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FEDERAL RESERVE BANK OF NEW YORK A ugust 2 7 , 1979 PROPOSED STATEMENT OF POLICY CONCERNING MINIMUM STANDARDS FOR FOREIGN EXCHANGE AND MONEY MARKET OPERATIONS OF COMMERCIAL BANKS T o A ll Member B a n ks, and O thers Concerned, in the Second F ederal R e se rv e D istrict: The F e d e r a l F in a n c i a l I n s t i t u t i o n s E x am in atio n C o u n c il h as i n v i t e d p u b lic comment on a p ro p o s e d s ta te m e n t o f p o li c y c o n c e rn in g minimum s ta n d a r d s f o r d o c u m e n ta tio n , a c c o u n tin g , and a u d i t i n g o f f o r e ig n exchange and money m ark et o p e r a t io n s ( r e l a t e d t o f o r e ig n ex ch an g e) o f co m m ercial b a n k s . I t i s th e i n t e n t o f t h i s s ta te m e n t t o r e i n f o r c e e x i s t i n g p ro c e d u re s and p r a c t i c e s w id e ly u se d by com m ercial b an k s i n m o n ito rin g and c o n t r o l l i n g t h e i r f o r e ig n exchange and money m a rk e t a c t i v i t i e s and i n p r o v id in g tim e ly and a c c u r a te r e p o r t s t o t h e i r own b o a rd s o f d i r e c t o r s , s e n i o r m anagem ent, governm ent s u p e r v i s o r s , and o th e r in te re s te d p a r ti e s . The C o u n c il h a s r e q u e s te d comments on th e p ro p o s e d s ta te m e n t o f p o li c y by S eptem ber 2 5 , 1979- We w ould b e p le a s e d t o a s s i s t you w ith any q u e s tio n s you m ig h t h av e on th e p ro p o s e d p o l i c y s ta t e m e n t . We w ould a l s o a p p r e c ia te r e c e i v i n g c o p ie s o f any comments t h a t y o u p r o v id e t o th e C o u n c il. A copy o f th e p ro p o s e d s ta te m e n t h a s b e e n s e n t t o a l l a f f e c t e d i n s t i t u t i o n s by th e F e d e r a l D e p o s it I n s u r a n c e C o r p o r a tio n . I f f o r any r e a s o n you have n o t r e c e iv e d a c o p y , we w ould be p le a s e d t o sen d you o n e. Comments o r r e q u e s ts f o r c o p ie s s h o u ld be d i r e c t e d t o Thomas P . McQueeney, A s s i s t a n t C h ie f E x am in er, o f o u r Bank E x a m in a tio n s D ep artm en t ( T e l. No. 212-7 9 1 -7 9 3M • THOMAS M. TlMLEN, F ir s t V ice P r e s id e n t Federal Financial Institutions Examination Council, Washington, D.C. 20219 Press Release A u g u s t 1 , 1979 F F IE C -1 -7 9 T he F e d e r a l F i n a n c i a l I n s t i t u t i o n s E x a m in a tio n C o u n c il i s com m ent o n a S t a t e m e n t o f P o l i c y C o n c e r n in g M inimum S t a n d a r d s re q u e s tin g f o r D o c u m e n ta tio n , A c c o u n t i n g , a n d A u d i t i n g o f F o r e i g n E x c h a n g e a n d Money M a r k e t O p e r a t i o n s o f C o m m e rc ia l B a n k s . It is th e i n t e n t o f t h i s s ta te m e n t to r e in f o r c e e x is tin g p r o c e d u r e s a n d p r a c t i c e s w i d e l y u s e d b y c o m m e r c ia l b a n k s i n m o n i t o r i n g a n d c o n tro llin g th e ir f o r e i g n e x c h a n g e a n d m oney m a r k e t a