BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM WASHINGTON, D. C.  20551 DIVISION OF BANKING SUPERVISION AND REGULATION SR 92-28 (FIS) July 24, 1992 TO THE OFFICER IN CHARGE OF SUPERVISION           AT EACH FEDERAL RESERVE BANK SUBJECT: Interagency Guidance on Coordination and Communication Between External Auditors and Examiners                         The Federal Reserve and the other federal bank and thrift regulatory agencies have issued an interagency policy statement on coordination and communication between external auditors and examiners which is effective immediately.   The 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.   While 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 provide similar information to their external auditors and to make similar arrangements regarding auditor attendance at meetings with examiners.                         The policy statement addresses external auditor attendance at two broad categories of meetings between examiners and institutions:   The policy statement generally encourages 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., meetings that do not involve examination findings or that are not relevant to the scope of the external auditor's work), the institution must first obtain the approval of the appropriate agency in order for the auditor to attend these meetings.   With regard to the latter category of meetings, each Officer in Charge of Supervision should establish a process for reviewing and acting on requests by banking organizations for external auditor attendance at such meetings.  In the vast majority of cases, such requests could be reviewed and approved by the examiner-in-charge. In addition, appropriate documentation should be maintained on meetings between external auditors and examiners, including coordinated meetings between representatives of the federal bank and thrift regulatory agencies and an institution's auditors.                         This policy does not preclude the Reserve Bank from holding meetings with the management of banking organizations without auditor attendance or from requiring that the auditor attend only certain portions of the meetings.  Furthermore, the policy statement specifically reiterates the requirement that institutions and their external auditors maintain the confidentiality of supervisory information.                         A copy of this policy statement should be given immediately to each official and examiner involved in the supervision of state member banks, bank holding companies, and U.S. branches and agencies of foreign banks.  In addition, a copy of this guidance should be sent to the chief executive officer of each state member bank and bank holding company, and to the officer in charge of U.S. branches and agencies of each foreign bank examined by your district. Stephen C. Schemering Deputy Director ONE ATTACHMENT TRANSMITTED ELECTRONICALLY BELOW Policy Statement can be obtained from Federal Reserve Bank [To the Chief Executive Officer of each state member bank and bank holding company, and the officer in charge of each branch and agency of foreign bank examined by the Federal Reserve]                         The Federal Reserve and the other federal bank and thrift regulatory agencies have issued an interagency policy statement on coordination and communication between external auditors and examiners which is effective immediately.   The 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.   A copy of this interagency policy statement is enclosed.                         While 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 provide similar information to their external auditors and to make similar arrangements regarding auditor attendance at meetings with examiners.                         Consistent with the interagency policy statement, banking organizations and their external auditors are reminded to maintain the confidentiality of examination reports, inspection reports, and supervisory discussions. Enclosure

SR letters | 1992