[Federal Register Volume 59, Number 225 (Wednesday, November 23, 1994)]
[Unknown Section]
[Page 0]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 94-28878]


[[Page Unknown]]

[Federal Register: November 23, 1994]


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DEPARTMENT OF THE TREASURY

Office of Thrift Supervision

12 CFR Parts 550, 552, 562, 563 and 571

[No. 94-246]
RIN 1550-AA68

 

Annual Independent Audits

AGENCY: Office of Thrift Supervision, Treasury.

ACTION: Final rule.

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SUMMARY: The Office of Thrift Supervision (OTS) is adopting a final 
rule that amends its annual independent audit requirements for savings 
associations to be more consistent with those applicable to other 
federally insured depository institutions. Pursuant to Section 112 of 
the Federal Deposit Insurance Corporation Improvement Act of 1991 
(FDICIA) all insured depository institutions with total assets of $500 
million or more are required to obtain an annual independent audit. OTS 
is amending its rules in order to eliminate the mandatory annual 
independent audit requirement for small savings associations with 
composite CAMEL ratings of 1 or 2; to rely on the FDICIA section 112 
independent audit requirements for savings associations with assets of 
$500 million or more; and to adopt regulatory language to allow OTS to 
require an independent audit of any savings association with assets of 
less than $500 million, as needed for purposes of safety and soundness.

EFFECTIVE DATE: December 23, 1994.

FOR FURTHER INFORMATION CONTACT: David H. Martens, Chief Accountant, 
(202) 906-5645, Timothy J. Stier, Deputy Chief Accountant, (202) 906-
5699, Office of Thrift Supervision, 1700 G Street, NW., Washington, 
D.C. 20552.

SUPPLEMENTARY INFORMATION:

I. Background and Description of Proposal

    On March 22, 1994, OTS published a notice of proposed rulemaking to 
amend the regulatory framework governing independent audits of savings 
associations' financial statements. The proposed amendments were 
designed to achieve comparability with the framework used by the other 
Federal banking agencies1 for banks. Historically, OTS regulations 
and policies required all savings associations and savings and loan 
holding companies to obtain an annual independent audit of their 
financial statements. In contrast, the regulations and policies of the 
other Federal banking agencies generally encourage all banks and bank 
holding companies to obtain an annual independent audit, but only 
mandate that certain institutions obtain audits. OTS' proposal 
recognized that a well planned and executed independent audit could 
improve the reliability of regulatory reports, such as the Thrift 
Financial Report (TFR). The proposal also recognized, however, that the 
current OTS audit requirement could be modified to reduce regulatory 
burden without increasing the risk of unsafe and unsound regulatory 
reporting.
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    \1\The term ``other Federal banking agencies'' means the Office 
of the Comptroller of the Currency, the Board of Governors of the 
Federal Reserve System, and the Federal Deposit Insurance 
Corporation.
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    Under the proposal, savings associations with assets of $500 
million or more would continue to be audited pursuant to Section 112 of 
FDICIA2 and the FDIC's implementing regulation 12 CFR Part 363. 
The FDIC regulation requires audits of all FDIC-insured depository 
institutions with assets of $500 million or more, includes financial 
statement and internal control reporting requirements, and sets minimum 
qualifications for independent public accountants and for members of 
the board of directors' audit committee.
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    \2\This provision is codified at section 36 of the Federal 
Deposit Insurance Act (``FDI Act''), 12 U.S.C. 1831m.
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    Under the proposal, small savings associations (i.e., those with 
assets of less than $500 million), were required to obtain annual 
independent audits of their financial statements whenever OTS believed 
an independent audit was necessary to supplement other safety and 
soundness supervisory activities. The proposal included a request for 
comment on the specific safety and soundness criteria that should be 
used to determine when such an audit would be appropriate. The proposal 
required that such audits utilize the same qualifications for 
independent public accountants as those applicable to institutions 
covered by the FDIC regulation. The proposal provided that when small 
savings associations obtained an audit voluntarily the audit would be 
conducted in accordance with generally accepted auditing standards 
(GAAS) and the resulting reports and supporting audit work papers would 
be made available to OTS upon request.
    Finally, the proposal included specific requests for comment on the 
audit requirements for trust operations, holding company financial 
statements, and savings associations overall. The objective of these 
inquiries was to assist OTS in developing an audit approach for these 
types of audits that would be responsive to the safety and soundness 
needs and comparable to the approach used by the other Federal banking 
agencies.