c t i v i t i e s tim e ly and a c c u r a te r e p o r t s to t h e i r own B o a rd s o f D i r e c t o r s , g o v e rn m e n t s u p e r v i s o r s , an d o t h e r i n t e r e s t e d 27, 1 9 7 9 , w i t h a com m ent p e r i o d e x t e n d i n g A copy o f th e p o lic y s ta te m e n t i s s e n i o r m a n a g e m e n t, p a rtie s . T he p r o p o s e d p o l i c y s t a t e m e n t w as p u b l i s h e d J u ly and in p r o v id in g in t h e F e d e r a l R e g i s t e r on t o S e p te m b e r 2 5 , 1 9 7 9 . a tta c h e d . i -™ "w •. J JL 1 - r/9 J. ANSWERED ...... .................. ............ ................... attended ra _________ ____ Board of Governors of the Federal Reserw System, Federal Deposit Insurance Corporation, Federal Home Loan Bank 3oard. National Credit Union Administration, O ffice of the Comptroller of the Currency FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL (FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL ACT OF 1 9 7 8 , 12 U .S .C . 3 3 0 5 ) COMMERCIAL 3ANKS N o t i c e o f P r o p o s e d S t a t e m e n t o f P o l i c y C o n c e r n in g M inim um S t a n d a r d s f o r D o c u m e n t a t i o n , A c c o u n t i n g , a n d A u d i t i n g o f F o r e i g n E x c h a n g e a n d M oney M a r k e t O p e r a t i o n s o f C o m m e rc ia l B a n k s . AGENCY: F e d e ra l F in a n c ia l I n s t i t u t i o n s ACTION: P ro p o se d p o lic y s ta te m e n t E x a m in a tio n C o u n c il SUMMARY: T h i s p r o p o s e d s t a t e m e n t o f s t a n d a r d s f o r t h e d o c u m e n t a t i o n , a c c o u n t i n g , a n d a u d i t i n g o f f o r e i g n e x c h a n g e a n d m oney m a r k e t a c t i v i t i e s o f c o m m e r c ia l b a n k s w as p r e p a r e d b y t h e T a s k F o r c e o n S u p e r v i s i o n o f t h e F e d e r a l F i n a n c i a l I n s t i t u t i o n s E x a m in a tio n C o u n c il. I t i s in te n d e d to r e i n f o r c e e x i s t i n g p r o c e d u r e s and p r a c t i c e s w i d e l y u t i l i z e d b y c o m m e r c ia l b a n k s i n m o n i t o r i n g a n d c o n t r o l l i n g t h e i r f o r e i g n e x c h a n g e a n d m oney m a r k e t a c t i v i t i e s a n d i n p r o v i d i n g t i m e l y a n d a c c u r a t e r e p o r t s t o t h e i r own B o a r d s o f D i r e c t o r s , s e n i o r m a n a g e m e n t, g o v e r n m e n t s u p e r v is o r s , and o th e r i n te r e s te d p a r t i e s . EFFECTIVE DATE: W r i t t e n co m m e n ts m u s t b e r e c e i v e d o n o r b e f o r e S e p te m b e r 2 5 , (6 0 d a y s f ro m p u b l i c a t i o n i n t h e F e d e r a l R e g i s t e r ) . 