View all text of Chapter 16 [§ 1811 - § 1835a]
§ 1831m. Early identification of needed improvements in financial management
(a) Annual report on financial condition and management
(1) Report required
(2) Contents of reportAny annual report required under paragraph (1) shall contain—
(A) the information required to be provided by—
(i) the institution’s management under subsection (b); and
(ii) an independent public accountant under subsections (c) and (d); and
(B) such other information as the Corporation and the appropriate Federal banking agency may determine to be necessary to assess the financial condition and management of the institution.
(3) Public availability
(b) Management responsibility for financial statements and internal controlsEach insured depository institution shall prepare—
(1) annual financial statements in accordance with generally accepted accounting principles and such other disclosure requirements as the Corporation and the appropriate Federal banking agency may prescribe; and
(2) a report signed by the chief executive officer and the chief accounting or financial officer of the institution which contains—
(A) a statement of the management’s responsibilities for—
(i) preparing financial statements;
(ii) establishing and maintaining an adequate internal control structure and procedures for financial reporting; and
(iii) complying with the laws and regulations relating to safety and soundness which are designated by the Corporation and the appropriate Federal banking agency; and
(B) an assessment, as of the end of the institution’s most recent fiscal year, of—
(i) the effectiveness of such internal control structure and procedures; and
(ii) the institution’s compliance with the laws and regulations relating to safety and soundness which are designated by the Corporation and the appropriate Federal banking agency.
(c) Internal control evaluation and reporting requirements for independent public accountants
(1) In general
(2) Attestation requirements
(d) Annual independent audits of financial statements
(1) Audits required
(2) Scope of auditIn connection with any audit under this subsection, the independent public accountant shall determine and report whether the financial statements of the institution—
(A) are presented fairly in accordance with generally accepted accounting principles; and
(B) comply with such other disclosure requirements as the Corporation and the appropriate Federal banking agency may prescribe.
(3) Requirements for insured subsidiaries of holding companies
(e) Repealed. Pub. L. 104–208, div. A, title II, § 2301(a), Sept. 30, 1996, 110 Stat. 3009–419
(f) Form and span of reports and auditing standards
(1) In general
(2) Consultation
(g) Improved accountability
(1) Independent audit committee
(A) Establishment
(B) Duties
(C) Criteria applicable to committees of large insured depository institutionsIn the case of each insured depository institution which the Corporation determines to be a large institution, the audit committee required by subparagraph (A) shall—
(i) include members with banking or related financial management expertise;
(ii) have access to the committee’s own outside counsel; and
(iii) not include any large customers of the institution.
(D) Exemption authority
(i) In general
(ii) Factors to be considered
(2) Review of quarterly reports of large insured depository institutions
(A) In general
(B) Report to audit committee
(C) Limitation on notice
(D) Notice to institution
(3) Qualifications of independent public accountants
(A) In generalAll audit services required by this section shall be performed only by an independent public accountant who—
(i) has agreed to provide related working papers, policies, and procedures to the Corporation, any appropriate Federal banking agency, and any State bank supervisor, if requested; and
(ii) has received a peer review that meets guidelines acceptable to the Corporation.
(B) Reports on peer reviews
(4) Enforcement actions
(A) In general
(B) Joint rulemaking
(5) Notice by accountant of termination of services
(h) Exchange of reports and information
(1) Report to the independent auditor
(A) In general
(B) Additional informationIn addition to the copies of the reports required to be provided under subparagraph (A), each insured depository institution shall provide the auditor with—
(i) a copy of any supervisory memorandum of understanding with such institution and any written agreement between such institution and any appropriate Federal banking agency or any appropriate State bank supervisor which is in effect during the period covered by the audit; and
(ii) a report of—(I) any action initiated or taken by the appropriate Federal banking agency or the Corporation during such period under subsection (a), (b), (c), (e), (g), (i), (s), or (t) of section 1818 of this title;(II) any action taken by any appropriate State bank supervisor under State law which is similar to any action referred to in subclause (I); or(III) any assessment of any civil money penalty under any other provision of law with respect to the institution or any institution-affiliated party.
(2) Reports to banking agencies
(A) Independent auditor reports
(B) Notice of change of auditor
(i) Requirements for insured subsidiaries of holding companies
(1) In generalExcept with respect to any audit requirements established under or pursuant to subsection (d), the requirements of this section may be satisfied for insured depository institutions that are subsidiaries of a holding company, if—
(A) services and functions comparable to those required under this section are provided at the holding company level; and
(B) the institution—
(i) has total assets, as of the beginning of such fiscal year, of less than $5,000,000,000; or
(ii) has—(I) total assets, as of the beginning of such fiscal year, of $5,000,000,000, or more; and(II) a CAMEL composite rating of 1 or 2 under the Uniform Financial Institutions Rating System (or an equivalent rating by any such agency under a comparable rating system) as of the most recent examination of such institution by the Corporation or the appropriate Federal banking agency.
(2) Large institutions
(3) Applicability based on risk to fund
(j) Exemption for small depository institutionsThis section shall not apply with respect to any fiscal year of any insured depository institution the total assets of which, as of the beginning of such fiscal year, are less than the greater of—
(1) $150,000,000; or
(2) such amount (in excess of $150,000,000) as the Corporation may prescribe by regulation.
(Sept. 21, 1950, ch. 967, § 2[36], as added Pub. L. 102–242, title I, § 112(a), Dec. 19, 1991, 105 Stat. 2242; amended Pub. L. 102–550, title XVI, § 1603(b)(3), Oct. 28, 1992, 106 Stat. 4079; Pub. L. 103–325, title III, § 314, Sept. 23, 1994, 108 Stat. 2221; Pub. L. 104–208, div. A, title II, §§ 2301, 2704(d)(14)(Z), Sept. 30, 1996, 110 Stat. 3009–419, 3009–494; Pub. L. 109–171, title II, § 2102(b), Feb. 8, 2006, 120 Stat. 9; Pub. L. 109–173, § 8(a)(34), Feb. 15, 2006, 119 Stat. 3615.)