On March 6, 2019, the FFIEC issued a joint statement to promote consistency, clarify and ease of reference for the presentation of information in examination reports. The FFIEC has been working on an Examination Modernization Project - which is aimed at reducing unnecessary regulatory burden on community financial institutions - and this policy statement is aimed to provide consistency upon exam agencies in regards to the structure of examination reports.
Background on Current Report of Examination Guidelines
The three-page report explains that the agencies recognize that reports of examination should evolve to address changes to the financial institution supervision process, advances in technology, changes in the banking industry, and industry feedback. This policy statement rescinds and replaces the prior policy statement - from 1993. The 1993 policy statement provided three categories of report of examination pages:
Mandatory core section to document examination conclusions;
Optional core pages to support examination findings; and
Supplemental content to include additional information as needed or required by a particular agency.
New Report of Examination Principles
The regulatory agencies have agreed to a set of “principles” that should apply to all reports of examination. These new “principles” set for the “minimum expectations of what should be included” in a report of examination.
According to the policy statement, each report of examination should include the following principles, as applicable:
include the following identifying information:
the name of the agency or agencies issuing the ROE,
the financial institution’s name, location, and the identifier number assigned by the issuing agency, and
the time period covered by the ROE or a financial “as of” date.
convey that the ROE contains confidential supervisory information and should be treated as such.
present conclusions and issues in order of importance.
document the financial institution’s condition and risk profile.
include the assigned regulatory component and composite ratings.
provide clear narrative and key data to support assigned ratings and other conclusions with a level of detail consistent with the assigned rating or level of concern. Narrative should generally be brief for 1- and 2-rated components and increase in detail for 3-, 4-, and 5-rated components.
discuss the adequacy of the financial institution’s risk management practices.
document issues of supervisory concern or warranting corrective action prominently, including,
noncompliance with laws or regulations,
the status of compliance with outstanding enforcement actions, and
the status of issues of supervisory concern or warranting corrective action communicated in the prior ROE.
request signatures of the board of directors to acknowledge their receipt and review of the ROE.
The full FFIEC statement can be found here.