1979, ADDRESSES: C om m ents s h o u l d b e a d d r e s s e d t o M r. P a u l M. H om an, C h a ir m a n , T a s k F o rc e on S u p e r v is io n , F e d e r a l F i n a n c i a l I n s t i t u t i o n s E x a m in a tio n C o u n c il, W a s h i n g t o n , D. C. 2 0 2 1 9 . FOR FURTHER INFORMATION CONTACT: M r. Hugh W. C onw ay, R e v ie w E x a m in e r F e d e ra l D e p o s it In s u ra n c e C o rp o ra tio n 5 5 0 1 7 t h S t r e e t , N .W ., Room 5 1 0 0 W a s h i n g t o n , D. C. 20429 ( 2 0 2 ) 3 8 9 -4 3 4 9 . SUPPLEMENTARY INFORMATION: T he f o l l o w i n g s t a n d a r d s a r e p r o p o s e d t o p r o v i d e b a n k m anagem ent w ith tim e ly and a c c u r a te d e t a i l s o f t h e i r b a n k s ' f o r e ig n e x c h a n g e and m oney m a r k e t a c t i v i t i e s a n d t o p r o v i d e g o v e r n m e n t s u p e r v i s o r s a n d o t h e r i n t e r e s t e d p a r t i e s w i t h r e a s o n a b l y u n i f o r m m inim um d a t a . I t m u st be re c o g n iz e d t h a t th e s t a n d a r d s c o n t a i n e d h e r e i n r e p r e s e n t t h e c u r r e n t ju d g e m e n t o f t h e F e d e r a l F i n a n c i a l I n s t i t u t i o n s E x a m i n a t i o n C o u n c i l a s t o t h e m inim um r e q u i r e m e n t s f o r b a n k s ' f o r e i g n e x c h a n g e a n d m oney m a r k e t o p e r a t i o n s a n d s h o u l d n o t b e p e r c e i v e d a s a l l e n c o m p a s s i n g i n t e r m s o f t h o s e p o l i c i e s a n d p r o c e d u r e s "w h ich a r e e x p e c t e d t o b e f o u n d i n t h e m o re a c t i v e p a r t i c i p a n t s i n t h e s e m a r k e t s . M o st c o m m e r c ia l b a n k s h a v e a d e q u a te s y s te m s an d p r o c e d u r e s to m o n ito r and c o n t r o l t h e i r f o r e i g n e x c h a n g e a c tiv itie s . Many b a n k s h a v e s y s t e m s t h a t e x c e e d t h e r e q u i r e m e n t s o f t h i s s t a t e m ent o f s t a n d a r d s . N e v e r th e le s s , i t i s b e lie v e d t h a t th e s e s ta n d a r d s w i l l p ro v e u s e f u l b o th to b a n k m anagem ent an d th e b a n k s u p e r v i s o r y a g e n c ie s i n p ro m o tin g th e s a f e t y an d s o u n d n e s s o f i n d i v i d u a l b a n k s a s w e ll a s th e b a n k in g s y s te m a s a w h o le . £ - 2 - T he s t a n d a r d s r e p r e s e n t a c o n s e n s u s o n c e r t a i n m inim um e l e m e n t s t h a t s h o u l d b e i n c l u d e d i n a b a n k 's s y s t e m f o r d o c u m e n t i n g , c o n t r o l l i n g , a n d m o n i t o r i n g i t s fo re ig n exchange a c t i v i t i e s . T he s t a n d a r d s w i l l s e r v e a s a b a s i s b y w h ic h m a n a g e m e n t, a u d i t o r s , a n d s u p e r v i s o r y a u t h o r i t i e s c a n m e a s u r e a n d e v a l u a t e t h e i n d i v i d u a l b a n k 's s y s t e m f o r c o n t r o l l i n g a n d m o n i t o r i n g i t s f o r e i g n e x c h a n g e a c t i v itie s . DRAFTING INFORMATION: The p r i n c i p a l d r a f t e r o f t h i s R e v ie w E x a m i n e r , FD IC . d o c u m e n t w as H ugh W. C onw ay, PROPOSED POLICY STATEMENT STANDARDS FOR THE DOCUMENTATION OF TRADING AND MONEY MARKET POLICY E a c h b a n k e n g a g e d i n f o r e i g n e x c h a n g e t r a d i n g s h o u l d h a v e w r i t t e n m em o ran d a t h a t p r o v id e a th o r o u g h o v e rv ie w o f th e g o a l s an d p o l i c i e s e s t a b l i s h e d by s e n i o