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IIA – DC Chapter Event

IIA – DC Chapter Event. Regulations and Audit March 26, 2014 Kathy Murphy OCC Deputy Comptroller & Chief Accountant Paula Johnson OCC Operational Risk and Core Policy Analyst. Agenda. Increased Focus on Audit 2013 Regulatory Highlights On the Horizon. Regulations & Audit.

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IIA – DC Chapter Event

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  1. IIA – DC Chapter Event Regulations and AuditMarch 26, 2014Kathy Murphy OCC Deputy Comptroller & Chief AccountantPaula JohnsonOCC Operational Risk and Core Policy Analyst

  2. Agenda • Increased Focus on Audit • 2013 Regulatory Highlights • On the Horizon

  3. Regulations & Audit Increased Focus on Audit • Reliance as 3rd line of defense • Multiple Regulators • Evolving Rules & Regulations • Effective Audit

  4. Increased Focus on Audit Supervisory Attention on Overlapping Areas of Concern Audit Compliance Mgt CRA/Fair Lending Audit Capital Planning Compensation Ops Risk Mang Enterprise Risk Mang 4

  5. Increased Focus on Audit Evolving Rules and Regulations

  6. Increased Focus on Audit Heightened Expectation themes • Accountability / Effective Challenge • Stature/Independence • Competence/Talent • Scope and Frequency

  7. Increased Focus on Audit Effective Audit Characteristics • Robust Board and Audit Committee (Committee) engagement/oversight • Strong audit management • Highly effective audit processes • Highly effective audit reporting • Competent internal audit staff

  8. Regulations & Audit Regulatory Highlights • Overview • OCC Accounting Policy • OCC Operational Risk & Core Policy

  9. Regulatory Highlights Overview

  10. Regulatory Highlights Accounting • 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)

  11. Regulatory Highlights Accounting Volcker Rule & OTTI Accounting BAAS

  12. Regulatory Highlights Overview

  13. Regulations & Audit On The Horizon • OCC Accounting Policy • OCC Operational Risk & Core Policy

  14. On The Horizon Accounting • 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

  15. On The Horizon Accounting • 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

  16. On 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

  17. On the Horizon Internal & 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

  18. Summary Midsize Bank Audit Roundtable 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?

  19. IIA – DC Chapter Event Regulations and AuditMarch 24, 2014Kathy Murphy OCC Deputy Comptroller & Chief AccountantPaula JohnsonOCC Operational Risk and Core Policy Analyst

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