II. Summary of Comments and OTS Response

    OTS received ten comment letters on the proposal. Commenters 
included seven savings associations, two trade associations, and a 
Federal banking agency. Overall, the commenters were supportive of the 
proposal and offered suggestions on implementing the approach. Only one 
commenter (a thrift) expressed significant opposition to the 
elimination of the mandatory audit requirement. Commenters also 
responded to the six specific requests for comment that were included 
in the proposal. The issues and comments raised by those responses are 
addressed below.

A. Benefits of Annual Independent Audits to Small Savings Associations

    Five small savings associations commented on the issue of whether 
audits were beneficial to small savings associations and improved the 
accuracy of the Thrift Financial Report (TFR). Four of the commenters 
suggested that audits were of little or no benefit since they typically 
do not focus on the association's internal operations or the TFR 
process. In addition, these commenters suggested that audits often 
overlapped with OTS safety and soundness examinations in key areas. One 
commenter suggested that audits were quite valuable because they are 
often the only independent review of management's activities.
    OTS believes that an independent audit can help address safety and 
soundness concerns regarding the accuracy of an institution's financial 
reports and the effectiveness of its internal controls over financial 
reporting. Nonetheless, OTS believes that decision should be left to 
the management of healthy savings associations that meet the size and 
composite rating criteria discussed above.
    Therefore, the final rule eliminates the mandatory annual audit 
requirement for institutions with less than $500 million in assets and 
composite CAMEL ratings of 1 or 2. The rule is intended to reduce the 
regulatory burden on those institutions while ensuring consistency 
between the audit requirements administered by the OTS and those 
administered by the FDIC. It is not intended to discourage such an 
institution from obtaining an annual independent audit. Management 
should carefully consider the value of the annual independent audit to 
the safety, soundness, and effectiveness of the institution's control 
systems in deciding whether to continue the practice.
    OTS will retain its ability to require audits of any small savings 
associations that present certain safety and soundness concerns as 
discussed in Item B below.

B. Safety and Soundness Concerns

    Most of the commenters suggested alternatives to the mandatory 
audit requirement that would mitigate the risk of unsafe and unsound 
regulatory reporting. Three commenters suggested that independent 
audits be required for all MACRO (CAMEL) 4 or 5 rated institutions or 
other supervisory measures of risk. These commenters also suggested 
that a waiver provision be included in any safety and soundness 
requirement. Two commenters suggested that OTS simply rely on the 
judgment of institution boards of directors to determine whether an 
audit is needed and specifically encourage boards of directors to 
obtain audits as part of a plan for sound financial reporting.
    OTS has decided to use the CAMEL 3, 4 and 5 rating as a measure of 
risk to identify when an independent audit is required. An institution 
that receives a CAMEL 3 rating for safety and soundness concerns 
exhibits a combination of financial, operational, or compliance 
weaknesses. When weaknesses relate to financial condition, such 
institutions may be vulnerable to the onset of adverse business 
conditions and could easily deteriorate if concerted action is not 
effective in correcting the areas of weakness. An institution that 
receives a CAMEL 4 or 5 rating has a significant level of serious 
financial weaknesses or a combination of other conditions that are 
unsatisfactory. For these reasons, OTS believes that an audit 
requirement for CAMEL 3, 4 or 5 rated institutions is generally an 
effective use of independent audit resources. The rule thus requires a 
CAMEL 3, 4 or 5 rated institution to obtain an independent audit, 
unless notified otherwise by OTS.
    OTS recognizes that an institution may receive a CAMEL 3, 4 or 5 
rating for safety and soundness concerns unrelated to any issue that 
would be addressed by an independent audit. It also recognizes that the 
FDIC Board chose not to require independent audits of all troubled 
banks. As a result, the final rule provides that in certain cases, the 
OTS Director may determine that the independent audit is unnecessary, 
and the required audit would be waived for the institution in question. 
In addition, the OTS Director may modify the audit requirement by 
requiring procedures agreed to by OTS if such agreed upon procedures 
are effective to address specific safety and soundness concerns that a 
particular institution presents.
    The Director's authority to require audits on a case-by-case basis, 
or to waive or modify an audit requirement in appropriate circumstances 
may be delegated.

