Financial Institution Letter
FIL-96-2007
November 2, 2007
ANNUAL AUDIT AND REPORTING REQUIREMENTS
Proposed Amendments to Part 363
Federal Deposit Insurance Corporation
550 17th Street NW, Washington, D.C. 20429-9990
Summary: The FDIC is requesting comments on the attached proposed amendments to
Part 363 of its regulations, which sets forth annual independent audit and reporting requirements
for insured institutions with $500 million or more in total assets. The FDIC is proposing to amend
Part 363 in light of changes in the industry; certain sound audit, reporting, and audit committee
practices incorporated in the Sarbanes-Oxley Act of 2002; and the FDIC’s experience in
administering Part 363. The amendments are also intended to provide clearer and more
complete guidance for compliance. Comments are due by January 31, 2008.
Distribution:
Selected FDIC-insured institutions
Suggested Routing:
Chief Executive Officer
Chief Financial Officer
Board of Directors
Audit Committee
Related Topics:
Federal Deposit Insurance Act Section 36
Part 363 of the FDIC's Regulations
Attachment:
Proposed Amendments to Part 363
Contact:
FDIC Regional Accountant or Harrison Greene,
Senior Policy Analyst, Division of Supervision and
Consumer Protection, on 202-898-8905 or
hgreene@fdic.gov
Highlights:
• Annual Reporting Requirements – The
proposal would require disclosure of the internal
control framework and identified material
weaknesses, provide relief from reporting for
certain merged institutions, provide relief from
reporting on internal control for acquired
businesses, require management’s assessment
of compliance with laws and regulations to
disclose any noncompliance, and provide
illustrative management reports.
• Independent Public Accountants – The
proposal would clarify the independence
standards applicable to accountants, require
certain communications to audit committees, and
establish retention requirements for audit working
papers.
• Filing and Notice Requirements – The proposal
would extend the annual report filing deadline for
non-public institutions and include a late filing
notification requirement.
• Audit Committees – The proposal would specify
the audit committee’s duties regarding the
independent public accountant, require audit
committees to ensure that audit engagement
letters do not contain unsafe and unsound
limitation of liability provisions, and require
boards of directors to apply written criteria for
evaluating audit committee members’
independence.
• Scope – The proposal would revise the criteria
for institutions to comply with Part 363 at a
holding company level.
Note:
FDIC financial institution letters (FILs) may be
accessed from the FDIC's Web site at
www.fdic.gov/news/news/financial/2007/index.html.
To receive FILs electronically, please visit
http://www.fdic.gov/about/subscriptions/fil.html.
Paper copies of FDIC financial institution letters
may be obtained through the FDIC's Public
Information Center, 3501 Fairfax Drive, E-1002,
Arlington, VA 22226 (1-877-275-3342 or 703-562-
2200).
FIL-96-2007
November 2, 2007
ANNUAL AUDIT AND REPORTING REQUIREMENTS
Proposed Amendments to Part 363
Federal Deposit Insurance Corporation
550 17th Street NW, Washington, D.C. 20429-9990
Summary: The FDIC is requesting comments on the attached proposed amendments to
Part 363 of its regulations, which sets forth annual independent audit and reporting requirements
for insured institutions with $500 million or more in total assets. The FDIC is proposing to amend
Part 363 in light of changes in the industry; certain sound audit, reporting, and audit committee
practices incorporated in the Sarbanes-Oxley Act of 2002; and the FDIC’s experience in
administering Part 363. The amendments are also intended to provide clearer and more
complete guidance for compliance. Comments are due by January 31, 2008.
Distribution:
Selected FDIC-insured institutions
Suggested Routing:
Chief Executive Officer
Chief Financial Officer
Board of Directors
Audit Committee
Related Topics:
Federal Deposit Insurance Act Section 36
Part 363 of the FDIC's Regulations
Attachment:
Proposed Amendments to Part 363
Contact:
FDIC Regional Accountant or Harrison Greene,
Senior Policy Analyst, Division of Supervision and
Consumer Protection, on 202-898-8905 or
hgreene@fdic.gov
Highlights:
• Annual Reporting Requirements – The
proposal would require disclosure of the internal
control framework and identified material
weaknesses, provide relief from reporting for
certain merged institutions, provide relief from
reporting on internal control for acquired
businesses, require management’s assessment
of compliance with laws and regulations to
disclose any noncompliance, and provide
illustrative management reports.
• Independent Public Accountants – The
proposal would clarify the independence
standards applicable to accountants, require
certain communications to audit committees, and
establish retention requirements for audit working
papers.
• Filing and Notice Requirements – The proposal
would extend the annual report filing deadline for
non-public institutions and include a late filing
notification requirement.
• Audit Committees – The proposal would specify
the audit committee’s duties regarding the
independent public accountant, require audit
committees to ensure that audit engagement
letters do not contain unsafe and unsound
limitation of liability provisions, and require
boards of directors to apply written criteria for
evaluating audit committee members’
independence.
• Scope – The proposal would revise the criteria
for institutions to comply with Part 363 at a
holding company level.
Note:
FDIC financial institution letters (FILs) may be
accessed from the FDIC's Web site at
www.fdic.gov/news/news/financial/2007/index.html.
To receive FILs electronically, please visit
http://www.fdic.gov/about/subscriptions/fil.html.
Paper copies of FDIC financial institution letters
may be obtained through the FDIC's Public
Information Center, 3501 Fairfax Drive, E-1002,
Arlington, VA 22226 (1-877-275-3342 or 703-562-
2200).