In 1991, the Federal Deposit Insurance Corporation passed the Federal Deposit Insurance Corporation Improvement Act of 1991 (FDICIA) in an effort to strengthen the banking environment and reduce the negative impacts of the savings and loan crisis of the 1980s and early 1990s. FDICIA remains in effect today and continues to have an impact on the operations and regulatory requirements of banks with $500 million or more in total assets (i.e., covered institutions). Covered institutions are required to submit audited, comparative financial statements as part of an annual reporting package. While the financial statements are required to be comparative, for those covered institutions that have just met the total assets threshold of $500 million or more and that have not had prior audit requirements, Part 363 allows for the prior period to be unaudited in the first year of FDICIA reporting. This reporting package also should include a management report, and for covered institutions with $1 billion or more in total assets, an independent auditor’s report on internal controls over financing reporting. In addition, FDICIA has specific requirements relating to auditor independence and the composition and responsibilities of the audit committee.
Preparation is critical to success in FDICIA compliance. The best advice may be to begin acting like a FDICIA covered institution before the provisions are effective. To help understand what it means to act like a FDICIA covered institution, we have prepared a white paper, FDICIA readiness: What you need to know and next steps, which includes:
- A summary of the key provisions of FDICIA that affect the banking industry
- Information about the annual reporting package required by FDICIA
- A summary of FDICIA’s audit committee requirements
- The key components of FDICIA readiness
Refer to the white paper for additional information, including how RSM can help with initial FDICIA compliance efforts.