Removal, Suspension, and Debarment of Accountants From Performing Audit Services - District Notice

ll★KFederal Reserve Bank of Dallas2200 N. PEARL ST.DALLAS, TX 75201-2272August 21, 2003Notice 03-45TO: The Chief Executive Officer of eachfinancial institution and others concernedin the Eleventh Federal Reserve DistrictSUBJECTRemoval, Suspension, and Debarment ofAccountants From Performing Audit ServicesDETAILSThe four federal bank and thrift regulatory agencies are jointly publishing final rules,effective October 1, 2003, pursuant to section 36 of the Federal Deposit Insurance Act (FDIA).Section 36, as implemented by 12 CFR part 363, requires that each insured depository institutionwith total assets of $500 million or more obtain an audit of its financial statements and anattestation on management’s assertions concerning internal controls over financial reporting byan independent public accountant. The insured depository institution must include theaccountant’s audit and attestation reports in its annual report.Section 36 authorizes the agencies to remove, suspend, or debar accountants fromperforming the audit services required by section 36 if there is good cause to do so. The finalrules establish rules of practice and procedure to implement this authority and reflect theagencies’ increasing concern with the quality of audits and internal controls for financialreporting at insured depository institutions. Although there have been few bank and thriftfailures in recent years, the circumstances of the failures that have occurred illustrate ...