Examination Handbook 350, External Audit, July 2002

Management Section 350 External Audit Accurate financial reporting is essential to an institution’s safety and soundness. The board of directors and the audit committee are responsible for ensuring that their institution operates in a safe and sound manner. To achieve this goal and meet the safety and soundness guidelines implementing Section 39 of the Federal Deposit Insurance Act (FDI Act) (12 USCS 1831p-1) (see 12 CFR 510), the board of directors should ensure that their institution maintains effective internal controls (see Handbook Sections 340, Internal Control, and 355, Internal Audit). Management is responsible for effectively managing the institution’s risks and making sound business decisions. They should also ensure that the financial LINKS statements fairly report the savings association’s financial condition, results of Program operations, and cash flows, and that the institution prepares its financial statements in accordance with generally accepted accounting principles (GAAP). Appendix A Appendix B Savings institutions must provide accurate and timely Thrift Financial Reports by Appendix C law (12 USC 1464(v)). These reports serve an important role in risk-focused Appendix D supervision programs, by contributing to pre-examination planning, off-site monitoring programs, and assessments of an institution’s capital adequacy and Appendix E financial strength. The OTS encourages all institutions to have an external audit. Some ...