The FDIC proposes to amend Part 363 to reflect changes in the industry
The FDIC has proposed amendments to Part 363 of its regulations (FDICIA rules) relating to annual independent audit and reporting requirements for insured institutions with $500 million or more in total assets.
The amendments follow the corporate governance and audit committee rules of the Sarbanes-Oxley Act of 2002.
Current requirements
Banks and thrifts with assets greater than $500 million at the beginning of a fiscal year must follow Part 363 by filing an annual report that includes:
- Audited annual financial statements
- Independent auditor’s report on the audited financial statements
- Management report including a statement of management’s responsibilities for preparing the annual financial statements, establishing and maintaining an adequate internal control structure over financial reporting and complying with designated laws and regulations
- Management’s assessment of the institution’s compliance with designated laws and regulations during the year
Additional internal control assessment and reporting requirements become effective when assets exceed $1 billion at the beginning of the fiscal year, with specific additional audit committee requirements when assets exceed $3 billion at the beginning of the fiscal year.
Proposed changes
According to the financial institution letter FIL-96-2007 (www.fdic.gov/news/news/financial/2007/fil07096.pdf), dated Nov. 2, 2007, the anticipated amendments include:
- Annual reporting requirements
Require disclosure of the internal control framework and identified material weaknesses, relief from reporting for certain merged institutions, relief from reporting on internal control for acquired businesses, management’s assessment of compliance with laws and regulations to disclose any noncompliance.
- Independent public accountants
Clarify independence standards applicable to accountants, require certain communications to audit committees and establish retention requirements for audit working papers.
- Filing and notice requirements
Extend the annual report filing deadline for non-public institutions and include a late filing notification requirement.
- Audit committees
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
Revise the criteria for institutions to comply with Part 363 at a holding company level.
The comment period ended Jan. 31, 2008.
