Back to basics: Fiduciary account reviews

It’s easy to overlook performing a well-documented and thorough account review when your financial institution is busy with day-to-day activities. However, there are critical reasons to remind your team about the importance of reviews.

The risk of significant changes going unnoticed could negatively impact the accuracy of your institution’s reviews. Even if your department is familiar with the objectives and beneficiaries after managing the account for years or you have an automated system to assist with the reviews, there could still be errors. And the frequency of account reviews can vary depending on your regulator and whether or not you have discretion over the account.

Without effective review processes, your institution could encounter these compliance issues and other major risks. Here are some ways to get back to basics and help strengthen your fiduciary account reviews:

Pre-acceptance fiduciary account review

The first and possibly most important account review is the pre-acceptance review, done to determine whether or not to accept the account.

This review is your team’s opportunity to identify administration requirements, identify any initial concerns and verify whether you can properly administer the account. Some key components of a pre-acceptance review include, but are not limited to:

• Expected assets and whether the department is capable and willing to manage them.
• Potential conflicts of interest.
• Trustee powers and duties.
• Review of prior trustee activities.
• Identification of co-trustees.

The following best practices can help financial institutions enhance their pre-acceptance review process:

• Use the right staff: An individual(s) who can appropriately assess the requirements and the risks related to accepting a new account should perform the pre-acceptance review.
• Leverage tailored review forms: A pre-acceptance review form can be beneficial and assist with performing consistent and complete reviews; however, they should be tailored to the account type.
• Understand your risk appetite: Management should determine the areas to be assessed as part of the pre-acceptance review to help ensure the account can be appropriately administered and falls within the department’s risk appetite.
• Document the results: Approval or denial of a new account should be documented and dated to support the department’s timely review of the account. While the trust committee is not required to approve all new accounts, the results of the pre-acceptance review should be ratified at the next committee meeting so that appropriate oversight is maintained.

Post-acceptance/initial review

Once the new account is accepted, if the institution has discretion, a prompt review of all assets must be performed to evaluate whether they are appropriate for the account. Though not specifically required, the industry standard is that the initial review is performed within 60-90 days of significant or complete funding.

In addition to doing an asset review, an administrative account review should be performed as well.

An administrative account review is typically performed 60-90 days after account opening. This review should include a review of the synoptic record to help ensure information was entered accurately and all documentation was obtained as required.

A common exception that may be noted during audits is that the timing of the initial review was not performed in accordance with internal policy, and there is limited reporting of the delinquent review. Some best practices to assist with managing the timing of initial reviews and review exceptions are outlined in the following sections.

Annual account review

After a new account has been set up on the system and an initial review has been performed, you need to include it in your ongoing account review process.

Both the Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC) require departments to review all assets “at least once a calendar year” to ensure they are appropriate for that particular account when the department has investment discretion.  

The annual review should consider the investment objective and performance of the assets to determine whether they are still appropriate. The investment objective should also be revised or reaffirmed to ensure it meets the purpose of the account and the needs of beneficiaries.   

Administrative reviews should be performed periodically for all fiduciary accounts regardless of discretion. If not performed at least annually, regulators expect the frequency of the reviews to be risk-based.

These reviews should ensure the account is being administered in accordance with the governing document. Some areas to consider during the administrative review include:

• Whether the synoptic record is accurate and that changes are supported by documentation in the account file.
• Documentation of appropriate approvals/direction for account activity was retained.
• The presence of potential conflicts of interest or potential litigation.

Your trust policy and/or procedures should address the frequency and depth of all account reviews.

Automated vs. manual reviews

Whether your department relies on an automated or manual system, the account review should be performed by someone independent from the ongoing administration of the account. This independence provides an additional layer of oversight and strengthens the overall account administration.

Here are some additional ways you can better manage automated and manual reviews:

Automated monitoring and review

When adding new accounts to the system for automated review monitoring, input data should be independently verified for accuracy so that it is set up on the appropriate cycle.

When relying on the system to perform part of the account review, ongoing oversight of parameters is essential to maintain the accuracy of the output data. Individuals should be designated to periodically assess the system parameters to ensure they are working as intended.

Regardless of the level of review the system performs, management is ultimately responsible for verifying the accuracy of the results. Management should also ensure that the staff finalizing account reviews are taking care to verify the accuracy and identify potential issues or areas of concern that need to be addressed.

A common exception that occurs during audits is that review exceptions or issues are identified, but do not include comments addressing or resolving them.

Manual monitoring and review

If relying on a manual system for monitoring when account reviews are coming due, management should ensure that controls are in place to prevent new accounts from being missed.

An action item on a new account checklist and periodic comparison of the list to the system could assist with maintaining oversight of completing account reviews. It’s also crucial to ensure that ongoing account reviews don’t become a “check-the-box” exercise.

Account reviews are management’s way of providing ongoing oversight of the account administration, identifying potential exceptions and addressing them before it’s too late.

Review exceptions

In addition to documenting the frequency and timing requirements for reviews, your trust policy should also address reporting requirements for review exceptions, such as not completing them within the required timeframe.

For example, if your trust policy requires the initial review to be performed within 60 days of account funding, but the review was not completed until 90 days after funding, why was that? There may be a reasonable explanation as to why it wasn’t performed in accordance with policy, but what is the process for documenting and reporting the exception?

Your policy and/or procedures should outline the process to document and report these exceptions. You may also want to track exceptions to see if there is a recurring issue.

If you notice that your department often struggles to meet the internal policy guidelines, management should review internal practices to determine whether enhancements in controls or changes to policy are appropriate.

Ongoing developments to consider

On March 7, 2025, the OCC announced that certain cryptocurrency securities are permissible in the federal banking system.

Although there has been minimal appetite to invest in this space so far, this announcement will likely spark discussion among financial institution leadership. Management should remain aware of permitted assets under your Bank Secrecy Act policy and whether this announcement will result in any changes.

Such policy updates could result in a necessary change to your fiduciary account review documentation from pre-acceptance to ongoing assessments.  

How Wipfli Can help

Build confidence in your trust department with Wipfli’s industry-experienced specialists. Our team can help assess your risk management and compliance so that you can implement more thorough and effective account review processes.

Contact us today to learn more about our comprehensive support for financial institutions.