C. OTS Access to Work Papers of Small Savings Association Audits

    Five commenters responded to the issue of whether OTS should have 
access to audit work papers in cases where a small savings association 
obtains an audit voluntarily. Most of the commenters were in favor of 
granting access to work papers if it increases the efficiency of the 
examination process. Two commenters were opposed to granting access to 
audit work papers based on the rationale that by rescinding the audit 
requirement, OTS is no longer an intended beneficiary of the audit 
process.
    In the interest of eliminating duplicative efforts, OTS believes it 
would be beneficial for small savings associations, who voluntarily 
have audits, to have their independent auditors make audit work papers 
available to OTS as part of their audit engagement. OTS encourages 
candid communication between examiners and independent auditors. OTS 
policy encourages examiners to utilize independent audit work papers to 
plan examinations and to reduce duplicative efforts and to share 
examination work products with independent auditors. OTS believes that 
it would be extremely beneficial for examiners and auditors to continue 
to share their work products. Therefore, OTS will require that the 
engagement letters for required and voluntary audits contain a 
provision that gives OTS access to the audit work papers. This 
provision is a continuation of the current OTS policy in Public 
Accountant (PA) Bulletin 7a, ``Audits of Insured Institutions, Service 
Corporations and Joint Ventures by Independent Public Accountants.''

D. Holding Company Audit Requirements

    A few commenters presented suggestions on the manner in which OTS 
should determine whether a savings and loan holding company is required 
to obtain an audit for safety and soundness purposes. One commenter 
suggested OTS utilize the same requirements that are applicable to bank 
holding companies. Currently, the rules and policies applicable to bank 
holding companies require an annual independent audit of all holding 
companies with consolidated assets of $150 million or more. Other 
commenters suggested that savings and loan holding companies be 
required to obtain an audit if they are a multiple holding company 
(i.e., owner of more than one depository institution) or have assets in 
excess of $1 billion.
    An objective in developing the overall OTS audit approach was to 
attain comparability with the other Federal banking agencies. Because 
the Federal Reserve's bank holding company audit requirement and the 
FDIC's insured depository institution audit requirement differ, OTS 
weighed the advantages and disadvantages of each agency's asset 
threshold. Setting a lower asset threshold (i.e., $150 million) at the 
holding company level would, in effect, require certain insured 
subsidiary institutions to obtain an audit that would otherwise not 
have been required by the FDIC.
    In determining the exposure to a thrift posed by its parent holding 
company, the OTS focuses primarily on the relationship and transactions 
between the thrift and its affiliates. OTS believes that its current 
holding company regulatory structure limits the risks from intercompany 
transactions that may not be in the best interests of the thrift.
    To avoid situations where the holding company audit requirement 
would essentially create an audit requirement for the subsidiary 
institution, OTS has decided against adopting the Federal Reserve's 
$150 million threshold for bank holding companies. Instead, OTS will 
require audits of holding companies whose subsidiary savings 
association(s) have aggregate assets of $500 million or more. OTS 
selected the $500 million asset threshold to achieve comparability with 
the approach utilized in the FDIC regulation. This requirement has also 
been incorporated into the instructions to the annual/current holding 
company report H-(b)11.
    The final rule provides that the Director of OTS may require, at 
any time, an independent audit of any savings and loan holding company, 
with aggregate assets of less than $500 million, when needed for 
purposes of safety and soundness.

