Magazine article Independent Banker

An Eye for Change

Magazine article Independent Banker

An Eye for Change

Article excerpt

Editor's Note: To keep bankers informed of proposed rules and other issues of concern to regulators, this column summarizes recent testimony and comment letters IBAA provides to federal banking agencies.

EXTERNAL AUDIT PROGRAMS

Issue: Proposed Policy Statement on External Auditing Programs of Banks and Saving Associations that would apply to institutions with less than $500 million in total assets.

Agency: Federal Financial Institutions Examination Council.

IBAA Positions:

Explained that most community banks, particularly smaller ones, would prefer that no change be made to current external audit requirements. If regulatory guidance is changed, smaller banks should have flexibility to choose the best approach for their institution;

Stated that many community banks are concerned that if the policy statement is adopted, they will see their auditing costs more than double. Some rural community banks may find it difficult and particularly expensive to comply;

Emphasized that community bankers are concerned that examiners would mandate actions that the policy statement encourages. Banks' board of directors and management, working with examiners, should determine whether an external audit program that includes an annual audit of the financial statements by an independent public accountant is appropriate for their institution;

Strongly urged that if the regulators go forward with the policy statement they should stress to examiners that not all banks need to comply with the policy statement in its entirety. …

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