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Preparing for your upcoming Regulatory Compliance Examination? Don't Panic!

Many of our compliance clients instantly panic when they receive that dreaded list of items needed for their upcoming regulatory compliance examination. Although it can be overwhelming and somewhat confusing, below are some things to consider during the course of the examination to help you prepare and organize the process more efficiently.

  1. Typically, examiners will provide a list of requested items electronically prior to the onsite visit. The request list is organized, and items are generally categorized and labeled. As you collect the information, assign the same label to each item as noted on the request list. For example, if the list includes "Lending, Section A" with items 1-15 listed, label the applicable items "Lending A, #1", etc. Also, keep in mind that the item being provided may satisfy more than one label. Include all labels on each item as applicable.
  2. If you are not clear about what is being requested, reach out to the Examiner In Charge (EIC) for clarification. This will ensure that you are providing exactly what is needed.
  3. Designate a single contact person from your institution as liaison for the examination process to ensure communication with examiners is smooth and consistent, and everyone is updated on the status of any pending or additionally requested items.
  4. If you are provided a secure link, or if you can send the requested items via a secure link, send requested information as much in advance as possible and in accordance with the instructions provided by the EIC. Some examiners would like the requested documents as you retrieve them and some may want them all at once. If it is not clear, contact the EIC and find out what they prefer. This will allow their team to effectively prepare for the examination in advance.
  5. Determine ahead of time the number of examiners that will be on site and their anticipated schedules. Have space for them to work effectively, and provide them with as much privacy as possible. Consider that they will have access to a large amount of confidential information and will hold several discussions with various staff, so privacy and confidentiality is imperative to ensure information remains secure.
  6. If they will need access to shared drives and storage systems required for viewing documents, make sure that equipment, user access, and passwords are established prior to arrival with the correct level of user access and applications needed. Have someone test connections and codes in advance to ensure they are functioning properly. Also, have someone available to train the examiners on use of the system when they arrive.  
  7. If the examiners send you a series of internal control questionnaires, make sure they are completed and provided prior to their arrival. These documents give the examiners critical information on products, services, systems, etc. that will assist them with a risk-based approach to the examination.
  8. If there are any pending items from the initial request list that need to be provided or reviewed on site, make sure they are organized and available upon the examiners' arrival.
  9. Have a contact person readily and consistently available to answer any questions, or to provide assistance to examiners during the entire process.
  10. Be sure to make the examiners aware of any recent management changes, system changes, or changes in products or services, so that the focus of the examination can be targeted appropriately.

While you want to make sure that you adequately provide the requested information along with the requisite detail for the examiners to complete their review appropriately, do not burden the examiners with excessive or unorganized documentation that they will need to sort through to determine if compliance is adequate.

 

Keep an open mind and work willingly during the examination process. Remember, the examiner's efforts will make you aware of any deficiencies in your system, processes, and procedures which will allow you the opportunity to take corrective action as necessary to avoid future regulatory violations, which may save costly fines.  

 

The more organized and prepared you are for the examination process, the more the examiners will have a comfort level that the institution and management are effectively controlling and managing associated compliance risks.

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