E. Alternatives to Auditing Procedures for Bank Secrecy Act and Third 
Party Reviews of Service Bureaus That Could Be Used To Address Safety 
and Soundness Concerns

    A few commenters responded to the issue of whether OTS should 
continue to have independent auditors perform procedures to test 
compliance with the Bank Secrecy Act (BSA) and apply OTS standards for 
third-party reviews of service bureau internal controls. Commenters 
indicated that BSA compliance and service bureau internal controls 
should be tested in more detail by an institution's internal audit 
staff and OTS examiners.
    OTS initially required independent auditors to test savings 
associations' compliance with the BSA as part of a strategy to closely 
monitor currency transactions. Since that time, OTS has expanded the 
scope of examination procedures in this area and required their 
application in all types of examinations. OTS believes that BSA 
compliance is now adequately tested through the internal audit 
functions of institutions and the examination process. In December of 
1993, OTS rescinded PA Bulletin 7a-3, ``Auditors' and Accountants' 
Responsibilities Under Currency and Foreign Transactions Reporting Act 
(Bank Secrecy Act)''. No audit requirements for testing compliance with 
the BSA are included in the final rule.
    OTS issued its standards for third party reviews of service bureaus 
at a time when there was limited supervisory and professional auditing 
guidance on the subject. Since that time, OTS and the other banking 
agencies have developed a uniform examination approach for EDP 
functions including service bureaus. The auditing profession has also 
revised its standards on several occasions to address testing of 
service bureau internal controls. In addition, under the proposed OTS 
Standards for Safety and Soundness regulations, promulgated pursuant to 
section 39 of the FDI Act, associations would be required to maintain 
an internal audit system that adequately tests and reviews internal 
controls and information systems, including service bureaus. OTS 
believes that service bureau internal controls are adequately tested 
through an institution's internal audit function and the OTS 
examination process. Therefore, PA Bulletin 7-1a, ``Standards for 
Audits of Insured Institutions Using Electronic Data Processing'' will 
be rescinded.

F. Trust Audits

    Several commenters presented suggestions on the requirements for 
audits of savings association trust departments. Two commenters 
suggested that trust departments should be audited based on the volume 
or dollar value of trust assets managed. Commenters indicated that 
trust department audits could be performed by internal auditors, 
external auditors, or OTS examiners. Commenters also suggested that 
trust department audits were generally more beneficial to the 
institution when performed by the internal audit function or as part of 
an OTS compliance review.
    OTS believes that the approach for trust audits outlined in the 
proposal combined with examination procedures is responsive to safety 
and soundness concerns. Therefore, the final rule will implement the 
approach outlined in the proposal.

III. Description of Final Rule

A. General

    The final rule generally follows the approach outlined in the 
proposal. Savings associations and savings and loan holding companies 
are no longer required to have independent audits except in cases 
where: (1) FDIC rule 12 CFR Part 363 requires independent audits of 
savings associations; (2) OTS requires independent audits of savings 
and loan holding companies (i.e., holding companies with aggregate 
insured depository assets of $500 million or more); or, (3) OTS 
requires an independent audit, or agreed-upon procedures, of a savings 
association or savings and loan holding company due to safety and 
soundness concerns (e.g., CAMEL 3, 4 or 5 examination rating for 
savings associations or other identified safety and soundness 
concerns).
    The final rule also includes two technical corrections to 12 CFR 
562.3--Statements of Condition--that were not included in the proposal. 
First, the final rule amends 12 CFR 562.3(b)(2) to eliminate language 
requiring savings associations to make their audited financial 
statements available to depositors upon request. This change was 
necessary due to the fact that the final rule eliminates the mandatory 
audit requirement. Any member of the public may obtain a copy of the 
audited financial statements of a savings association, or other FDIC-
insured depository institution, that files a report with the FDIC 
pursuant to FDIC rule 12 CFR Part 363 simply by making a request to the 
institution.
    Second, the final rule amends 12 CFR 562.3(d) to eliminate a cross 
reference to 12 CFR 571.2. This change was necessary due to the fact 
that the final rule eliminates 12 CFR 571.2.

