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F ederal

reserve

Bank

DALLAS. TEXAS

of

Dallas

75222

C i r c u l a r No. 78-81
J u n e 15, 1978

JOINT POLICY FOR THE EXAMINATION
OF DATA PROCESSING CENTERS

TO THE STATE MEMBER BANK ADDRESSED:
P r in te d on th e following p a g e s is a p o lic y s ta te m e n t w h ic h w as a d o p te d
b y the F ed eral Deposit I n s u r a n c e C o r p o r a tio n , Fe d e ra l Home Loan B an k B o a r d ,
F ederal R e s e r v e B o a r d , a n d th e C o m p tro ller of th e C u r r e n c y in a n effort to make
EDP exam ination p r o c e d u r e s m ore efficien t.
T h e statem ent p r o v i d e s fo r jo in t o r ro ta te d e x am in atio n s of d a ta c e n t e r s
w h ich p r o v i d e s e r v i c e s to financial in s titu tio n s . Data c e n t e r s o p e r a te d b y State
m em ber b a n k s will c o n tin u e to b e th e r e s p o n s i b i l i t y of th e Fe d e ra l R e s e r v e S y s te m .
T h e statem e n t s p e c ifie s th a t exam ination r e p o r t s will b e d i s t r i b u t e d to
th e a p p r o p r i a t e data c e n t e r a n d its s e r v i c e d i n s titu t i o n s . F e d e ra l R e s e r v e B an k s
will b e r e s p o n s ib le fo r d i s t r i b u t i n g r e p o r t s to s e r v i c e d S tate m e m b e r b a n k s . C o r­
r e s p o n d e n c e from th e data c e n t e r a b o u t th e exam ination will be d i r e c t e d to the
e x am in in g a g e n c ie s ; y o u r c o r r e s p o n d e n c e a b o u t an ex am inatio n s h o u ld be s e n t to
th e Fe d e ra l R e s e r v e Bank of Dallas.
If y o u r b a n k is s e r v i c e d b y a n o rg a n iz a tio n o t h e r th a n a financial in s titu ­
tio n , p le a s e p r o v i d e y o u r s e r v i c e r w ith a copy of t h i s le tte r a n d th e p o licy s ta te m e n t.
If you h a v e a n y q u e s ti o n s r e g a r d i n g th is m a tte r , p l e a s e c o n ta c t o u r Bank S u p e r v i ­
sion a n d R eg u latio n s D e p a rtm e n t, a t E x t. 6274.
S i n c e r e ly y o u r s ,
R o b e rt H . B oykin
F i r s t Vice P r e s i d e n t

Banks and others are encouraged to use the following incoming W A T S numbers in contacting this Bank:
1-800 -492 -440 3 (intrastate) and 1 -8 00 -527 -497 0 (interstate). For calls placed locally, please use 651 plus
the extension referred to above.

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

Interagency EDP Examination, Scheduling and Report Distribution Policy Statement

Definitions
1.

2.

Insured Institution - any bank, savings and loan association or
financial institution whose deposits or
shares are Insured by a
agency.

other
federal

Serviced Institution - any insured institution which receives data
processing services.

3.

Independent Data Center - any data center that
provides data
processing
services to an insured institution, but is
not owned by or affiliated
with an insured institution.

4.

Holding Company - any organization which has control over one
insured institutions.

5.

or more

Bank Service Corporation - a servicing corporation as defined in the Bank
Service Corporation Act, 12 U.S.C. 1861-1865.

I . Examination Responsibility
A.

Insured Institutions
Data centers operated by an insured institution, or its subsidiary,
will be examined by the federal regulatory agency responsible for
the insured institution.

B.

Holding Companies
1.

2.

Data centers operated by a holding company, or its affiliate,
which services more than one class of insured institution will
be examined jointly, or on a rotated basis, as agreed to by the
federal regulatory agencies responsible for those classes of
insured institutions.