r m a n a g e m e n t. T h e m e m o ra n d a s h o u l d d e s c r i b e t h e s c o p e o f t r a d i n g a c t i v i t y a u t h o r iz e d and ty p e s o f s e r v ic e s o f f e r e d . I t s h o u ld a l s o d e s c r ib e th e tr a d i n g l i m i t s , c o n tr o ls , and o th e r i n s t r u c t i o n s d e le g a te d to tr a d in g p e rs o n n e l a t ea c h o f f ic e o f th e bank. As a m in im u m , t h e b a n k 's p o l i c y s h o u l d i n c l u d e l i m i t s w i t h r e s p e c t t o : 1) N et p o s itio n s by c u rre n c y ; 2) M a tu rity d i s t r i b u t i o n c o n tra c ts ; 3) O u ts ta n d in g 4) D a ily 5) T o ta l o u ts ta n d in g c o n tr a c ts , o f fo re ig n c u rre n c y a s s e ts , lib ilitie s , and c o n t r a c t s w ith i n d i v i d u a l c u s to m e rs and b a n k s ; s e t t l e m e n t s w ith i n d i v i d u a l c u s to m e rs and b a n k s; and s p o t and fo rw a rd . T h e b a n k 's t r a d i n g p o l i c y s h o u l d p r o v i d e f o r r e p o r t i n g p r o c e d u r e s w h ic h e n s u r e s t a f f a d h e re n c e to p o l i c y d i r e c t i v e s an d k e e p s e n i o r m anagem ent in fo rm e d o f th e s i z e a n d s c o p e o f t r a d i n g a t a l l t h e b a n k 's o f f i c e s . B anks v a ry i n th e d e t a i l o f r e p o r t i n g r e q u i r e d f r o m t h e i r t r a d i n g o f f i c e s ; h o w e v e r , e a c h b a n k 's h e a d o f f i c e s h o u ld m a in ta in c u r r e n t an d c o m p le te r e c o r d s t h a t i n d i c a t e e x c e p tio n s to l i m i t s , c o n t r o l s , and i n s t r u c t i o n s d e le g a te d to i n d iv id u a l tr a d in g o f f i c e s . When a s y s t e m o f r e p o r t i n g b y e x c e p t i o n i s u s e d , t h e l i m i t s d e l e g a t e d t o e a c h t r a d i n g o f f i c e s h o u ld c l o s e l y r e f l e c t th e a c t u a l o r a n t i c i p a t e d ra n g e o f tr a d i n g a t each o ffic e . T h e r a n g e a n d v o lu m e o f t r a d i n g b y t r a d i n g o f f i c e s s h o u l d 1 b e r e v i e w e d p e r i o d i c a l l y , a n d t h o s e l i m i t s t h a t do n o t r e f l e c t p r e s e n t o r a n t i c i p a te d o u ts ta n d in g s s h o u ld be re d u c e d . T he l i m i t s s h o u l d n o t b e d e l i b e r a t e l y s e t to o h ig h so a s n e v e r to b e e x c e e d e d . W h ile r e c o g n i z i n g t h e e x i s t e n c e o f d e l i v e r y r i s k , som e b a n k s do n o t b e l i e v e t h a t i t i s n e c e s s a r y to e s t a b l i s h l i m i t s and fo rm a l r e p o r tin g p ro c e d u re s in o r d e r to s a t i s f a c t o r i l y m o n ito r t h i s e x p o s u re . T h e s e b a n k s c h o o s e t o w e ig h d e l i v e r y r i s k in t h e i r d e te r m i n a t i o n o f i n d i v i d u a l c u s to m e r l i m i t s f o r o u t s t a n d i n g c o n t r a c t s . As a m in im u m , e a c h b a n k s h o u l d h a v e d o c u m e n ta r y e v i d e n c e t h a t a c u s t o m e r 's d e l i v e r y e x p o s u re i s b e in g re v ie