Once on-site, examiners analyze the bank’s loans and other assets to ascertain the organization’s current condition, and also to evaluate its internal control process and its own ability to identify and resolve problems. As a result, the Federal Reserve is placing greater reliance than before on a bank’s internal auditors and on the accuracy and adequacy of bank information systems.
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.