CAE Agenda: Your Monthly Audit News Roundup - September 2020
Our team has collected the top internal audit news, insights and resources for financial services organizations to help you and your teams.
Thank you for reading the September edition of the CAE Agenda.
2020 Internal Audit Capabilities and Needs Survey Report
In recent years, mammoth waves of disruption have both buffeted and ignited organizations in their drive to change and stay relevant. Not surprisingly, internal audit functions have seen the effects. It’s now time for internal audit leaders and their teams to take the initiative, stand up and ride their own wave of transformation and innovation.
Next-generation auditing capabilities, processes and tools — from strategic vision, agile auditing and dynamic risk assessment to artificial intelligence (AI), machine learning and process mining, among others — should be pressing priorities for the internal audit function to build and grow as their organizations continue to transform and stakeholder expectations for these capabilities rise. The results of our latest Internal Audit Capabilities and Needs Survey show that audit committees certainly hold this to be true. At present, too many internal audit teams are not adequately prepared to commit to difficult but necessary transformation.
August 26, 2020
On August 26, the federal bank regulatory agencies finalized three rules, which are either identical or substantially similar to interim final rules currently in effect that were issued earlier this year. They include:
- A final rule that temporarily modifies the community bank leverage ratio, as required by the CARES Act.
- A final rule that makes more gradual, as intended, the automatic restrictions on distributions if a banking organization’s capital levels decline below certain levels.
- A final rule that allows institutions that adopt the current expected credit losses (CECL) accounting standard in 2020 to mitigate the estimated effects of CECL on regulatory capital for two years.
FDIC-Insured Institutions Reported Lower Profitability but Strong Liquidity and Higher Capital Levels in Second Quarter 2020
August 25, 2020
On August 25, the Federal Deposit Insurance Corporation (FDIC) reported that commercial banks and savings institutions saw a decrease in net income of 70% from a year ago, while liquidity and capital levels remained very strong to meet loan demand and absorb any losses in the future.
August 25, 2020
On August 25, the Financial Stability Board (FSB) published a Key Attributes Assessment Methodology for the Insurance Sector. The methodology sets out essential criteria to guide the assessment of the compliance of a jurisdiction’s insurance resolution framework with the FSB’s Key Attributes of Effective Resolution Regimes for Financial Institutions. It was developed in collaboration with experts from FSB jurisdictions, relevant standard-setting bodies, the International Monetary Fund and the World Bank. It is designed to promote consistent assessments across jurisdictions and to provide guidance to jurisdictions when adopting or amending their resolution regimes to implement the Key Attributes.
Agencies Issue Statement on Bank Secrecy Act Due Diligence Requirements for Customers Who May Be Considered Politically Exposed Persons
August 21, 2020
On August 21, the Federal Reserve Board, the Federal Deposit Insurance Corporation, the Financial Crimes Enforcement Network, the National Credit Union Administration, and the Office of the Comptroller of the Currency today issued a joint statement clarifying that Bank Secrecy Act (BSA) due diligence requirements for customers who may be considered “politically exposed persons” (PEPs) should be commensurate with the risks posed by the PEP relationship.
Basel Committee Releases Consultative Documents on Principles for Operational Risk and Operational Resilience
August 6, 2020
Given the critical role played by banks in the global financial system, increasing banks' resilience to absorb shocks from operational risks, such as those arising from pandemics, cyber incidents, technology failures or natural disasters, will provide additional safeguards to the financial system as a whole. Recognizing that a concerted operational resilience effort may not prevent a significant shock resulting from a specific hazard, the Basel Committee seeks comment on proposed Principles for Operational Resilience that aim to mitigate the impact of potentially severe adverse events by enhancing banks' ability to withstand, adapt to and recover from them. Comments are due by Friday, November 6, 2020.
August 6, 2020
Financial authorities face the task of deciding whether their regulatory framework needs to be adjusted to account for new fintech activities. To do so, they will need to consider a number of elements. This paper explores how digital banking and fintech platform financing are regulated and provides a cross-country overview of the regulatory requirements for fintech activities in 30 jurisdictions.
As Regulators Boost Market Surveillance Capabilities, Firms Should Enhance Self-Monitoring to Reduce Trading Violations
This podcast reviews the financial services industry's early implementation of business continuity planning during the pandemic and looks forward to where the industry might be headed. Kenneth E. Bentsen Jr., president and CEO of the Securities Industry and Financial Markets Association (SIFMA), sat down with Ron Lefferts, global leader of technology consulting at Protiviti, and Tom Price, a managing director at SIFMA and head of its technology, operations and business continuity team, to explore the story behind the industry's business continuity planning efforts in the face of the global pandemic.
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