ABA Dodd-Frank Tracker

FDIC Adopts Supervisory Guidance on Model Risk Management

2017-06-08T11:30:00.000-04:00

The FDIC announced that it is adopting the supervisory guidance on managing “model risk” that was previously issued by the Federal Reserve and the OCC in 2011. The guidance addresses the potential for damage when models play a material role in bank decision-making. The FDIC said the guidance is “not expected” to apply to banks with less than $1 billion in assets unless “the institution’s model use is significant, complex or poses elevated risk to the institution.”

The guidance describes risk management practices related to model use, including effectively challenging models through model validation, strong governance, internal audit coverage and clear internal policies and documentation. It also addresses how to incorporate third-party vendor models into the institution’s overall risk management framework, and it advises banks to watch for whether model use can increase consumer compliance or fair lending risk.

ABA offers numerous resources for bankers managing model risk. For example, ABA’s Regulatory Compliance Conference, which opens this weekend in Orlando, Fla., features sessions on model risk. On June 21, ABA will host a webinar on managing model risks in dynamic markets.

Read the FDIC statement.
Read the supervisory guidance.
Register for the ABA webinar.

OCC Addresses Bank Collaboration, Fintech in Vendor Risk FAQs

2017-06-08T11:03:00.000-04:00

Responding to several questions flagged by ABA, the OCC issued a set of frequently asked questions to help bankers implement the agency’s 2013 guidance on managing risk associated with third-party relationships. The FAQs address several areas on which ABA sought clarification related to the guidance, including collaboration with other banks and partnerships with fintech providers.

For example, while noting that banks that use the same vendors for like products and services can collaborate on due diligence, contract negotiation and ongoing monitoring, the OCC said that this collaboration is “insufficient to fully meet the bank’s responsibilities” under the guidance. Responsibilities specific to individual banks include requirements for planning and termination, integration into the bank’s strategic planning, risk assessments, IT controls, performance benchmarking, fee structure analysis and monitoring for compliance and business continuity.

The FAQs make clear that relationships with fintech firms are covered under the 2013 guidance, although they may or may not qualify as a “critical activity” requiring “more comprehensive and rigorous management.” However, since many fintech companies may be early-stage startups without the kind of financial track record that would ordinarily be reviewed in a vendor relationship, the FAQs indicate that a bank partnering with such a company should have appropriate contingency plans. They make clear that while financial analysis of vendors “may be as comprehensive” as underwriting for a loan, there is no requirement for potential vendors to meet banks’ lending criteria.

The FAQs also address access to technology service providers’ regulatory exam reports (another issue raised by ABA), marketplace lending, mobile payments, partnering with fintech firms to serve the underbanked, reviews of fourth-party risk and more.

Read the FAQs.

Fed, FDIC Issue FAQs on Large Bank Resolution Plans

2017-05-08T09:41:00.000-04:00

The Federal Reserve and the FDIC have published the answers to frequently asked questions about guidance issued last year on the resolution plans that the nation’s eight largest banks are required to submit detailing how they would be wound down in the event of bankruptcy.

The FAQs address capital and liquidity requirements and forecasting, governance mechanisms, management of critical third-party vendors and other operational issues, derivatives and trading activities, legal entity rationalization and other general and legal matters related to the resolution planning process.

Read the FAQs.

Regulators Clear Living Wills for Regional, Card Banks

2017-03-27T10:20:00.000-04:00

The FDIC and Federal Reserve have announced that they had reviewed resolution plans submitted in December 2015 by 16 regional and credit card banks and that none were found “not credible” or inadequate to facilitate an orderly resolution under the Bankruptcy Code, the statutory standard under the Dodd-Frank Act.

So-called living wills submitted for fifteen of the banking firms – American Express, Ally Financial, BB&T, Capital One, Comerica, Discover, Fifth Third, Huntington, KeyCorp, M&T Bank, PNC, Regions, SunTrust, U.S. Bancorp and Zions Bancorporation – had no shortcomings, according to regulators. As a result, these institutions will be able to submit less information as part of the resolution plans due in December 2017. The agencies identified shortcomings in the plan submitted by Northern Trust Corporation that the company must address in its next filing.

Meanwhile, the agencies provided feedback to the U.S. affiliates of four overseas banking firms – Barclays, Credit Suisse, Deutsche Bank and UBS – to address vulnerabilities associated with governance, capital and liquidity. All four have “significantly restructur[ed]” their U.S. operations to comply with Dodd-Frank, the agencies said. The four firms will have until July 2018 to submit revised living wills.

