Academic journal article Journal of Accountancy

Final Banking Bill: Roundup of Accounting Provisions

Academic journal article Journal of Accountancy

Final Banking Bill: Roundup of Accounting Provisions

Article excerpt

Accounting and auditing provisions in the final version of the Federal Deposit Insurance Corporation (FDIC) Improvement Act of 1991, signed by President Bush last December, win affect banks, thrifts and their CPAS. These provisions are briefly summarized below:

* Annual audits. Annual financial statement audits in accordance with generally accepted auditing standards are mandated for institutions with assets of $150 million or more. The independent auditor's report must address whether the financial statements are in conformity with GAAP and comply with any additional disclosure requirements regulators may establish.

* Management and auditor's reports on internal control structure and compliance. Annually, management will assess the effectiveness of the institution's internal control structure over financial reporting and its compliance with specified laws and regulations relative to safety and soundness. The independent auditor will report separately on management's assertions, using standards for attestation engagements.

* Communication with regulators. Institutions must provide a copy of each audit report, any management letter and notification of any change in auditors to appropriate federal and state banking agencies.

* Communication with auditors. Each institution must provide its auditor with copies of its most recent report of condition and report of examination, any supervisory memorandum of understanding or written agreement with any federal or state regulatory agency and the report of any action initiated by federal banking agencies.

* Audit committees. The covered institutions must have audit committees made up entirely of outside directors. …

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