Federal Deposit Insurance Corporation
550 17th Street NW, Washington, DC 20429 Division of Supervision
Outside Audits
FIL-19-95
February 23, 1995
TO: CHIEF EXECUTIVE OFFICER
SUBJECT: FDIC Proposes Amendment to Annual Audit and Reporting Requirements (Part 363)
On January 31, 1995, the FDIC Board of Directors proposed the attached amendment to the agency's
annual independent audit and reporting requirements (Part 363) that would provide relief from duplicative
reporting and audit committee requirements for certain sound, well-managed banks. The proposed
amendment would implement Section 314(a) of the Riegle Community Development and Regulatory
Improvement Act of 1994.
In general, existing rules require an institution with $500 million or more in total assets to have an annual
independent audit of its financial statements, to have an independent evaluation of its internal controls for
financial reporting and compliance with designated laws, and to have an independent audit committee.
Related reports also are required to be filed. These rules are part of an independent early warning system
mandated by Congress in 1991.
The FDIC's proposed amendment would cover any institution that:
Is a subsidiary of a multibank holding company;
Has $5 billion or more in total assets; and
Has a composite "1" or "2" rating under the interagency CAMEL rating system.
The proposal states that any such institution could use the audit committee of its holding company and
file its holding company's annual report. That would provide relief for any institution with $9 billion or more
in total assets because it previously had to file a separate report and have its own audit committee. These
aspects of the FDIC proposal may affect approximately 70 institutions.
The vast majority of institutions report on a calendar year basis and are now in the process of preparing
annual reports for 1994. In order to make the process less burdensome, the FDIC will not object if an
institution chooses to follow the provisions of this proposal now instead of waiting for final rules to be
adopted. An institution using the holding company exception should file with the FDIC two copies of any
annual report and a letter identifying all institutions to which it applies. This material should go to the
Regional Director of the FDIC's Division of Supervision responsible for the location where the lead
institution is headquartered. In addition, two copies should be supplied to each institution's primary federal
or state regulator. An institution filing any report just for itself should send it to the FDIC regional office
responsible for the location of the institution's main office, whether or not the institution is a subsidiary of a
holding company. A list of FDIC regional directors and addresses is attached.
The proposed amendment also would streamline and reformat the agreed-upon procedures for
determining compliance with designated laws and regulations (Schedule A to Appendix A of the
guidelines). This aspect of the amendment, which would affect about 1,000 banks, is intended to make
the procedures more efficient and less burdensome for institutions and accountants to implement. The
proposal also would revise and correct certain wording in the regulations to reduce the burden of
compliance on insured institutions.Inactive
550 17th Street NW, Washington, DC 20429 Division of Supervision
Outside Audits
FIL-19-95
February 23, 1995
TO: CHIEF EXECUTIVE OFFICER
SUBJECT: FDIC Proposes Amendment to Annual Audit and Reporting Requirements (Part 363)
On January 31, 1995, the FDIC Board of Directors proposed the attached amendment to the agency's
annual independent audit and reporting requirements (Part 363) that would provide relief from duplicative
reporting and audit committee requirements for certain sound, well-managed banks. The proposed
amendment would implement Section 314(a) of the Riegle Community Development and Regulatory
Improvement Act of 1994.
In general, existing rules require an institution with $500 million or more in total assets to have an annual
independent audit of its financial statements, to have an independent evaluation of its internal controls for
financial reporting and compliance with designated laws, and to have an independent audit committee.
Related reports also are required to be filed. These rules are part of an independent early warning system
mandated by Congress in 1991.
The FDIC's proposed amendment would cover any institution that:
Is a subsidiary of a multibank holding company;
Has $5 billion or more in total assets; and
Has a composite "1" or "2" rating under the interagency CAMEL rating system.
The proposal states that any such institution could use the audit committee of its holding company and
file its holding company's annual report. That would provide relief for any institution with $9 billion or more
in total assets because it previously had to file a separate report and have its own audit committee. These
aspects of the FDIC proposal may affect approximately 70 institutions.
The vast majority of institutions report on a calendar year basis and are now in the process of preparing
annual reports for 1994. In order to make the process less burdensome, the FDIC will not object if an
institution chooses to follow the provisions of this proposal now instead of waiting for final rules to be
adopted. An institution using the holding company exception should file with the FDIC two copies of any
annual report and a letter identifying all institutions to which it applies. This material should go to the
Regional Director of the FDIC's Division of Supervision responsible for the location where the lead
institution is headquartered. In addition, two copies should be supplied to each institution's primary federal
or state regulator. An institution filing any report just for itself should send it to the FDIC regional office
responsible for the location of the institution's main office, whether or not the institution is a subsidiary of a
holding company. A list of FDIC regional directors and addresses is attached.
The proposed amendment also would streamline and reformat the agreed-upon procedures for
determining compliance with designated laws and regulations (Schedule A to Appendix A of the
guidelines). This aspect of the amendment, which would affect about 1,000 banks, is intended to make
the procedures more efficient and less burdensome for institutions and accountants to implement. The
proposal also would revise and correct certain wording in the regulations to reduce the burden of
compliance on insured institutions.Inactive
The FDIC will accept comments on the proposed amendment through April 17, 1995. For more
information, please contact Doris L. Marsh, an Examination Specialist in the Division of Supervision, at
(202) 898-8905.
Stanley J. Poling
Director
Attachments: PDF Format (75 kb, PDF help or hard copy), Text Format
Regional Offices
Distribution: Selected Insured Banks and Savings AssociationsInactive
information, please contact Doris L. Marsh, an Examination Specialist in the Division of Supervision, at
(202) 898-8905.
Stanley J. Poling
Director
Attachments: PDF Format (75 kb, PDF help or hard copy), Text Format
Regional Offices
Distribution: Selected Insured Banks and Savings AssociationsInactive