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Regulations and AuditMarch 26, 2014
Kathy Murphy Kathy Murphy OCC Deputy Comptroller & Chief Accountant
Paula JohnsonPaula JohnsonOCC Operational Risk and Core Policy Analyst
Regulations and AuditMarch 26, 2014
Kathy Murphy Kathy Murphy OCC Deputy Comptroller & Chief Accountant
Paula JohnsonPaula JohnsonOCC Operational Risk and Core Policy Analyst
IIA – DC Chapter Event
AgendaAgenda
• Increased Focus on Audit
• 2013 Regulatory Highlights
• On the Horizon
Regulations & Audit
• Reliance as 3rd line of defense
• Multiple Regulators• Evolving Rules &
Regulations • Effective Audit
Increased Focus on Audit
Increased Focus on Audit
Audit Capital PlanningCompensationOps Risk Mang
Enterprise Risk Mang
4
AuditCompliance
MgtCRA/Fair Lending
SUPERVISORY ATTENTION ON OVERLAPPING AREAS OF CONCERN
Increased Focus on Audit
EVOLVING RULES AND REGULATIONS
• Accountability / Effective Challenge
• Stature/Independence
• Competence/Talent
• Scope and Frequency
Increased Focus on Audit
HEIGHTENED EXPECTATION THEMES
• Robust Board and Audit Committee (Committee) engagement/oversight
• Strong audit management
• Highly effective audit processes
• Highly effective audit reporting
• Competent internal audit staff
Increased Focus on Audit
EFFECTIVE AUDIT CHARACTERISTICS
Regulatory Highlights
• Overview • OCC Accounting Policy• OCC Operational Risk &
Core Policy
Regulations & Audit
OVERVIEW
Regulatory Highlights
Regulatory HighlightsRegulatory Highlights
• Selected Bulletins• 2014-4: Clarification of the OCC’s expectations regarding
secured consumer debt discharged in Chapter 7 bankruptcy proceedings
• 2014-2: Mortgage Banking Comptroller Handbook• 2013-26: Interagency Supervisory Guidance Addressing
Certain Issues Related to Troubled Debt Restructurings • 2013-23: Regulatory Capital Rule (Basel III)• 2013-20: OREO Comptroller Handbook
• Bulletins can be obtained from OCC.gov (left side of the screen under key resources)
10
ACCOUNTING
Regulatory HighlightsRegulatory Highlights
• Volcker Rule & OTTI Accounting• BAAS
11
ACCOUNTING
OVERVIEW
Regulatory Highlights
On The Horizon
• OCC Accounting Policy• OCC Operational Risk &
Core Policy
Regulations & Audit
On The HorizonOn The Horizon
• Policy Pipeline• Basel Committee on Banking Supervision - External Audit
Document• ALLL Comptroller Handbook
• Hot Topics• Appropriateness of the ALLL and Accrual Status • HELOC “End of Draw”• Sales/Creation of Mortgage Servicing Rights (MSRs)• Appraisals• Valuation, including funding valuation adjustments• New capital rule and other regulation changes
14
ACCOUNTING
On The HorizonOn The Horizon
• FASB Developments• Classification and Measurement• Current Expected Credit Losses (CECL) • Leases• EITF Matters (e.g., OREO, Foreclosed FHA Guaranteed
Loans)• Private Company Council
• Changes to PCAOB Auditing Standards• Auditor’s Report • Auditor’s Responsibilities Regarding Other Information and
Related Amendments
15
ACCOUNTING
On the HorizonOn the Horizon
• Updating the Audit Booklet in the Comptroller Handbook• Risk Governance Framework Standards for Complex Banks –
New Appendix to Part 12CFR30 • Updating the Internal Controls Booklet in the Comptroller
Handbook• Updating The Director’s Book
16
Internal & External Audit BookletInternal & External Audit Booklet• Board and Management Oversight * • Audit Programs (types of audits) • Internal Audit Function (Oversight & structure) * - Independence
and Competence *• Co-sourcing & outsourcing * • External Audit - Board & Committee Oversight, External audit
opinions* • Annual 12CFR363 reporting *• Internal Audit Program - Audit Universe * , Audit Work Programs,
Sampling Methods & Techniques * , Risk Scoring Methodology *, Follow-up Activities *, Professional Development Program*
• Quality Assurance Program* • Continuous Auditing *• Reliance on Assurance Providers * - External & Internal assurance
reports , Audit planning impact
17
On the HorizonOn the Horizon
• Increased Focus on Audit – rules and guidance, regulators, Heightened expectations themes, and effective audit elements
• 2013 Regulatory Highlights – accounting and operational risk/core policy highlights
• On the Horizon - Handbook updates
Questions?
Midsize Bank Audit Roundtable
SummarySummary
Regulations and AuditMarch 24, 2014
Kathy Murphy Kathy Murphy OCC Deputy Comptroller & Chief Accountant
Paula JohnsonPaula JohnsonOCC Operational Risk and Core Policy Analyst
Regulations and AuditMarch 24, 2014
Kathy Murphy Kathy Murphy OCC Deputy Comptroller & Chief Accountant
Paula JohnsonPaula JohnsonOCC Operational Risk and Core Policy Analyst
IIA – DC Chapter Event