The resolution plan process – which applies to U.S. bank holding companies with assets of more than $50 billion, nonbanks designated as systemically important by the Financial Stability Oversight Council and large foreign banks with U.S. operations – requires these large institutions to describe their strategy for a rapid and orderly wind-down in the event of stress. Planning requirements are tiered based on a firm’s level of complexity.

Read more.

ABA Supports Consistency, Oversight in Proposed Fintech Charter

2017-01-18T09:45:00.000-05:00

ABA has offered its support for the OCC’s proposal to grant special-purpose national bank charters to fintech firms, as long as existing rules are applied evenly and fairly and with effective oversight. In a comment letter, ABA recognized the OCC’s efforts to facilitate responsible innovation within the banking system, emphasizing that the implementation of the new charter will be critical to ensuring a level playing field for banks and fintech companies. “The OCC must ensure that the appropriate regulations apply consistently to all national bank charters and that no regulatory gaps emerge,” ABA said.

Specifically, ABA said that fintech companies applying for a limited-purpose charter must be held to the same standards as national banks in terms of governance structure, capital and liquidity requirements, compliance risk management and financial inclusion, among other things. The association urged the OCC to work with other agencies “carefully and cooperatively to assure that no current policy lines are directly or inadvertently moved as a consequence of this action.”

ABA added that in addition to granting a limited-purpose charter to fintech firms, the OCC must also remain focused on empowering traditional banks to innovate. “Banks are the original fintech companies and have a long history of bringing innovative services to customers in a responsible manner,” said ABA VP Rob Morgan. “There are a number of steps that the OCC can take to help facilitate this. These include enabling banks to undertake limited-scale tests of innovative products and making it easier for banks to partner with fintech companies.”

ABA will continue to provide feedback to the OCC as the agency works through the details of the fintech charter in the weeks and months ahead. The association will host a webinar today at 3 p.m. EST with President and CEO Rob Nichols and a panel of ABA’s fintech and regulatory experts to discuss ABA’s response to the proposal and answer questions from bankers.

Read ABA’s comment letter.
Read ABA subsidiary BAFT's comment letter.

OCC Focusing on Sales Oversight at Large Banks

2017-01-06T10:00:00.000-05:00

In the wake of the scandal over fake accounts created at Wells Fargo, the OCC has added a strong emphasis on governance of sales practices to its risk supervision for large banks, according to the agency’s Semiannual Risk Perspective. The agency said,

Control breakdowns over the governance of retail product sales practices can erode trust in the banking system. Effective systems to detect and address fraud and possible unfair or deceptive practices in a timely manner, including effective complaint management systems, are critical.

At midsize and community banks, the OCC will continue to focus on strategic risk, credit risk, compliance risk and cyber resiliency – themes broadly unchanged from six months ago. In addition to sales practices, for larger institutions the agency will focus on compliance risk management – particularly change management dealing with the TILA-RESPA integrated disclosures, flood insurance, the Home Mortgage Disclosure Act and new Military Lending Act rules – as well as operational risk and third-party risk.

Credit risk is rising, the agency found, as an ongoing trend in easing underwriting is compounded by “increased risk layering,” such as more policy exceptions, higher loan-to-value ratios and weaker covenants. The OCC noted particular concern about commercial real estate concentration risk at community banks.

In addition to compliance change management, the OCC highlighted growing compliance risks for anti-money laundering and Bank Secrecy Act rules. The agency noted that technology designed to improve efficiency can “create vulnerabilities that can be exploited by criminals,” adding that “timely identification” of these openings “continue[s] to present challenges.”

Read the report.

Regulators Issue Determinations on Revised SIFI Resolution Plans

2016-12-14T09:45:00.000-05:00

The Federal Reserve Board and the FDIC have announced that four out of five systemically important domestic banking institutions have successfully remedied deficiencies in their 2015 resolution plans. Revisions submitted in October by Bank of America, Bank of New York Mellon, J.P. Morgan Chase and State Street were approved unanimously, after the agencies earlier this year determined that the original plans would not facilitate orderly resolution under the U.S. Bankruptcy Code in the event of failure.