3.

C.

Data centers operated by a holding company, or its affiliate,
which services only one class of insured institution will be
examined by the federal regulatory agency responsible for that
class of insured institution.

Data centers operated by holding companies which control only
one insured institution, or its affiliate, will be examined by
the federal regulatory agency responsible for the insured insti­
tution.

Independent Data Centers
Responsibility for the examination of independent data centers will
be based on the class of insured institution being serviced.
The
guidelines for holding companies (Item B) will apply.

- 2 -

U.

Bank Service Corporations
Responsibility for the examination of bank service corporations will
be based on the class of insured institution being serviced.
The
guidelines for holding companies (Item R) vill apply.

E.

Independent Examinations
No federal regulatory agency is precluded from conducting an inde­
pendent examination of any data center that is providing data processing
services to an insured institution for which the agency is responsible
or where an agency has regulatory responsibility for holding company
data centers.

II.

Scheduling and Report Preparation
A.

Joint Examinations
1.

2.

One report will be prepared and signed by the examiner-in-charge
from each agency. The participating examiners will reach an
agreement on the report comments and the responsibility for
authoring the finished product.

3.

B.

Joint examinations will be scheduled at the regional level.
Exami­
nation duties will be divided and rotated among the EDP examiners
assigned.

Interested state agencies will be invited to participate when
institutions operating under their charter are being serviced.

Rotated Examinations
1.

When joint examinations are not scheduled for servicers of various
classes of insured institutions, the examination responsibilities
will be rotated among the respective agencies for two-year
periods.
However, when the data center's overall condition is
determined to be less than satisfactory, joint examinations must
be scheduled for the subsequent examination.

2.

The examining agency will complete its standard report of exami­
nation when conducting rotated examinations.

Ill. Report Distribution Policies and Procedures
A.

At the conclusion of the examination the examiner will discuss
the
report comments with the senior management.
Management will be informed
that, as a matter of policy, these or similar report comments will be
distributed to all insured serviced institutions.
The distribution
policy will be repeated in the cover letter transmitting the completed
report to the data center.

B.

The examining agency will furnish all other affected agencies (at
the district or regional level) a copy of the completed report, a
complete list of serviced institutions, and an outline of any request
for corrective action.
If the receiving agency feels additional followup is warranted, it will immediately request the initiating agency to
do so.

- J -

C.

Each agency will be responsible for reproducing and distributing the
report comments to its serviced institutions. A transmittal letter
will be used to advise each recipient that the comments are for their
internal use only, are not tc be construed to satisfy audit requirements,
and remain the confidential property of the sending agency. A written
receipt will be obtained froir each recipient.
Report comments resulting
from joint examinations will be distributed by the participating agencies
to their respective serviced institutions.
These procedures do not affect existing distribution agreements with
state agencies. The agency conducting the examination will be the only
one permitted to provide nonparticipating state authorities copies of
the report. In the case of joint examinations, participation by state
agencies and report distribution to those state agencies will be decided
on an individual basis (at the district or regional level) by the
participating federal agencies.

D.

Regardless of the distributing agency, report comments transmitted
to serviced institutions will be limited to the examiner's conclusions,
recommendations and comments. Matters of a proprietary or competitive
nature relating to the servicer will be excluded from report comments
prepared for distribution to serviced institutions, but will be
contained in the report provided to the servicer and other federal
agencies. Requests for additional information will be considered
on an individual basis. Each agency with serviced institutions will
have access to examiner work papers in addition to the complete
report (including confidential sections).

E.

In cases where the servicer is examined by a single agency and does
not respond to corrective action requests, it may be necessary to
report the uncorrected deficiencies to the serviced institutions.
However, the regulatory agencies of all serviced Institutions will
first agree on the need and jointly meet with the servicer.


Federal Reserve Bank of St. Louis, One Federal Reserve Bank Plaza, St. Louis, MO 63102