w e d by r e s p o n s i b l e a c c o u n t an d t r a d i n g o f f i c i a l s . E v e ry b an k s h o u ld h a v e th e c a p a b i l i t y to r e a d i l y r e p o r t d e l i v e r y e x p o s u re w ith c u s to m e rs and b a n k s . T he b a n k s h o u l d h a v e a w r i t t e n p o l i c y f o r t r a d i n g w i t h c u s t o m e r s a f f i l i a t e d w i t h t h e b a n k o r w i t h m e m b e rs o f t h e B o a rd o f D i r e c t o r s . The te rm s an d c o n d i t i o n s o f f o r e i g n e x c h a n g e c o n t r a c t s s h o u ld n o t v a r y m a t e r i a l l y fro m s i m i l i a r t r a n s a c t i o n s w ith n o n r e l a t e d c o m p a n ie s . T he p o l i c y s h o u l d i n c l u d e a n y a r r a n g e m e n t s f o r h o l d in g p o s i t i o n s o r e x e c u tin g c o n t r a c t s f o r th e a c c o u n t o f o th e r o f f i c e s , b a n k s , o r o u ts id e p a r tie s . STANDARDS FOR PREPARATION AND MAINTENANCE OF ACCOUNTING INSTRUCTIONS AND THE ESTABLISHMENT OF INTERNAL CONTROLS E ach t r a d i n g o f f i c e s h o u ld e x p la in in g th e in fo rm a tio n s u b s id ia r y le d g e r a c c o u n ts d a i l y , w e e k ly , a n d m o n th ly t i o n s s h o u ld b e d e s c r ib e d . h a v e a c o m p le te g e n e r a t e d fro m a f f e c t e d by th e p ro c e d u re s used a n d c u r r e n t s e t o f m e m o ra n d a a v a i l a b l e th e a c c o u n tin g s y s te m . T he g e n e r a l a n d tr a d i n g and fu n d in g a c t i v i t i e s an d an y to r e v a lu e tr a d i n g and fu n d in g p o s i T h e m e m o ra n d a s h o u l d d e s c r i b e t h e a c c o u n t i n g a n d i n t e r n a l c o n t r o l s i n c o r p o r a t e d i n th e s y s te m to e n s u r e th e r e p o r t i n g o f c u r r e n t a n d c o m p le te d a ta on t r a d i n g and fu n d in g a c t i v i t i e s , to p r e v e n t m is a p p r o p r ia tio n o f fu n d s , and to p r e c lu d e c o n c e a lm e n t o f u n a u th o r iz e d t r a n s a c t i o n s . T he a c c o u n t i n g a n d i n t e r n a l c o n t r o l s s h o u ld i n c l u d e a s a m inim um : 1) A s t r i c t s e g re g a tio n o f d u tie s f o r tr a d in g , o p e ra tio n a l and c u s t o d i a l (p a y in g and r e c e i v i n g ) p e r s o n n e l; 2) A p r o c e d u r e f o r d e t e r m i n i n g t h e o r d e r , d a t e , a n d tim e t r a d i n g p e r s o n n e l e n te re d in to in d iv id u a l c o n tr a c ts . A tim e s ta m p in g o f d e a l i n g s l i p s w o u ld b e s a t i s f a c t o r y ( s e e i t e m 6 b ) ; 3) The i d e n t i f i c a t i o n 4) The p r e p a r a t i o n o f o u tg o in g c o n f i r m a t i o n s t h a t of " fin a n c ia l (re c o rd k e e p in g ), sw a p " c o n t r a c t s ; in c lu d e : a) d a t e o f t r a n s a c t i o n , d a t e o f p r e p a r a t i o n i f d i f f e r e n t fro m t r a n s a c t i o n d a t e , and d a te o f v a lu e o r m a tu r ity d a te ; b) a m o u n ts o f t h e c u r r e n c i e s a p p lic a b le r a t e ; and tr a d e d , a c c e p