The fifth bank, Wells Fargo, failed to adequately remedy its deficiencies with its revised plan, the agencies said, citing outstanding issues with “legal entity rationalization” and “shared services.” Regulators did note, however, that the bank’s revised plan did address the deficiency in the “governance” category. As a result, the agencies will impose restrictions on the growth of Wells Fargo’s international and nonbank activities. The company will have until the end of March to address the remaining deficiencies to avoid further regulatory actions, including divestiture of certain assets or operations.

Read more.

OCC Issues Guidance on AML/BSA Risk Management

2016-10-06T09:15:00.002-04:00

As promised by Comptroller of the Currency Thomas Curry, the OCC has released guidance articulating its expectations for banks with respect to terminating foreign correspondent relationships. The guidance addresses the recent “derisking” trend in anti-money laundering and Bank Secrecy Act compliance.

The guidance directs banks to establish and implement procedures for periodically reevaluating the risk posed by foreign correspondent relationships, taking into account the risks present in foreign institutions’ business and markets, the anticipated account activity and the supervisory regime of the geographic location in which the foreign financial institution is licensed. Reevaluations should be performed periodically for all foreign correspondent accounts, and banks making decisions to terminate foreign correspondent relationships should base their determinations on these reevaluations.

Along with the guidance, the OCC included “best practices” for banks when conducting risk reevaluations, which include establishing a governance function to review and monitor recommendations regarding foreign account termination; ensuring that decisions are properly communicated to both senior management and the foreign financial institution in question (if permitted by law); and ensuring proper documentation of the decision-making process before taking any steps to terminate a foreign correspondent accounts. As part of that process, the agency expects banks to consider the effects account closure might have on the foreign correspondent, particularly with respect to accessing banking services.

Unlike most BSA/AML guidance typically released under a joint-agency approach, the guidance was issued independently by the OCC and without industry input. ABA is currently in the process of analyzing the guidance, but fears that the expectations outlined by the agency (which are often interpreted as mandates by examiners) could ultimately serve to perpetuate the derisking trend rather than curb it. Additionally, ABA noted that establishing a set of requirements that must be met before a bank can terminate a foreign correspondent relationship may run contradictory to the agency’s claim that it “does not direct banks to open, close or maintain individual accounts.”

View the guidance.
Read Curry's speech.

OCC Finalizes Recovery Planning Guidelines for Large Banks

2016-09-30T09:30:00.000-04:00

The OCC has issued final guidelines on recovery planning for the financial institutions it regulates with assets of more than $50 billion. The guidelines will join the OCC’s safety and soundness regulations as an appendix and be enforceable by statute, the agency said.

Under the guidelines, each covered bank would be expected to develop and maintain a recovery plan appropriate for its own risk profile, size, activities and complexity. Each plan would be expected to include an overview of the bank; qualitative and quantitative stress triggers for when the recovery plan would be implemented; the range of recovery options for each trigger and how they would be implemented; assessments of how each option would affect the covered bank; escalation procedures; reports to management or board members as appropriate; and communications procedures.

As ABA requested in its comment letter, the OCC recognized that many banks covered by the proposal already engage in significant recovery planning exercises, and the agency said “we do not intend for the recovery planning described in these final guidelines to be needlessly burdensome or duplicative of these other planning processes.” But while ABA urged the agency to allow covered banks to meet the guidelines by leveraging recovery planning done at the holding company level, the OCC emphasized that it is “unlikely” that a plan not prepared specifically for the covered bank will satisfy the final guidelines, unless the covered bank comprises at least 95% of the holding company’s assets.

Also as requested by ABA, the guidelines will take effect on a phased schedule. Banks with assets of over $750 billion will need to comply within six months of Jan. 1, 2017; banks with $100-$750 billion in assets will have 12 months; and banks with $50-$100 billion in assets will have up to 18 months after Jan. 1 to comply.

Read the final guidelines.

OCC to Issue ‘Best Practices’ Guidance on AML/BSA Risk Management

2016-09-29T09:40:00.000-04:00

In response to the “derisking” trend in anti-money laundering and Bank Secrecy Act compliance, the OCC will soon issue guidance that articulates its expectations for banks to routinely evaluate risk in their foreign correspondent banking portfolios, Comptroller of the Currency Thomas Curry said.

Speaking to the Association of Certified Anti-Money Laundering Specialists in Las Vegas, Curry said the guidance will “reiterate our risk management expectations for banks to establish and follow policies and procedures for regularly conducting risk evaluations of their foreign correspondent portfolios.”

