Financial Institutions: Time Limits on Holding Deposits Generally Met but More Oversight Needed
GGD-91-132
Published: Sep 30, 1991. Publicly Released: Sep 30, 1991.
Skip to Highlights
Highlights
Pursuant to a legislative requirement, GAO evaluated the implementation and administration of the Expedited Funds Availability Act (EFAA), which limits the length of time that financial institutions can hold funds from checks deposited into customer accounts, focusing on the Federal Reserve Board's (FRB) efforts to establish examination procedures and monitor the act's compliance.
Recommendations
Recommendations for Executive Action
| Agency Affected | Recommendation | Status |
|---|---|---|
| Office of Thrift Supervision | For better administration of EFAA, FRB, the Comptroller of the Currency, the Chairman of the Federal Deposit Insurance Corporation, the Director, Office of Thrift Supervision, and the Chairman of the National Credit Union Administration should collectively evaluate their examination experience under the act and review the FFIEC uniform examination guidelines to identify procedures that they consider essential for assessing compliance with EFAA funds availability provisions. Those procedures should include guidance on: (1) the extent of testing of various types of transactions needed to ascertain compliance; and (2) the type and extent of documentation needed to support the examiners' conclusions and facilitate supervisory review. The procedures deemed essential should then be incorporated into each agency's compliance examination handbook or manual, and examiners should be required to use them during subsequent examinations. |
OTS worked with the other regulators through FFIEC to revise EFAA exam procedures. The guidelines have been updated to include minor changes and have been revised in that management or policy-related procedures have been separated from operations review procedures. Guidance was issued in July 1992.
|
| Office of the Comptroller of the Currency | For better administration of EFAA, FRB, the Comptroller of the Currency, the Chairman of the Federal Deposit Insurance Corporation, the Director, Office of Thrift Supervision, and the Chairman of the National Credit Union Administration should collectively evaluate their examination experience under the act and review the FFIEC uniform examination guidelines to identify procedures that they consider essential for assessing compliance with EFAA funds availability provisions. Those procedures should include guidance on: (1) the extent of testing of various types of transactions needed to ascertain compliance; and (2) the type and extent of documentation needed to support the examiners' conclusions and facilitate supervisory review. The procedures deemed essential should then be incorporated into each agency's compliance examination handbook or manual, and examiners should be required to use them during subsequent examinations. |
OCC worked with other regulators through FFIEC to revise EFAA exam procedures. Guidelines have been updated to include minor changes and have been revised in that management or policy related procedures have now been separated from operations review procedures; however, guidance contains no date, but was sent out in April, 1992.
|
| Federal Deposit Insurance Corporation | For better administration of EFAA, FRB, the Comptroller of the Currency, the Chairman of the Federal Deposit Insurance Corporation, the Director, Office of Thrift Supervision, and the Chairman of the National Credit Union Administration should collectively evaluate their examination experience under the act and review the FFIEC uniform examination guidelines to identify procedures that they consider essential for assessing compliance with EFAA funds availability provisions. Those procedures should include guidance on: (1) the extent of testing of various types of transactions needed to ascertain compliance; and (2) the type and extent of documentation needed to support the examiners' conclusions and facilitate supervisory review. The procedures deemed essential should then be incorporated into each agency's compliance examination handbook or manual, and examiners should be required to use them during subsequent examinations. |
FDIC worked with the other regulators through FFIEC to revise EFAA exam procedures. The guidelines have been updated to include minor changes and have been revised in that management or policy procedures have been separated from operations review procedures. FDIC guidance was issued May 21, 1992.
|
| Board of Governors | For better administration of EFAA, FRB, the Comptroller of the Currency, the Chairman of the Federal Deposit Insurance Corporation, the Director, Office of Thrift Supervision, and the Chairman of the National Credit Union Administration should collectively evaluate their examination experience under the act and review the FFIEC uniform examination guidelines to identify procedures that they consider essential for assessing compliance with EFAA funds availability provisions. Those procedures should include guidance on: (1) the extent of testing of various types of transactions needed to ascertain compliance; and (2) the type and extent of documentation needed to support the examiners' conclusions and facilitate supervisory review. The procedures deemed essential should then be incorporated into each agency's compliance examination handbook or manual, and examiners should be required to use them during subsequent examinations. |
Because the Federal Reserve has routinely complied with the EFAA exam procedures, it does not plan to change its approach. The Federal Reserve did work with the FFIEC on the guidelines. The guidelines have been updated through minor changes.
|
| National Credit Union Administration | For better administration of EFAA, FRB, the Comptroller of the Currency, the Chairman of the Federal Deposit Insurance Corporation, the Director, Office of Thrift Supervision, and the Chairman of the National Credit Union Administration should collectively evaluate their examination experience under the act and review the FFIEC uniform examination guidelines to identify procedures that they consider essential for assessing compliance with EFAA funds availability provisions. Those procedures should include guidance on: (1) the extent of testing of various types of transactions needed to ascertain compliance; and (2) the type and extent of documentation needed to support the examiners' conclusions and facilitate supervisory review. The procedures deemed essential should then be incorporated into each agency's compliance examination handbook or manual, and examiners should be required to use them during subsequent examinations. |
Revised guidance has been sent to the field offices; however, the estimated time for formal revision of the Examiner's Guide has been changed to April 1993.
|
| Board of Governors | For better administration of EFAA, FRB should issue supplementary guidance that highlights and illustrates the most frequently violated EFAA provisions to enhance financial institutions' compliance with EFAA. |
FRB provided a copy of the guidance pamphlet entitled "A Guide to Regulation CC Compliance" which was issued at the end of 1992. The pamphlet highlighted EFAA requirements that have caused the most compliance problems and provided availability rule examples to improve compliance by institutions.
|
Full Report
Public Inquiries
Topics
Bank depositsBanking lawBanking regulationCheck disbursement or controlElectronic funds transferFederal reserve banksFinancial institutionsInformation systemsLending institutionsMonitoring