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Federal R eserve Bank
OF DALLAS
ROBERT

D. M c T E E R , J R .

p re s id e n t
AND CHIEF EXECUTIVE O F F IC E R

_

_ _

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August 21, 1992

DALLAS, TEXAS 75222

Notice 92-72
TO:

The Chief Executive Officer of each
member bank and others concerned in
the Eleventh Federal Reserve District
SUBJECT
Interagency Policy Statement Concerning Communications
Between External Auditors and Bank Examiners
DETAILS

The Federal Reserve Board, Office of the Comptroller of the Curren­
cy, Federal Deposit Insurance Corporation, and the Office of Thrift Supervi­
sion have issued a policy statement on coordination and communication between
external bank auditors and examiners. The policy statement is effective
immediately.
The policy statement provides guidelines concerning information that
should be provided by depository institutions to their external auditors and
meeting arrangements between external auditors and bank examiners in connec­
tion with safety and soundness examinations. Although the policy statement
focuses on depository institutions and their external auditors, bank holding
companies and U.S. branches and agencies of foreign banks that are examined by
the Federal Reserve are encouraged to follow this policy.
ATTACHMENT
Attached is a copy of the interagency policy statement.
MORE INFORMATION
For more information, please contact Basil Asaro at (214) 744-7400.
For additional copies of this B a n k ’s notice, please contact the Public Affairs
Department at (214) 922-5254.
Sincerely yours,

For additional copies, bankers and others are encouraged to use one of the following toll-free numbers in contacting the Federal Reserve Bank of Dallas:
Dallas Office (800) 333-4460; El Paso Branch Intrastate (800) 592-1631, Interstate (800) 351-1012; Houston Branch Intrastate (800) 392-4162,
Interstate (800) 221-0363; San Antonio Branch Intrastate (800) 292-5810.

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

Interagency Policy Statement on
Coordination and Communication
Between External Auditors and Examiners1
July 23, 1992
The federal bank and thrift regulatory agencies are issuing this policy statement to
improve the coordination and communication between external auditors and examiners.
This policy statement provides guidelines regarding information that should be provided
by depository institutions to their external auditors and meetings between external
auditors and examiners in connection with safety and soundness examinations.
Coordination of External Audits and Examinations

In most cases, the federal bank and thrift regulatory agencies provide institutions with
advance notice of the starting date(s) of full-scope or other examinations. When
notified, institutions are encouraged to promptly advise their external auditors of the
date(s) and scope of supervisory examinations in order to facilitate the auditors’ planning
and scheduling of audit work. The external auditors may also advise the appropriate
regulatory agency regarding the planned dates for the auditing work on the institution’s
premises in order to facilitate coordination with the examiners.
Some institutions prefer that audit work be completed at different times from
examination work in order to reduce demands upon their staff members and facilities.
On the other hand, some institutions prefer to have audit work and examination work
performed during similar periods in order to limit the impact of these efforts on the
institutions’ operations to certain times during the year. By knowing in advance when
examinations are planned, institutions have the flexibility to work with their external
auditors to schedule audit work concurrent with examinations or at separate times.
Other Information Provided By the Institution

Consistent with prior practice, a depository institution should provide its external audi­
tors with a copy of certain reports and supervisory documents, including:
o

The most recent regulatory Report of Condition (i.e., "Call Reports" for
banks, and "Thrift Financial Reports" for savings institutions);

1
The agencies issuing this policy statement are the Board o f Governors of the Federal Reserve System,
the Federal D eposit Insurance Corporation, the Office o f the Comptroller of the Currency, and the Office of
Thrift Supervision.

2
o

The most recent examination report and pertinent correspondence received
from its regulator(s);

o

Any supervisory memorandum of understanding with the institution that
has been put into effect since the beginning of the period covered by the
audit;

o

Any written agreement between a federal or state banking agency and the
institution that has been put into effect since the beginning of the period
covered by the audit; and

o

A report of:
-

Any actions initiated or undertaken by a federal banking agency
since the beginning of the period covered by the audit under certain
subsections of Section 8 of the Federal Deposit Insurance Act,2 or
any similar action taken by an appropriate state bank supervisor
under state law; and

-

Any civil money penalty assessed under any other provision of law
with respect to the depository institution or any institution-affiliated
party, since the beginning of the period covered by the audit.

External Auditor Attendance at Meetings Between Management and Examiners
Generally, the federal bank and thrift regulatory agencies encourage auditors to attend
examination exit conferences upon completion of field work or other meetings between
supervisory examiners and an institution’s management or Board of Directors (or a
committee thereof) at which examination findings are discussed that are relevant to the
scope of the audit. When other conferences between examiners and management are
scheduled (i.e., that do not involve examination findings that are relevant to the scope of
the external auditor’s work), the institution shall first obtain the approval of the
appropriate federal bank or thrift regulatory agency in order for the auditor to attend the
meetings. This policy does not preclude the federal bank and thrift regulatory agencies
from holding meetings with the management of depository institutions without auditor
attendance or from requiring that the auditor attend only certain portions of the
meetings.

2
Section 112 o f the Federal Deposit Insurance Corporation Improvement Act o f 1991 includes a
requirement that the institution provide its external auditors with a report of any action initiated or taken by
a federal banking agency during the period under audit under subsection (a), (b), (c), (e), (g), (i), (s) or (t)
of Section 8 of the Federal Deposit Insurance Act (12 U.S.C. 1817).

3
Depository institutions should ensure that their external auditors are informed in a
timely manner of scheduled exit conferences and other relevant meetings with examiners
and of the agencies’ policies regarding auditor attendance at such meetings.
Meetings and Discussions Between External Auditors and Examiners

An auditor may request a meeting with any or all of the appropriate federal bank and
thrift regulatory agencies that are involved in the supervision of the institution or its
holding company during, or after completion of, examinations in order to inquire about
supervisory matters relevant to the institution under audit. External auditors should
provide an agenda in advance to the agencies that will attend these meetings. The
federal bank and thrift regulatory agencies will generally request that management of the
institution under audit be represented at the meeting. In this regard, examiners
generally will only discuss with an auditor examination findings that have been presented
to the depository institution’s management.
In certain cases, external auditors may wish to discuss with regulators matters relevant to
the institution under audit at meetings without the representation from the institution’s
management. External auditors may request such confidential meetings with any or all
of the federal bank and thrift regulatory agencies, and the agencies may also request
such meetings with the external auditor.
Confidentiality of Supervisory Information

While the policies of the federal bank and thrift regulatory agencies permit external
auditors to have access to the previously mentioned information on depository
institutions under audit, institutions and their auditors are reminded that information
contained in examination reports, inspection reports, and supervisory discussions including any summaries or quotations -- is confidential supervisory information and
must not be disclosed to any party without the written permission of the appropriate
federal or thrift regulatory agency. Unauthorized disclosure of confidential supervisory
information may subject the auditor to civil and criminal actions and fines and other
penalties.

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