The guidance will include “best practices” that OCC examiners have observed, Curry said, including risk governance for foreign correspondent accounts, communications to senior management and consideration banks might give to “any adverse impact that closures may have on access to financial services for an entire group of customers or an entire region.”

Other best practices include communicating with customers while determining whether to end a relationship, giving sufficient time for customers to establish new accounts before termination and maintaining clear audit trails documenting the reasons for the account termination, he added.

Read the speech.

OCC Updates Comptroller’s Handbook

2016-08-02T09:27:00.002-04:00

The OCC has issued revisions to the “Corporate and Risk Governance” booklet of the Comptroller’s Handbook. The updated booklet discusses expectations and responsibilities for bank management and board with respect to enterprise risk management and governance. Among other things, it expands the discussion on risk management to include the three lines of defense; provides guidance on strategic, capital and operational planning; and describes risk culture and appetite in the context of a risk governance framework. With these revisions, the OCC rescinds several of its previously issued booklets.

View the booklet.

FDIC Updates Community Bank Corporate Governance Video

2016-07-21T09:29:00.002-04:00

The FDIC has released an updated video on corporate governance designed to help community bank directors and officers develop sound frameworks for corporate governance at their institutions. The video discusses the importance of effective corporate governance, and highlights key elements to consider in developing a strong program, including understanding the bank’s risk profile; establishing an appropriate risk appetite; recruiting and retaining qualified management; strategic planning; and implementation.

Watch the video.

Latest Issue of FDIC Publication Covers Corporate Governance

2016-04-06T09:54:00.001-04:00

The FDIC released a special edition of its Supervisory Insights publication that focuses on corporate governance for community banks. The issue includes a summary of responsibilities for bank boards and senior management, commentary on the FDIC’s Pocket Guide for Directors and an overview of regulatory expectations when evaluating board effectiveness.

The publication discusses the board’s role in building a strong risk management culture, understanding the bank’s risk profile and assessing risk appetite and ensuring that appropriate policies, procedures and objectives are in place to appropriately manage risk and meet strategic goals. Boards must evaluate the organization’s strengths, opportunities, weaknesses and threats and develop measurable objectives to guide the direction of the organization as part of the strategic planning process, the FDIC said.

The FDIC also noted that board members should play an active role in the examination process, engaging with their regulators and thoroughly reviewing examination results and recommendations. The agency said it expects a higher level of board oversight when banks have lower regulatory ratings, enforcement actions, elevated concentrations, complex products, high growth rates, low liquidity or capital levels, business model changes, poor operating results and deterioration in local economies, among other concerns.

Read Supervisory Insights.

ABA Comments on Proposed Recovery Planning Guidelines

2016-02-17T09:34:00.001-05:00

ABA offered feedback on the OCC’s proposed guidelines on recovery planning for the financial institutions it regulates with assets of more than $50 billion. As proposed, each covered bank would be expected to develop and maintain a recovery plan appropriate for its own risk profile, size, activities and complexity.

ABA pointed out that many banks are already putting significant efforts into developing their own recovery plans, and that the proposed OCC guidelines would require banks to devote additional time and resources to consolidating, synthesizing and reporting the requested information in the required format. Given that, covered banks should be able to use their existing resources to the greatest extent possible when meeting the OCC guidelines and adapting their existing recovery plans to their new standard, ABA said.

The association also called on the OCC to clarify its intentions concerning the implementation of the guidelines, and ensure that sufficient time is allowed for banks to come into compliance. ABA recommended an implementation date of 2018 at the earliest, which would allow for extensive dialogues between banks and examiners.

Read the comment letter.

New York Proposes AML Monitoring Requirements

2016-02-08T09:33:00.002-05:00

The New York State Department of Financial Services is proposing a new anti-money laundering regulation that would apply to all financial institutions chartered in the state. If adopted, the proposal would set forth a set of specific mandates designed to detect suspicious activities that New York financial institutions would be compelled to follow.

More significantly, the proposal would require that financial institutions obtain a “certifying senior officer” to file an annual certification verifying compliance with the mandate as part of financial institutions' transaction monitoring and filtering program requirements. NYDFS has recently been involved in investigations regarding compliance by financial institutions with AML/BSA laws, including compliance with the Office of Foreign Assets Control's trade sanctions.