te d , o r p la c e d , an d th e - c) liq u id a tio n in s tru c tio n , 4 - if a v a ila b le , a n d r e f e r e n c e n u m b e r; 5) A h o ld o v e r le d g e rs a t o v e r" ite m r e p o r t s to 6) S e q u e n t i a l l y n u m b e re d c o n t r a c t f o r m s t h a t a r e : 7) r e g i s t e r t o r e c o r d t r a d e s m ade b u t n o t p o s t e d t o t h e b a n k 's end o f d a y , th e i d e n t i f i c a t i o n o f su c h c o n t r a c t s a s " h o ld s , and t h e i r in c lu s io n in th e t r a d e r 's d a y -e n d p o s itio n m a n a g e m e n t; a) k ep t under c o n tro l, b) p re p a re d c) id e n tifie d d a te ; in t h e sam e o r d e r , a s t h e d e a l i n g s l i p s , a s to d a te o f p r e p a r a t i o n if d iffe re n t and fro m t r a n s a c t i o n A p r o c e d u r e u n d e r w h ic h c o n t r a c t c o n f i r m a t i o n s a r e s e n t a n d r e c e i v e d b y th e o p e r a tio n s s t a f f o n ly ( n o t th e t r a d i n g s t a f f ) and th e m a in te n a n c e o f a c o n f ir m a tio n e x c e p tio n lo g t h a t : a) r e c o r d s e v e r y e x c e p t i o n b e tw e e n a n in c o m in g c o n f i r m a t i o n a n d t h e b a n k 's own r e c o r d s r e g a r d l e s s o f d i s p o s i t i o n , a n d b) is r e v i e w e d a t l e a s t w e e k ly b y a n o p e r a t i o n s o f f i c e r , 8) A d a i l y r e c o n c ile m e n t o f th e d e a l e r 's p o s i t i o n s h e e ts w ith th e b ank t r a d i n g a n d f u n d i n g p o s i t i o n s a s r e c o r d e d i n Che g e n e r a l l e d g e r ; a n d 9) I n f o r m a tio n on a l l o v e r d r a f t c h a r g e s , b r o k e r a g e b i l l s , a u t h o r i z a t i o n s f o r p a y m e n ts w i t h i n t h e l a s t 12 m o n th s , a n d r e t e n t i o n o f a l l f o r e i g n e x c h a n g e t e l e x t a p e s f o r t h e p a s t 12 m o n th s . MINIMUM STANDARDS FOR THE AUDIT OF FOREIGN EXCHANGE AND MONEY MARKET ACTIVITES T he f o l l o w i n g m inim um p r o c e d u r a l a n d r e p o r t i n g s t a n d a r d s a r e a p p l i c a b l e t o a u d i t s o f f o r e i g n e x c h a n g e a n d m oney m a r k e t d e p a r t m e n t s b y b a n k i n t e r n a l a u d i t o r s . T he i n t e r n a l a u d i t o r s r e s p o n s i b l e f o r t h e a u d i t o f f o r e i g n e x c h a n g e a n d m oney m a r k e t a c t i v i t i e s s h o u l d r e p o r t t o t h e B o a rd o f D i r e c t o r s o r a c o m m itte e t h e r e o f . C o r r e s p o n d e n c e b e tw e e n t h e B o a rd a n d t h e a u d i t o r s s h o u l d i n d i c a t e t h a t t h e d i r e c t o r s a r e b e in g p r o p e r ly in fo rm e d o f t r a d i n g and fu n d in g a c t i v i t i e s . A u d it r e p o r t s a n d s u p p o r t i n g w o rk p a p e rs s h o u ld b e r e a d i l y a v a i l a b l e f o r r e v ie w by e x a m in a tio n p e r s o n n e l. C o p ie s o f a l l a u d i t r e p o r t s f o r s u b s i d i a r y an d b ra n c h f o r e ig n ex ch an g e d e p a rtm e n ts s h o u ld be a v a i l a b l