The last few years have been busy with regard to financial institutions and compliance with the Federal Deposit Insurance Corporation Improvement Act (FDICIA). The active acquisition market as well as organic asset growth have pushed compliance issues front and center for institutions.
In response to serious problems in the banking and thrift industries — including a wave of bank failures in the late 1980s — the act established greater oversight and additional audit needs for institutions based on total assets, beginning in 1991.
Success with FDICIA compliance depends on having a sound and executable plan
A good plan starts with constant communication. One advantage of using a reputable experienced third-party advisor is the ability to guide you through the process from beginning to end, leveraging deep industry knowledge.
It’s important to start the process with the development of a road map tailored to your institution. This will map out a tentative plan for the financial institution, taking it through a live compliance reporting year. The plan should allow you to see the entire process and track milestones clearly.
An ideal point to start the process is about 18 months prior to the bank’s required compliance year. Your institution could be one acquisition away from trigging compliance requirements, so having a plan in place is key.
If you’re approaching the $1 billion asset mark or are in the acquisition market, it’s a good idea to ensure you’re having FDICIA discussions early. One of the best ways to prepare is to go through a readiness process.
A trusted advisor can help you go through a dry run of the steps needed for compliance. This allows the financial institution time to perform a risk assessment and identify and document key controls. It allows additional time to implement key controls or strengthen ones already in place.
The process reduces the strain on staff, adds more lead time to make key control performance a habit and refine the precision in controls.
Whether you plan to outsource, co-source or perform FDICIA testing in-house, planning is key in making this successful.
How Wipfli can help
Wipfli’s experienced team of advisors can help you prepare to meet all compliance requirements facing your institution. We work with more than 800 financial institutions with a broad range of asset sizes, and some exceeding $10 billion. Our team sets up tests and other protocols to guide you through this process so you can feel confident about meeting all provisions of the FDICIA. Contact us to learn how we can assist you.
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