B. Securities Filings

    The final rule does not affect any of the auditing standards, 
accounting standards, or other requirements for financial statements 
contained in securities filings submitted to OTS pursuant to the 
Securities Exchange Act of 1934 (1934 Act) or OTS regulations parts 
563b, 563d, or 563g (Securities filings). Applicable federal securities 
laws and regulations require securities filings to comply with 
generally accepted accounting principles (GAAP) and to include 
financial statements and other information that have been audited by 
independent public accountants in accordance with GAAS. Savings 
associations anticipating a conversion from mutual to stock form of 
ownership, or any other transaction governed by the federal securities 
laws and regulations, should note that the accounting or auditing 
requirements for such securities filings continue to apply.

IV. Regulatory Flexibility Act

    Pursuant to section 605(b) of the Regulatory Flexibility Act, it is 
certified that this rule will not have a significant economic impact on 
a substantial number of small entities. The rule is expected to relieve 
a regulatory burden on savings associations with assets of less than 
$500 million. The overall economic impact is not expected to be 
significant because it is anticipated that many of these institutions 
will continue on a voluntary basis to obtain annual independent audits. 
Therefore, Regulatory Flexibility Act analysis is not required.

V. Paperwork Reduction Act

    The reporting requirements contained in this final rule have been 
submitted to and approved by the Office of Management and Budget under 
OMB Control No. 1550-0082 for review in accordance with the Paperwork 
Reduction Act of 1980 (44 U.S.C. 3504(h)). Comments on the collections 
of information should be sent to the Office of Management and Budget, 
Paperwork Reduction Project (1550), Washington, DC 20503 with copies to 
the Office of Thrift Supervision, 1700 G Street NW., Washington, DC 
20552.
    The reporting requirements in this proposal are found in 12 CFR 
550.7(a) and 12 CFR 562.4(a). The information is needed by OTS to 
provide an orderly mechanism for expeditiously processing requests for 
non-public information while ensuring confidentiality. The likely 
recordkeepers are Federal savings associations.

VI. Executive Order 12866

    OTS has determined that this final rule does not constitute a 
``significant regulatory action'' for purposes of Executive Order 
12866.

VII. Effective Date

    OTS has provided for a 30-day delayed effective date for this rule. 
See 5 U.S.C. 553(d). The Riegle Community Development and Regulatory 
Improvement (CDRI) Act of 1994, which was signed by the President on 
September 23, 1994, imposes further effective date requirements with 
respect to regulations issued by the Federal banking agencies. Section 
302(b) of that law requires the agencies to delay the effective date of 
new regulations that ``impose additional reporting, disclosures, or 
other new requirements on insured depository institutions'' until the 
first day of the first calendar quarter after the regulations are 
published in final form. An exception to this requirement is available 
if the agency determines, ``for good cause published with the 
regulation,'' that the regulation should become effective sooner.
    Although the principal effect of today's rule is to relieve 
restrictions rather than to impose ``new requirements'' on insured 
depository institutions, certain of its provisions arguably fall within 
the scope of coverage of the CDRI Act's effective date provision. For 
the following reasons, however, the OTS has concluded that good cause 
exists to accelerate the effective date that would be required by the 
CDRI Act.
    Application of this CDRI Act effective date provision would cause 
today's rule to take effect on January 1, 1995. OTS's current rules 
require all savings associations to be audited at least once in each 
calendar year. If the effective date of today's rule is delayed until 
January 1, 1995, then it will not exempt any savings associations from 
their obligation to obtain an audit in calendar year 1994. The result 
would be to require those associations that are relieved of the annual 
audit requirement under today's rule to incur the burden and expense of 
an annual independent audit for no reason other than the timing imposed 
by the CDRI Act's delayed effective date provision. This result would 
be inconsistent with the purpose of section 302 of the CDRI Act, which 
is generally to reduce regulatory burden and the cost of compliance. 
See H.R. Conf. Rep. No. 103-652, 103d Cong., 2d Sess. 168 (1994). 
Accordingly, the OTS finds good cause for the rule to become effective 
earlier than the date that the CDRI Act would otherwise require.
    Finally, the OTS notes that the CDRI Act effective date provision 
applies only to regulations affecting insured depository institutions. 
Regulations applicable to holding companies are therefore beyond the 
scope of the provision.

