Magazine article American Banker

Bankers Get Split Decision in Bid to Ease Audit Rules

Magazine article American Banker

Bankers Get Split Decision in Bid to Ease Audit Rules

Article excerpt

WASHINGTON -- Regulators have agreed to water down a proposal for tough new auditing standards, but they rejected pleas to exempt all banks with less than $1 billion in assets.

The decisions represent a partial victory for bankers, who had argued that the new rules would boost auditing costs 30% to 100% a year.

The revised proposal "will still be very expensive, but there will certainly be a good deal of relief," said Jim McLaughlin, director of agency relations at the American Bankers Association.

Specter of Resignations

Bankers complained that the original proposal, published on Sept. 1, would have prohibited most existing directors from serving on audit committees, leading to mass resignations. The final draft, due out in a few weeks, addresses this fear, they said.

In another important change, regulations will be tiered so that fewer provisions apply to smaller institutions.

But all banks with $150 million or more in assets will still be required to have annual outside audits. Bankers had sought to raise the asset threshold to $1 billion.

The $150 million exclusion already exempts 9,515 banks, or 82% of the industry, noted Bob Miailovich, associate director of policy for the Federal Deposit Insurance Corp., which issued the proposal.

Lifting the threshold to $1 billion would have excluded another 1,700 institutions. "We're not going to gut the law by exempting everybody," he said.

Under the original draft, customers could not serve on the audit committee of institutions with $500 million or more in assets if they had loans and deposits equal to more than 15% of the bank's capital or $50 million, whichever was less. …

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