Summary

This operational audit of the Office of Financial Regulation (OFR) focused on OFR’s regulation of State-chartered banks and credit unions.  Our audit, covering the period March 2006 through February 2008, and selected actions taken through December 2008, also included a follow-up on prior audit findings contained in audit report No. 2007-090.  Our audit disclosed the following:

Review of De Novo Bank Applications

Finding No. 1:  OFR did not adequately document, through the use of its established worksheets and checklists, the elements of de novo bank[1] applications that were reviewed for compliance with the requirements of Florida law and rules. 

Credit Union Examinations

Finding No. 2:  Contrary to OFR policies and procedures, OFR staff did not always adequately complete an examination checklist in support of the credit union examinations performed.

Bank Examination Reports

Finding No. 3:  In conducting bank examinations, OFR was to follow the Federal Deposit Insurance Corporation (FDIC) Risk Management Manual of Examination Policies (Policies) and supplemented its guidance through memorandums to staff, notes from management meetings, and training schools provided through FDIC.  Our audit found that OFR generally followed FDIC policies and procedures.  However, we did find that OFR Reports of Examination did not always include all mandatory FDIC disclosures.

Bank Examination Documentation

Finding No. 4:  OFR had not established a single, uniform checklist to document the completion of all applicable bank examination procedures.

Bank and Credit Union Examination Review

Finding No. 5:  Area field offices did not always document the independent supervisory review of examination working papers and Reports of Examination.

Financial Institution Surveillance

Finding No. 6:  OFR had not established written procedures related to on-going surveillance of State-chartered financial institutions.

Management’s response is included as Exhibit A.