List of Subjects

12 CFR Part 550

    Reporting and recordkeeping requirements, Savings associations, 
Trusts and trustees.

12 CFR Part 552

    Reporting and recordkeeping requirements, Savings associations, 
Securities.

12 CFR Part 562

    Accounting, Reporting and recordkeeping requirements.

12 CFR Part 563

    Accounting, Advertising, Crime, Currency, Flood insurance, 
Investments, Reporting and recordkeeping requirements, Savings 
associations, Securities, Surety bonds.

12 CFR Part 571

    Accounting, Conflicts of interest, Gold, Investments, Reporting and 
recordkeeping requirements, Savings associations.
    Accordingly, OTS hereby amends subchapters C and D, chapter V, 
title 12, Code of Federal Regulations, as set forth below:
SUBCHAPTER C--REGULATIONS FOR FEDERAL SAVINGS ASSOCIATIONS

PART 550--TRUST POWERS OF FEDERAL SAVINGS ASSOCIATIONS

    1. The authority citation for part 550 is revised to read as 
follows:

    Authority: 12 U.S.C. 1462a, 1463, 1464, 1735f-7.

    2. Section 550.7 is revised to read as follows:


Sec. 550.7  Audit of trust department.

    (a) A committee of directors of the Federal savings association who 
are independent of its management shall make, or cause to be made, a 
suitable audit of the association's trust department annually. The 
audit shall, at a minimum, ascertain whether the department has 
internal control policies and procedures in place to provide reasonable 
assurance that:
    (1) Fiduciary activities are administered in accordance with 
applicable laws and regulations, governing trust instruments, and sound 
fiduciary principles;
    (2) Fiduciary assets are properly safeguarded; and
    (3) Transactions are accurately recorded in the appropriate 
accounts in a timely manner.
    (b) The audit shall be conducted in accordance with generally 
accepted standards for attestation engagements and any other standards 
established by the OTS. The audit may be conducted by internal 
auditors, external auditors or other qualified persons who are 
responsible only to the board of directors.

PART 552--INCORPORATION, ORGANIZATION, AND CONVERSION OF FEDERAL 
STOCK ASSOCIATIONS

    3. The authority citation for part 552 continues to read as 
follows:

    Authority: 12 U.S.C. 1462, 1462a, 1463, 1464, 1467a.


Sec. 552.6-4  [Removed and Reserved]

    4. Section 552.6-4 is removed and reserved.
SUBCHAPTER D--REGULATIONS APPLICABLE TO ALL SAVINGS ASSOCIATIONS

PART 562--REGULATORY REPORTING STANDARDS

    5. The authority citation for part 562 continues to read as 
follows:

    Authority: 12 U.S.C. 1463.

    6. Section 562.3 is amended by removing paragraph (b)(2), 
redesignating paragraph (b)(3) as paragraph (b)(2), and revising 
paragraph (d) to read as follows:


Sec. 562.3  Statements of condition.

