section RC-O) or TFR report (section SC-710) totals. The comparison is meant to ensure that all deposit sources making up the gross deposits balance on the Call/TFR report has been accounted for.
8. Should I contact our Technology Service Provider (TSP)?
Yes. It is important to let the TSP know of the testing, so that they are available to set up test environment, place provisional holds, create data extract files, process FDIC files, and to discuss or modify any programs as needed.
9. What kind of data would the FDIC like to use in our test environment?
The FDIC prefers to test with either production data in its entirety or a subset of production data, loaded into the test environment. The FDIC prefers not to use made-up test accounts. There is no threshold as to the number of accounts, but it should be large enough to get an accurate depiction of the entire production environment (i.e. should contain all applications and products). In addition, the test environment should contain all systems and software specifications as the production environment. No activities in the test environment should affect the production systems.
10. How will we exchange files with the FDIC testing team?
The FDIC puts the utmost value on the security of your data. For that reason, we use a secure FTP server (GlobalScape EFT) that can be set up to facilitate the file exchange. To establish the session, we simply need the email of the bank employee who will be responsible for transmitting the data. However, if you have a secure file transfer method that you would prefer, we can use that instead. Flash drive, CDs, or DVDs are also acceptable ways to transfer data while FDIC staffs are onsite.
11. When do I need to complete the self-assessment test plan?
The bank should have completed the Self-Assessment test prior to submitting its Attestation Letter due May 31, 2010. Please have the Self-Assessment test package available for review on the first day of the FDIC testing team's arrival at the bank. For specific questions regarding the Self-Assessment test, please refer to the FDIC website (September 11, 2009 update) - http://www.fdic.gov/regulations/resources/largebankdim/large_bank_faq.html
12. What is the provisional hold (PH) memorandum³ ?
The provisional hold memorandum specifies thresholds and percentages for various deposit account types and sweep investment vehicle products. It is used by the bank to calculate and place FDIC provisional holds. The bank can choose to prepare and use its own provisional hold memorandum for the onsite review testing. The bank prepared provisional hold memorandum should be sent to the FDIC at least two weeks prior to the scheduled review date. The FDIC can provide a provisional hold memorandum upon request.
13. Does it matter what thresholds and hold percentages I select when preparing the provisional hold memorandum?
This is up to you. However, we need to see varying thresholds and hold percentages across each of the four domestic deposit account types. In addition, the threshold amounts should accurately reflect the data. For example, if your bank has very few DDA accounts with balances in excess of $100,000, it would be appropriate to lower the threshold amount to $50,000. The goal is to have enough accounts with balances above thresholds so that they are subject to the FDIC provisional holds and to have enough accounts with balances below thresholds so that they are not subject to the FDIC provisional hold.
14. Does the FDIC allow the placement of provisional holds manually?
The regulation mandates all FDIC provisional holds be placed automatically. However, in certain circumstances placing provisional holds manually is acceptable on certain sub-systems. The bank needs to submit an exemption request for alternative mechanism to place provisional holds on certain sub-systems. Please refer to the regulation for filing instructions.
15. What type of workspace will the FDIC testing team need?
The team will need its own workspace, with enough space to accommodate 4-5 people. Internet access outside of the bank's network will be required during the testing team's visit. This should be prepared prior to the testing team's arrival. Either a wireless or hard-wired internet connection is acceptable.
¹ See Appendix 1 for pre-questionnaire Excel file.
² See Appendix 2 for reconciliation temple.
³ See Appendix 3 for sample provisional hold memorandum.
1. What is the kick-off meeting and what do I need to prepare for it?
The kick-off meeting takes place the morning of the first day of the onsite review (generally a Tuesday). This serves as a forum for the testing team to meet the necessary bank personnel and to discuss the activities, timeline, requirements, and expectations for the week. The bank should come ready to discuss their self-assessment test package, any issues that arose during preparation, reconciliation related items, and any other questions they might have about the process.
2. Who needs to attend the kick-off meeting?
Because of the topics discussed, it would be helpful to have all involved bank personnel on hand for this meeting. This includes those involved in the preparation of the self-assessment plan (i.e. programmer, project manager, etc.) in addition to the accounting/finance personnel responsible for the reconciliation.
3. What documentation will be needed for the reconciliation portion of the testing?
The bank staff should prepare a trial balance summary report (documents the system balances), general ledger, and the Call/TFR report, all with the same as-of date, preferable the latest quarter-end. In addition, the bank staff should prepare reconciliation between each of the aforementioned sources by using the FDIC provided template or bank's own template.
4. When do the data extract files need to be ready?
The FDIC testing team expects to receive the data extract files (Deposit, Hold, Sweep, Customer, and Join) at the onsite kick-off meeting.
5. Are separate files for each system/sub-system acceptable?
Yes. The FDIC can accept separate files from each system(s). All bank data extract files will be loaded together and create a consolidated set of FDIC files (two non-monetary transaction files, credit file, and debit file) for the bank to process. The bank needs to be able to separate records for each system(s)/sub-system and process them accordingly. It is important to identify files from different systems/sub-systems by incorporating system identifiers in the file names and using one of the account identifier fields in each record.
6. What type of field delimiter is required for the extract files?
The regulation allows the use of tab or pipe (|) as delimiters. It is vital that the same delimiter is used consistently in all data extract files.
7. What delimiter will the non-monetary transaction file & debit/credit file use?
The FDIC will provide these files in pipe-delimited format with header and trailer records.
