Supervisors need to place more emphasis on determining whether the strength and effectiveness of those controls are tested by an independent third party other than supervisors and if they are, how frequently. In particular, as part of our risk-focused supervision, we have endeavored to use the work of internal auditors when it is deemed to be reliable.
For example, the Board cannot adopt by regulation the changes called for in the proposed Check Clearing for the 21st Century Act, because the bill affects the rights of the end users of checks (including businesses and consumers), in particular their right to receive their original checks, and allocates liability for not only the amount of the check but also interest, litigation costs, and in some cases consequential damages.