OF THE
FEDERAL RESERVE SYSTEM
WASHINGTON, D. C. 20551
SUPERVISION AND REGULATION
June 26, 2000
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BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C. 20551 |
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| DIVISION OF BANKING SUPERVISION AND REGULATION |
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| SR 00-10 (SUP) June 26, 2000 |
Section 36 of the FDI Act and the FDIC's implementing regulations require all state member banks and other insured depository institutions with $500 million or more in total assets to 1) obtain annual independent audits, 2) submit certain management reports to their regulatory agencies, and 3) establish audit committees of their board of directors comprised of independent directors. SR letter 94-3 described the types of reports required to be filed with the Reserve Banks each year. They include audited financial statements, management reports, and CPA attestations on internal controls over financial reporting (collectively referred to as Section 36 reports). The 1994 SR letter also sets forth Section 36 review procedures to be followed by the Reserve Banks and included a "Preliminary Review Checklist" that Reserve Bank staff should use in reviewing Section 36 reports. In recent years, Reserve Bank and Board staffs have suggested improvements to increase the efficiency and effectiveness of the review of Section 36 reports. Also, the Economic Growth and Regulatory Paperwork Reduction Act of 1996 repealed a part of Section 36 of the FDI Act and eliminated the need for institutions to have an accountant perform specific procedures for determining compliance with designated safety and soundness laws and regulations. As a result, a new "Preliminary Review Checklist" has been designed and is attached to this letter. This new checklist eliminates the need for a Reserve Bank review team to perform a second review of the financial statements in connection with the review of Section 36 reports when other Reserve Bank analysts have already performed a review.1 The new checklist also eliminates sections of the previous checklist including the review for compliance with designated laws and regulations. In addition, the remaining sections of the original checklist have been substantially streamlined. The new checklist is effective immediately and should be used for the December 31, 1999 Section 36 reports. All other aspects of the guidance in SR letter 94-3 remain in place. If you have any questions regarding the guidance in this letter, please call Terrill Garrison, Supervisory Financial Analyst, at (202) 452-2712.
Director
Cross-reference: SR 94-3 (SUP)
Notes: 1. The reviewer must confirm that a current analysis has been performed on the financial statements and footnotes. If a current financial statement analysis has not been performed, then the reviewer or the analyst assigned to the institution should consider performing analytical review procedures on the financial statements and disclosures. Return to text
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SR letters | 2000
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