8. Do we need to supply a data dictionary?
Yes. The FDIC will require a data dictionary, which shows the mapping of each field provided.
9. Do we need to supply account type categorization information?
Yes. This information is critical for the FDIC onsite review. Please provide the exact logic of how you use Deposit file data field(s) to categorize an account into one of the four domestic deposit account types (consumer DDA, NOW, MMDA; consumer other; non-consumer DDA, NOW, MMDA; and non-consumer other). It is vital to use data field(s) reported in the Deposit data extract file to categorize accounts. If you use data field(s) on your deposit system that are not reported in the Deposit file, you need to find a way to add them to the Deposit file, such as add additional data field(s) to the end of the file.
10. Do we have to use the FDIC's code values?
No, you can use your own codes values rather than the FDIC's suggested values. If you do, a translation conversion-mapping file should be created and sent to the FDIC as a supplemental document. It is important to follow the layout specified in the appendixes of the regulation. Any change to the length and type of a data field is prohibited.
11. Can we add additional fields to the extracts?
Yes. Any information that would assist the FDIC in its insurance determination process would be allowed to be added. If this is the case, a complete data dictionary for these additional fields need be supplied along with a description of the information.
12. What to do with foreign deposits?
Foreign deposits are defined as "Any obligation of an insured depository institution which is payable solely at an office of such institution located outside the States of the United States, the District of Columbia, Puerto Rico, Guam, the Commonwealth of the Northern Mariana Islands, American Samoa, the Trust Territory of the Pacific Islands, and the Virgin Islands." It is required to report foreign deposits in the Deposit file and label the data field #12 DP_Dep_Type with value "F".
13. What to do with deposits denominated in foreign currencies?
A deposit denominated in a foreign currency can be a domestic deposit or a foreign deposit depending on the payable status. According to FDIC regulation 12 CFR 330.3 "Deposit insurance for such deposits shall be determined and paid in the amount of United States dollars that is equivalent in value to the amount of the deposit denominated in the foreign currency as of close of business on the date of default of the insured depository institution. The exchange rates to be used for such conversions are the 12 PM rates (the "noon buying rates for cable transfers") quoted for major currencies by the Federal Reserve Bank of New York on the date of default of the insured depository institution."
For onsite review testing purpose, you can choose to use an exchange rate published by a reputable source. You will need to use the same exchange rate to convert US dollars in the FDIC non-monetary transaction files, credit file, and debit file before processing these files.
14. What does the non-monetary transaction file do?
This file is used to add or remove FDIC holds.
15. How does the FDIC change a FDIC hold amount on an account?
FDIC will first remove FDIC provisional holds on all accounts on the bank's deposit system in a non-monetary transaction file and place a new FDIC hold to the same account in a subsequent non-monetary transaction file.
16. What does the Debit/Credit file do?
This allows for debits and credits to individual accounts or subsequent accounts after the removal of the FDIC holds. The debit represents the uninsured funds after the insurance determination is complete. The credit represents the advanced dividend. Debit transactions will be in one file while credit transactions will be in another.
17. What to do if Debit/Credit cannot be posted due to account restrictions?
The FDIC debit and credit should be force posted regardless of any existing account restrictions.
18. What to do with Debit/Credit for IRA accounts?
The FDIC debit and credit for IRA accounts should be force posted. However, this debit and credit transactions should be non-reportable to IRS.
19. What is the order of processing the incoming FDIC files?
- Non-monetary transaction file to remove the FDIC holds.
- Non-monetary transaction file to add the FDIC holds.
- Credit file to post credits to accounts.
- Debit file to post debits to accounts.
20. How does the FDIC validate successful processing of the incoming FDIC files?
The FDIC will select certain accounts and request screen shots which show the available balance both before and after processing, in addition to a maintenance file (showing removal or addition of holds) and transaction file (showing credit and debit transactions).
21. What happens in the exit meeting?
This meeting is to serve as conclusion for the week's testing activities. The testing team will discuss their findings and any additional tasks that will need to be taken care of in the future. This is also the proper time for the bank to address any questions they might have.
1. What happens to the files provided after the review is complete?
All data files will be deleted from the FDIC testing team's computers, prior to departing from the bank site, on the last day of review.
2. What if additional files need to be transmitted after the testing team has left the bank site?
The FDIC can arrange for a secure file exchange session, which will allow for secure file transmission. It is acceptable if the bank prefers to use a different secure file transmission method that meets security standards for the bank and the FDIC.
3. Who will serve as the primary contacts on follow-up items after the testing team has left the bank site?
The same FDIC contacts that were onsite will continue to be your primary point of contact for any supplemental communication after the onsite review is complete.
4. When can I expect to receive my certificate after the testing is complete?
Signed copy of the certificate will be scanned and emailed to you after successful completion of the testing. Should you need a hard copy mailed to your bank, please request so when receiving the emailed certificate.
5. Will the FDIC conduct yearly onsite testing?
The FDIC will not automatically conduct yearly onsite testing unless there has been a significant change during the year. Examples of changes include:
- Change of servicer
- Major deposit system change
- Significant change in deposit products offering
6. What does my institution need to do to re-certify each year?
Each year, your institution should fill out the annual re-certification form and submit to DRRLargeBnkDepRule@FDIC.gov. This questionnaire asks a series of questions that will help the FDIC determine if retesting will be required for annual re-certification. The Annual Testing Questionnaire can be found on FDIC website (May 18, 2010 update) - http://www.fdic.gov/regulations/resources/largebankdim/large_bank_faq.html your bank, please request so when receiving the emailed certificate.
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