FDIC Reduces Burden of Independent Audits and Reporting Requirements

In an effort to reduce regulatory burden and compliance and audit costs for some insured depositories, including a number of mutual institutions, the Federal Deposit Insurance Corp (FDIC) has amended its regulations concerning annual independent audits and reporting requirements. The FDIC has raised the threshold by which insured depository institutions are required to have internal control assessments by management and external auditors. The FDIC has left in place the requirement that institutions with $500 million in assets must have an external audit. The changes are intended to reduce regulatory burden for those private and mutual institutions between $500 million in assets and $1 billion in assets that are not required to comply with Section 404 of Sarbanes-Oxley. The amendments to the regulation will make some difference in the regulatory burden and compliance costs, but management and boards of mutual institutions should not expect a roll back of all scrutiny.