12 U.S.C. § 1831m
Early identification of needed improvements in financial management
Each insured depository institution shall submit an annual report to the Corporation, the appropriate Federal banking agency, and any appropriate State bank supervisor (including any State bank supervisor of a host State).
Any annual report required under paragraph (1) shall be available for public inspection. Notwithstanding the preceding sentence, the Corporation and the appropriate Federal banking agencies may designate certain information as privileged and confidential and not available to the public.
With respect to any internal control report required by subsection (b)(2) of any institution, the institution’s independent public accountant shall attest to, and report separately on, the assertions of the institution’s management contained in such report.
Any attestation pursuant to paragraph (1) shall be made in accordance with generally accepted standards for attestation engagements.
The Corporation, in consultation with the appropriate Federal banking agencies, shall prescribe regulations requiring that each insured depository institution shall have an annual independent audit made of the institution’s financial statements by an independent public accountant in accordance with generally accepted auditing standards and section 1831n of this title.
The requirements for an independent audit under this subsection may be satisfied for insured depository institutions that are subsidiaries of a holding company by an independent audit of the holding company.
The scope of each report by an independent public accountant pursuant to this section, and the procedures followed in preparing such report, shall meet or exceed the scope and procedures required by generally accepted auditing standards and other applicable standards recognized by the Corporation.
The Corporation shall consult with the other appropriate Federal banking agencies in implementing this subsection.
Each insured depository institution (to which this section applies) shall have an independent audit committee entirely made up of outside directors who are independent of management of the institution, except as provided in subparagraph (D), and who satisfy any specific requirements the Corporation may establish.
An independent audit committee’s duties shall include reviewing with management and the independent public accountant the basis for the reports issued under subsections (b)(2), (c), and (d).
An appropriate Federal banking agency may, by order or regulation, permit the independent audit committee of an insured depository institution to be made up of less than all, but no fewer than a majority of, outside directors, if the agency determines that the institution has encountered hardships in retaining and recruiting a sufficient number of competent outside directors to serve on the internal audit committee of the institution.
In determining whether an insured depository institution has encountered hardships referred to in clause (i), the appropriate Federal banking agency shall consider factors such as the size of the institution, and whether the institution has made a good faith effort to elect or name additional competent outside directors to the board of directors of the institution who may serve on the internal audit committee.
In the case of any insured depository institution which the Corporation has determined to be a large institution, the Corporation may require the independent public accountant retained by such institution to perform reviews of the institution’s quarterly financial reports in accordance with procedures agreed upon by the Corporation.
The independent public accountant referred to in subparagraph (A) shall provide the audit committee of the insured depository institution with reports on the reviews under such subparagraph and the audit committee shall provide such reports to the Corporation, any appropriate Federal banking agency, and any appropriate State bank supervisor.
Reports provided under subparagraph (B) shall be only for the information and use of the insured depository institution, the Corporation, any appropriate Federal banking agency, and any State bank supervisor that received the report.
The Corporation shall promptly notify an insured depository institution, in writing, of a determination pursuant to subparagraph (A) to require a review of such institution’s quarterly financial reports.
Reports on peer reviews shall be filed with the Corporation and made available for public inspection.
In addition to any authority contained in section 1818 of this title, the Corporation or an appropriate Federal banking agency may remove, suspend, or bar an independent public accountant, upon a showing of good cause, from performing audit services required by this section.
The appropriate Federal banking agencies shall jointly issue rules of practice to implement this paragraph.
Any independent public accountant performing an audit under this section who subsequently ceases to be the accountant for the institution shall promptly notify the Corporation and each appropriate Federal banking agency pursuant to such rules as the Corporation and each appropriate Federal banking agency shall prescribe.
Each insured depository institution which has engaged the services of an independent auditor to audit such institution shall transmit to the auditor a copy of the most recent report of condition made by the institution (pursuant to this chapter or any other provision of law) and a copy of the most recent report of examination received by the institution.