NYDFS said the proposal is needed to correct BSA/AML regime deficiencies caused by "a lack of robust governance, oversight, and accountability at senior levels of these institutions." ABA is concerned about the proposal since, if adopted, it could set an example for other states. Comments are due by March 31.

Read the proposed regulation.

ABA Launches New Online TRID Courses

2015-10-15T08:57:00.002-04:00

As part of its Residential Mortgage Lender Certificate, ABA launched two new online courses on preparing the required TILA-RESPA integrated disclosures. The new courses — Preparing the Loan Estimate and Preparing the Closing Disclosure — are part of the 18-course sequence toward the certificate. ABA also added a free pre-information course on TRID. ABA EVP Jim Edrington said:

Our expanded mortgage lending curriculum will be a tremendous asset to bankers as they work to implement the complex TRID rule. Mortgage lending remains a core product for most banks, which must continue finding ways to exceed customer expectations in an increasingly competitive marketplace.

The ABA Residential Mortgage Lender Certificate is designed for aspiring mortgage lenders and bankers new to the mortgage area of the bank, including mortgage loan clerks, loan processors and closers — providing the fundamentals of banking, credit analysis and legal principles that support the mortgage process.

Read more.

New Report Highlights 2015 Regulator Expectations

2015-01-21T10:31:00.002-05:00

In 2015, regulators will expect banks to step up standards for governance, consumer protection compliance, third-party risk management, cybersecurity, credit quality and anti-money laundering compliance, according to a new report from Deloitte. The report also said that the Volcker Rule, liquidity requirements and resolution planning will be high on supervisors’ priorities for larger banks.

In addition to effective compliance management systems, regulators will also expect “a ‘compliant’ tone coming from top leadership,” Deloitte said.

Regulatory compliance is ultimately about protecting the reputation of the organization and its management, both in the eyes of the regulators and the public whom the organization serves.”

Regulators are expressing concern about loosening credit underwriting standards, Deloitte added, noting that “[r]egulators are increasingly likely to issue critical comments based on their discomfort with a firm’s underwriting practices.”

Read the report.

OCC Outlines Risk Supervision Priorities for 2015

2014-12-18T09:45:00.000-05:00

Noting an environment of “high” strategic and operational risk, the OCC outlined nine priorities for midsize and community bank supervision in 2015 in its Semiannual Risk Perspective report.

The OCC said its examiners will focus on strategic planning, corporate governance, stress testing for banks with more than $10 billion in assets, operational risk management, cybersecurity, underwriting practices in certain portfolios where the agency has observed slippage, interest rate risk, compliance and “fair access.”

These priorities respond to increasing credit risk as competition for loans picks up, evolving cyber threats, more frequent data breaches and sluggish earnings. The OCC noted that overall return on equity for federally chartered banks is down year over year, although smaller banks’ ROE has improved and now almost matches that of larger banks.

Read the report.

House GOP, Dems Evaluate Dodd-Frank on Anniversary

2014-07-22T09:57:00.000-04:00

Democrats on the Financial Services Committee have released a report defending the progress of the Dodd-Frank Act, arguing that the bill reduced the risk of bailouts by providing regulators with tools to address systemic threats.

Meanwhile, Republicans on the House Financial Services Committee released a report finding that the regulatory structure created by the Dodd-Frank Act does not sufficiently address the problem of too-big-to-fail financial institutions. The report argued that the orderly liquidation authority created by Title II of Dodd-Frank is untested and continues to leave taxpayers exposed to the costs of winding down a failing firm.

While ABA has opposed several major Dodd-Frank provisions and its overall regulatory burden, ABA and its member banks of all sizes share the law’s goal of ending too big to fail. They support policies that ensure taxpayers do not shoulder the burden when a large financial firm must be wound down.

Read the Democrats’ report.
Read the Republicans’ report.

Davis Polk Dodd-Frank Progress Report Released

2014-07-21T10:01:00.000-04:00

Davis Polk has released its July 2014 Dodd-Frank Progress Report.
From the report:

As of July 18, 2014, a total of 280Dodd-Frank rulemaking requirement deadlines have passed. This is 70.4% of the 398 total rulemaking requirements.
Of the 398 total rulemaking requirements, 208 (52.3%) have been met with finalized rules and rules have been proposed that would meet 94 (23.6%) more. Rules have not yet been proposed to meet 96 (24.1%) rulemaking requirements.

Read the full report here.

