Saturday, December 16, 2017

Policy Changes Required – Do you Wait until Annual Approval?

Posted by Sharon September 19, 2013 5:23pm

Photo Credit: 4seasons

Let’s say a team of BSA internal auditors come in and audit your Bank.  At the conclusion of the audit, an internal audit report is issued to the Bank’s audit committee with a recommendation for changes to the BSA policy.  Management indicates in their response to the audit report that they agree with the recommended changes and will update the policy accordingly. 

Now come the questions..

  • Should management have a set timeframe for which to update the policy
  • Being that the BSA Policy is approved annually, is it permissible for management to wait for the next annual approval date to submit the recommended changes to the Board?
  • Should it be dependent on the nature of the changes and the risk they pose to the Bank?
  • Should they be implemented later rather than sooner? 
  • Would the timeframe for policy revision and approval from the Board be any different if the recommendation came from the regulators?

I have seen the answers on this topic go both ways.  It has always been my personal opinion that if auditors and/or regulators make recommendations to revise a particular policy it would be in the best interest of the Bank to implement such revisions as soon as possible and submit to the Board for approval.  I am sure that your Bank has a tracking mechanism in place to track audit recommendations from both internal auditors and regulators (either electronically or by way of excel spreadsheet) which details the issue, the recommendation, management’s response, the responsible person, and a target date for completion.  And I suppose that the audit committee is responsible for reviewing this tracking report on a regular basis and ensuring that the recommendations are implemented by the target dates.  I also suppose, that the audit committee will be the ones to decide whether the target dates appear reasonable and to change the target dates as they see fit.

All this being said, when policy changes are required, do you implement immediately or do you wait for annual approval of the policy?  What are your comments or opinions on this matter?

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Sharon Geiger

Quality Control Specialist

Sharon Geiger, Quality Control Specialist Sharon has 27 years banking experience, 21 of which have been involved in internal audit. She has extensive knowledge of all aspects of the banking industry, with a particular emphasis on regulatory compliance and identifying risks and controls. As QCR Specialist, she performs Quality Control Reviews to ensure all workpapers and reports are completed in compliance with the firm's standards.



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