The review of a bank’s information flow extends from top to bottom, and with the expectation that bank senior management and boards of directors are actively involved in monitoring the bank’s activities and providing sufficient guidance regarding their appetite for risk.
As in the past, performance of substantive checks on the reliability of a bank’s controls remains an important element of the examination process, albeit in a more automated and advanced form. For example, we are pursuing ways to make greater use of loan sampling in order to generate statistically valid conclusions about the accuracy of a bank’s internal loan review process.