Each insured depository institution shall provide to the Corporation, any appropriate Federal banking agency, and any appropriate State bank supervisor, a copy of each audit report and any qualification to such report, any management letter, and any other report within 15 days of receipt of any such report, qualification, or letter from the institution’s independent auditors.
Each insured depository institution shall provide written notification to the Corporation, the appropriate Federal banking agency, and any appropriate State bank supervisor of the resignation or dismissal of the institution’s independent auditor or the engagement of a new independent auditor by the institution, including a statement of the reasons for such change within 15 calendar days of the occurrence of the event.
For purposes of this subsection, in the case of an insured depository institution described in paragraph (1)(B)(ii) that the Corporation determines to be a large institution, the audit committee of the holding company of such an institution shall not include any large customers of the institution.
The appropriate Federal banking agency may require an institution with total assets in excess of $9,000,000,000 to comply with this section, notwithstanding the exemption provided by this subsection, if it determines that such exemption would create a significant risk to the Deposit Insurance Fund if applied to that institution.
2006—Subsec. (i)(3). Pub. L. 109–173 substituted “Deposit Insurance Fund” for “affected deposit insurance fund”.
Pub. L. 109–171 repealed Pub. L. 104–208, § 2704(d)(14)(Z). See 1996 Amendment note below.
1996—Subsec. (a)(3). Pub. L. 104–208, § 2301(c), inserted at end “Notwithstanding the preceding sentence, the Corporation and the appropriate Federal banking agencies may designate certain information as privileged and confidential and not available to the public.”
Subsec. (e). Pub. L. 104–208, § 2301(a), inserted “[Repealed]” and struck out heading and text of subsec. (e). Text read as follows:
“(1)
“(2)
Subsec. (g)(1)(A). Pub. L. 104–208, § 2301(b)(1), inserted “, except as provided in subparagraph (D)” after “management of the institution”.
Subsec. (g)(1)(D). Pub. L. 104–208, § 2301(b)(2), added subpar. (D).
Subsec. (i)(3). Pub. L. 104–208, § 2704(d)(14)(Z), which directed substitution of “Deposit Insurance Fund” for “affected deposit insurance fund”, was repealed by Pub. L. 109–171. See Effective Date of 1996 Amendment note below and 2006 Amendment note above.
1994—Subsec. (g)(2)(D). Pub. L. 103–325, § 314(b), added subpar. (D).
Subsec. (i). Pub. L. 103–325, § 314(a), inserted par. (1) designation and heading before “Except with respect to”, redesignated former par. (1) as subpar. (A) of par. (1), added subpar. (B) of par. (1) and pars. (2) and (3), and struck out former par. (2) which read as follows: “either—
“(A) the institution has total assets, as of the beginning of such fiscal year, of less than $5,000,000,000; or
“(B) the institution—
“(i) has total assets, as of the beginning of such fiscal year, of more than $5,000,000,000 and less than $9,000,000,000; and
“(ii) has 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.”
1992—Subsec. (b)(2)(A)(iii). Pub. L. 102–550, § 1603(b)(3)(A), substituted “Corporation and” for “Corporation or”.
Subsec. (g)(3)(A)(i). Pub. L. 102–550, § 1603(b)(3)(B), substituted “any appropriate” for “an appropriate”.
Subsec. (g)(5). Pub. L. 102–550, § 1603(b)(3)(C), inserted “and each appropriate Federal banking agency” after “Corporation” in two places.
Amendment by Pub. L. 109–173 effective
Amendment by Pub. L. 109–171 effective no later than the first day of the first calendar quarter that begins after the end of the 90-day period beginning
Amendment by section 2704(d)(14)(Z) of Pub. L. 104–208 effective
Amendment by Pub. L. 102–550 effective as if included in the Federal Deposit Insurance Corporation Improvement Act of 1991, Pub. L. 102–242, as of
Pub. L. 102–242, title I, § 112(c), formerly § 112(b),