e e i t h e r a t th e h ead o f f i c e o r a t an o f f i c e r e a d i l y a c c e s s i b l e to e x a m in a tio n p e r s o n n e l . The i n t e r n a l a u d i t o r 's r e p o r t a n d w o rk p a p e rs s h o u ld in c lu d e : 5 1) A re v ie w and c r i t i q u e s h o u ld i n d i c a t e e x c e p tio n s to a d e q u a te f o r th e n e e d s o f th e in c lu d e th e d e s c r ip tio n o f th e in g o r g a n i z a t i o n c h a r t s , flo w o f t h e b a n k 's a c c o u n t i n g m e m o ra n d a . T h is re v ie w th e p r e s c r ib e d p r o c e d u r e s and w h e th e r s t a f f i n g i s tra d in g o p e ra tio n s . The a u d i t w o rk p a p e rs s h o u ld a c c o u n tin g p ro c e s s p re p a re d by th e a u d ito r , in c lu d c h a r ts , and in te r n a l c o n tr o l q u e s tio n n a ir e s . 2) A re v ie w and a s s e s s m e n t o f th e i n t e r n a l c o n t r o l s in c o r p o r a te d i n t o th e a c c o u n tin g s y s te m a n d th e e f f e c t i v e n e s s o f t h e s e i n t e r n a l c o n t r o l s . E v e ry a u d i t s h o u ld in c lu d e an a p p r a i s a l o f i n t e r n a l c o n t r o l s . T he r e v i e w s h o u l d i n c l u d e a l i s t i n g o f a l l t h e i n t e r n a l c o n t r o l s i n c o r p o r a t e d i n t o t h e a c c o u n t i n g s y s te m and th e t e s t i n g u n d e rta k e n to e v a lu a te th e e f f e c t i v e n e s s o f th e s e c o n t r o l s . A u d i t o r s w i l l b e e x p e c t e d t o r e p o r t w h e r e a n y o f t h e m inim um i n t e r n a l c o n t r o l s l i s t e d a b o v e a r e n o t i n c o r p o r a t e d i n th e a c c o u n tin g s y s te m o r a r e n o t o p e ra tin g e f f e c tiv e ly . 3) T h e e x t e n t o f t h e a u d i t o r ' s s u b s t a n t i v e t e s t s o f a m o u n ts i n c l u d e d i n f i n a n c i a l s ta te m e n ts a s w e ll a s in r e p o r t s to s e n i o r m anagem ent and r e g u l a t o r y a g e n c ie s . 4) The a u d i t o r 's r e v ie w o f c o m p lia n c e b y t r a d i n g p o lic ie s and d i r e c tiv e s . s t a f f w ith t h e b a n k 's T h e a u d i t r e p o r t s o f p u b l i c a c c o u n t i n g f i r m s e n g a g e d t o a u d i t a b a n k 's f o r e i g n e x c h a n g e a c t i v i t i e s , an y m anagem ent l e t t e r s , a s w e ll a s th e sc o p e o f a u d i t , s h o u ld b e r e a d i l y a v a i l a b l e to e x a m in a tio n p e r s o n n e l. T h e s e d o c u m e n ts s h o u l d i n c l u d e a r e v i e w a n d a c r i t i q u e o f t h e b a n k 's f o r m a l a c c o u n t i n g i n s t r u c t i o n s f o r f o r e i g n ex ch an g e o p e r a t i o n s , e x c e p tio n s to p r e s c r ib e d p r o c e d u r e s , and th e a d e q u a c y o f p r e s c r ib e d p ro c e d u re s and s t a f f i n g . A p p ro v e d J u n e 7 , 1 9 7 9 By o r d e r o f t h e C o u n c i l . FEDERAL FINANCIAL INSTITUTIONS EXAMINATION COUNCIL ( S i g n e d ) L e w is G. Odom L e w is G. Odom E x e c u t i v e S e c r e t a r y ( A c t i n g)
@FedFRASER