* * * * *
    (d) Alternative annual statement of condition. The requirement of 
paragraph (a)(2) of this section is satisfied when a savings 
association makes copies of its audited financial statements 
conspicuously available to the public in its home office and each of 
its branch locations.
* * * * *
    7. Section 562.4 is added to read as follows:


Sec. 562.4  Audit of savings associations and savings association 
holding companies.

    (a) General. The OTS may require, at any time, an independent audit 
of the financial statements of, or the application of procedures agreed 
upon by the OTS to a savings association, savings and loan holding 
company, or affiliate (as defined by 12 CFR 563.41(b)(1)) by qualified 
independent public accountants when needed for any safety and soundness 
reason identified by the Director.
    (b) Audits required for safety and soundness purposes. The OTS 
requires an independent audit for safety and soundness purposes:
    (1) If, as of its most recent report of examination, a savings 
association has received a composite rating of 3, 4 or 5 on the CAMEL 
financial institutions' rating scale; or
    (2) If, as of the beginning of its fiscal year, a savings and loan 
holding company controls savings association subsidiary(ies) with 
aggregate consolidated assets of $500 million or more.
    (c) Procedures. (1) When the OTS requires an independent audit 
because such an audit is needed for safety and soundness purposes, the 
Director shall determine whether the audit was conducted and filed in a 
manner satisfactory to the OTS.
    (2) The Director may waive the independent audit requirement for a 
savings association that, as of its most recent report of examination, 
has received a CAMEL rating of 3, 4 or 5, if the Director determines 
that an audit would not address the safety and soundness issues that 
caused the examination rating.
    (3) When the OTS requires the application of procedures agreed upon 
by the OTS for safety and soundness purposes, the Director shall 
identify the procedures to be performed. The Director shall also 
determine whether the agreed upon procedures were conducted and filed 
in a manner satisfactory to the OTS.
    (d) Qualifications for independent public accountants. The audit 
shall be conducted by an independent public accountant who:
    (1) Is registered or licensed to practice as a public accountant, 
and is in good standing, under the laws of the state or other political 
subdivision of the United States in which the savings association's or 
holding company's principal office is located;
    (2) Agrees in the engagement letter to provide the OTS with access 
to and copies of any work papers, policies, and procedures relating to 
the services performed;
    (3) Is in compliance with the American Institute of Certified 
Public Accountants' (AICPA) Code of Professional Conduct and meets the 
independence requirements and interpretations of the Securities and 
Exchange Commission and its staff; and
    (4) Has received, or is enrolled in, a peer review program that 
meets guidelines acceptable to the OTS.
    (e) Voluntary audits. When a savings association, savings and loan 
holding company, or affiliate (as defined by 12 CFR 563.41(b)(1)) 
obtains an independent audit voluntarily, it shall be performed only by 
an independent public accountant who satisfies the requirements of 
paragraphs (d)(1), (d)(2), and (d)(3) of this section.

PART 563--OPERATIONS

    8. The authority citation for part 563 continues to read as 
follows:

    Authority: 12 U.S.C. 375b, 1462, 1462a, 1463, 1464, 1467a, 1468, 
1817, 1828, 3806; 42 U.S.C. 4106.


Sec. 563.170  [Amended]

    9. Section 563.170 is amended by removing paragraph (a)(2) and the 
paragraph designation of (a)(1).

PART 571--STATEMENTS OF POLICY

    10. The authority citation for part 571 continues to read as 
follows:

    Authority: 5 U.S.C. 552, 559; 12 U.S.C. 1462a, 1463, 1464.


Sec. 571.2  [Removed and Reserved]

    11. Section 571.2 is removed and reserved.

    Dated: November 17, 1994.
Jonathan L. Fiechter,
Acting Director.
[FR Doc. 94-28878 Filed 11-22-94; 8:45 am]
BILLING CODE 6720-01-P