A Supplemental Audit Report on the Department of Banking
November 2009
Report Number 10-012
Overall Conclusion
With respect to its examinations of state-chartered commercial banks for which the Federal Deposit Insurance Corporation (FDIC) is the federal oversight entity, the Department of Banking (Department) complies with applicable statutes, administrative rules, and Department policies in (1) monitoring the safety and soundness of those banks and (2) providing sufficient oversight of commercial banks identified as having a poor or deteriorating financial condition. Auditors also concluded that the Department's off-site monitoring tools were effective. However, auditors identified opportunities for the Department to strengthen controls in areas such as:
- Ensuring that it includes all issues identified during an examination in the examination report or documents the reasons it did not include these issues in the examination report.
- Completing all examination procedures and ratings.
- Processing examination reports in a timely manner. For example, the Department did not process 15 (50.0 percent) of 30 examinations tested within the required time frames.
- Contacting banks within required time frames between examinations.
This audit report is the result of the continuation of a prior State Auditor's Office audit conducted at the Department from March 2009 to May 2009 (see An Audit Report on the Department of Banking, State Auditor's Office Report No. 09-043, July 2009). The July 2009 audit report included information regarding an audit scope limitation because the FDIC had not permitted the State Auditor's Office to access information necessary to address the objectives of the audit. After that audit report was published, the FDIC granted conditional access to certain records in August 2009 (see Appendix 2 for the FDIC's letter). This audit report covers only the audit work performed after the receipt of the conditional access to examinations of commercial banks for which the FDIC is the federal oversight entity.
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