Financial Institution Letter
FIL-72-2005
August 2, 2005
ANNUAL INDEPENDENT AUDITS AND REPORTING
REQUIREMENTS
Proposed Amendment to Part 363
Summary: The FDIC is proposing to amend Part 363 of its regulations by raising the asset size
threshold from $500 million to $1 billion for requirements relating to internal control assessments
and reports by management and external auditors, and the requirement that members of the
audit committee, who must be outside directors, be independent of management. Comments are
due by September 16, 2005.
Distribution:
FDIC-Insured Institutions With $500 Million or More
in Total Assets
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 Amendment to Part 363
Contact:
FDIC Regional Accountant or Senior Policy Analyst
Harrison Greene, Division of Supervision and
Consumer Protection, at (202) 898-8905 or
hgreene@fdic.gov
Note:
FDIC financial institution letters (FILs) may be
accessed from the FDIC's Web site at
www.fdic.gov/news/news/financial/2005/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, 801 17th Street, NW,
Room 100, Washington, DC 20434
(1-877-275-3342 or 202-416-6940).
Highlights:
• The FDIC’s annual audit and reporting
requirements, including audit committee
requirements, apply to insured institutions with
$500 million or more in total assets (“covered
institutions”).
• As proposed, for covered institutions with
between $500 million and $1 billion in total
assets, management would no longer be
required to assess and report on the
effectiveness of internal control over financial
reporting, the external auditors would no longer
be required to examine and attest to
management’s internal control assertions, and
the outside directors on the audit committee
would no longer be required to be independent of
management.
• The proposal would relieve covered institutions
with total assets of less than $1 billion from these
requirements only for purposes of Part 363.
These covered institutions must continue to
comply with the remaining provisions of Part 363,
including the annual financial statement audit
requirement.
• The proposal would 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
assessments by management and attestations
by external auditors and, if applicable, audit
committee independence.
• The amendments are proposed to take effect
December 31, 2005.
Federal Deposit Insurance Corporation
550 17th Street NW, Washington, D.C. 20429-9990
FIL-72-2005
August 2, 2005
ANNUAL INDEPENDENT AUDITS AND REPORTING
REQUIREMENTS
Proposed Amendment to Part 363
Summary: The FDIC is proposing to amend Part 363 of its regulations by raising the asset size
threshold from $500 million to $1 billion for requirements relating to internal control assessments
and reports by management and external auditors, and the requirement that members of the
audit committee, who must be outside directors, be independent of management. Comments are
due by September 16, 2005.
Distribution:
FDIC-Insured Institutions With $500 Million or More
in Total Assets
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 Amendment to Part 363
Contact:
FDIC Regional Accountant or Senior Policy Analyst
Harrison Greene, Division of Supervision and
Consumer Protection, at (202) 898-8905 or
hgreene@fdic.gov
Note:
FDIC financial institution letters (FILs) may be
accessed from the FDIC's Web site at
www.fdic.gov/news/news/financial/2005/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, 801 17th Street, NW,
Room 100, Washington, DC 20434
(1-877-275-3342 or 202-416-6940).
Highlights:
• The FDIC’s annual audit and reporting
requirements, including audit committee
requirements, apply to insured institutions with
$500 million or more in total assets (“covered
institutions”).
• As proposed, for covered institutions with
between $500 million and $1 billion in total
assets, management would no longer be
required to assess and report on the
effectiveness of internal control over financial
reporting, the external auditors would no longer
be required to examine and attest to
management’s internal control assertions, and
the outside directors on the audit committee
would no longer be required to be independent of
management.
• The proposal would relieve covered institutions
with total assets of less than $1 billion from these
requirements only for purposes of Part 363.
These covered institutions must continue to
comply with the remaining provisions of Part 363,
including the annual financial statement audit
requirement.
• The proposal would 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
assessments by management and attestations
by external auditors and, if applicable, audit
committee independence.
• The amendments are proposed to take effect
December 31, 2005.
Federal Deposit Insurance Corporation
550 17th Street NW, Washington, D.C. 20429-9990