Harroun PC
Client Login  
 
ok
forgot password
News
12.03.2018
Compliance: FFIEC Issues Update to Exam Modernization Project
The Federal Financial Institutions Examination Council (FFIEC) released its second update on its Examination Modernization Project this week, following one from March of this year. According to the FFIEC, further action and additional updates may be needed as the project progresses.

The most recent update provides common risk tailoring principles and practices used by federal regulators, NCUA, Federal Reserve Board, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency, as well as FFIEC’s State Liaison Committee when risk tailoring examinations.

Common risk tailoring principles and practices include:

• Recognizing there are financial institutions, or areas within institutions, that present low risk, and in those cases, minimum examination procedures are generally sufficient to assess the institution’s condition and risks;

• Allocating more examination resources to higher risk areas and fewer resources to lower risk areas;

• Using data from the quarterly Call Report filings to monitor changes to the institution’s business model, complexity and risk profile between examinations;

• Leveraging available information, including analyses and conclusions from ongoing offsite monitoring and previous examinations to determine the financial institution’s risk profile and the scope of the next examination;

• Considering the financial institution’s ability to identify and control risks when risk-focusing examinations;

• Tailoring the pre-examination request list to the institution’s business model, complexity and risk profile;

• Contacting institutions between examinations or prior to finalizing the scope of the examination to help inform an examiner’s assessment of an institution’s risk profile; and

• Following up between examinations on institutions’ actions taken to address areas in need of improvement.

Federal and state regulators will clarify if needed, any issued guidance with examination staff. At the beginning of the examination, examiners should reach out to the credit union’s management to discuss the examination plan and rationale for the tailored risk focus areas.

Based on the principles of the Examination Modernization Project examiners, if they haven’t done so already, will:

• Consider the unique risk profile, complexity and business model of the institution when developing an examination plan;

• Analyze existing information such as Call Report data, publicly available information, and confidential supervisory information to help identify areas of higher and lower risk when planning examinations;

• Monitor financial institutions between examinations;

• Tailor the document request list based on the financial institution’s business model, complexity, risk profile and planned scope of review;

• Apply examination procedures in a way that reduces the level of review of low risk institutions or low risk areas; and

• Discuss financial conditions, risk profiles, new or expanded business lines, and pertinent new supervisory or regulatory information with institution management prior to finalizing the scope of review.

In addition to CompBlog, CUNA’s Compliance Community contains discussion boards and a number of other resources for credit union compliance professionals around the country.

Copyright 2018. CUNA Daily News . (link)
©2007 - 2018 Harroun P.C. · All rights reserved. · Designed and Hosted by Custom Web Concepts.