Keating Pushes Back on Tarullo Fiduciary Duty Remarks

2014-06-10T11:29:00.001-04:00

ABA pushed back against remarks by Federal Reserve Governor Daniel Tarullo in which he mused on the possibility of broadening directors’ fiduciary duties to encompass heightened supervisory expectations on risk management. ABA President and CEO Frank Keating said:

I’m concerned that Governor Tarullo’s suggestion will discourage participation on local bank boards across the country, reducing community participation in a manner that will harm institutions’ abilities to serve their customers.

Tarullo discussed other regulatory approaches to supervising bank risk-taking, offering thoughts on three principal kinds of measures: changing decision-makers’ incentives, aligning corporate governance with regulators’ objectives and directly affecting corporate governance processes.

Read Tarullo’s speech.

Agencies Issue Joint Diversity Assessment Standards

2013-10-24T08:06:00.001-04:00

Six financial regulators yesterday proposed interagency standards for assessing the diversity policies and practices of the firms they oversee. Under the aegis of Section 342 of the Dodd-Frank Act, the FDIC, CFPB, OCC, Federal Reserve, SEC and the National Credit Union Administration proposed to assess firms’ commitment to diversity, the makeup of their workforces, employment and procurement practices and transparency about diversity.

The standards, developed jointly by the regulators’ Offices of Minority and Women Inclusion, are tailored to firms’ asset size, workforce size, governance structure and other characteristics.

The agencies will accept comments for 60 days after the standards are published in the Federal Register.

Read the standards.

Curry on Dodd-Frank Rulemaking Progress at the OCC

2013-07-11T11:00:00.000-04:00

In prepared remarks for a Senate Banking Committee hearing today Comptroller of the Currency Thomas Curry commented on the status of Dodd-Frank rulemaking at the OCC.

Curry noted that all the rules that the Dodd-Frank Act mandates the OCC independently implement have been completed. This includes rule related to lending limits, stress testing, the removal of references to credit ratings, and retail foreign exchange transactions.

Curry stressed there are a number of other rules that require interagency action and are yet to be completed including addressing credit risk retention, the Volcker Rule, margin and capital requirements for covered swap entities, and incentive-based compensation.

In addition, Curry remarked that the OCC and other federal regulators are developing a proposed rule to implement a 30-day Liquidity Coverage Ratio in the U.S. for large banking organization. The agencies are aiming to issue this proposed rule for comment by the end of the year.

Read Curry’s prepared testimony.

Gruenberg on Dodd-Frank Rulemaking Progress

2013-07-11T09:21:00.000-04:00

In prepared remarks for a Senate Banking Committee hearing today Chairman Martin Gruenberg commented on the FDIC’s progress on policies and strategies to build a more effective resolution framework for large, complex financial institutions as mandated by the Dodd-Frank Act.

The FDIC is working on a Statement of Policy which would provide more clarity on the resolution process. Gruenberg noted the FDIC anticipates to release a proposal for public comment before the end of the year.

Gruenberg also commented on the banking industry’s progress in raising the quality and quantity of capital in the industry. Speaking of the new capital rules released this week, Gruenberg stated: “Going forward, the rule would have the effect of preserving and maintaining the gains in capital strength the industry has achieved in recent years.”

Read Gruenberg’s prepared testimony.

Auditor Attestation of Internal Controls

2013-07-05T08:18:00.000-04:00

Section 404(b) of the Sarbanes-Oxley Act required a public company to have its independent auditor attest to and report on management's internal control over financial reporting; this is known as the auditor attestation requirement. In July 2010, the Dodd-Frank Wall Street Reform and Consumer Protection Act exempted companies with less than $75 million in public float from the auditor attestation requirement. The Dodd-Frank Act mandated that Government Accountability Office (GAO) examine the impact of the permanent exemption on the quality of financial reporting by small public companies and on investors.

This report discusses (1) how the number of financial statement restatements compares between exempt and nonexempt companies (i.e., those with $75 million or more in public float), (2) the costs and benefits of complying with the attestation requirement, and (3) what is known about the extent to which investor confidence is affected by compliance with the auditor attestation requirement.

Although information on auditor attestation status is available to investors, GAO recommended that Securties and Exchange Commission should consider requiring public companies, where applicable, to explicitly disclose whether they obtained an auditor attestation of their internal controls. GAO believes this could increase transparency and investor protection.

Read the report.