Skip to main content
SpringerLink
Log in

The complexity of bank regulation: audit requirements in the USA

  • Original Article
  • Published:
Journal of Banking Regulation Aims and scope Submit manuscript

Abstract

We use requirements governing external audits in the US banking industry as a case study to illustrate the complexity of regulatory structure. Complexity reflects a flexibility that has been used to “tailor” regulations for particular categories of banks. But it appears to conflict with recent proposals to “rationalize” a system that is said to lack coherence.

This is a preview of subscription content, log in via an institution to check access.

Access this article

Log in via an institution

Price excludes VAT (USA)
Tax calculation will be finalised during checkout.

Instant access to the full article PDF.

Institutional subscriptions

Similar content being viewed by others

Notes

  1. The $1 billion threshold, established in 2005, replaced an original threshold of $500 million.

  2. Reports are filed with FDIC regional offices. Non-confidential parts of them must be made publicly available but with limited accessibility (on-site at a bank).

References

  1. Volcker Alliance. 2015. Reshaping the Financial Regulatory System.

  2. U.S. Treasury. 2017. A Financial System that Creates Economic Opportunities.

  3. Economic Growth and Regulatory Paperwork Reduction Act. 2015. Hearings in Boston.

  4. Economic Growth and Regulatory Paperwork Reduction Act. 2017. Federal Register (March 30).

  5. U.S. Senate Committee on Banking, Housing and Urban Affairs. 2017. Senators Release Text of “Economic Growth, Regulatory Relief and Consumer Protection Act” (November 16).

  6. U.S. Treasury. 2017. A Financial System that Creates Economic Opportunities.

  7. Economic Growth and Regulatory Paperwork Reduction Act. 2017. Federal Register (March 30).

  8. U.S. Treasury. 2017. A Financial System that Creates Economic Opportunities.

  9. Awrey, D. 2011. Regulating financial innovation: A more principles-based approach? Brooklyn Journal of Corporate, Financial & Commercial Law 5: 273–315.

    Google Scholar 

  10. Lautenschlager, S. 2017. Walled Off? Banking regulation after the crisis. Bank for International Settlements (March 13).

  11. Cunningham, L. 2007. A prescription to retire the rhetoric of “principles-based systems” in corporate law, securities regulation and accounting. Vanderbilt Law Review 60: 1409–1494.

    Google Scholar 

  12. U.S. General Accounting Office (GAO). 1989. Bank Failures: Independent Audits Needed to Strengthen Internal Control and Bank Management.

  13. Ibid.

  14. Ibid, Appendix VI.

  15. Bies, S. 2002. Effective accounting and disclosure for financial transactions and financial institutions. BIS Review 63: 1–5.

    Google Scholar 

  16. Broughton, K. 2017. What’s behind the curious rise in bank auditing woes? American Banker (March 9).

  17. Altamuro, J., and A. Beatty. 2010. How does internal control regulation affect financial reporting. Journal of Accounting and Economics 49: 58–74.

    Article  Google Scholar 

  18. Dahl, D., J. O’Keefe, and G. Hanweck. 1998. The influence of examiners and auditors on loan-loss recognition. FDIC Banking Review 11: 10–25.

    Google Scholar 

  19. Jin, J., K. Kanagaretnam, and G. Lobo. 2013. Unintended consequences of the increased asset threshold for FDICIA internal controls: Evidence from U.S. private banks. Journal of Banking & Finance 37: 4879–4892.

    Article  Google Scholar 

  20. Jin, J., K. Kanagaretnam, G. Lobo, and R. Mathieu. 2013. Impact of FDICIA internal controlson bank risk taking. Journal of Banking & Finance 37: 614–624.

    Article  Google Scholar 

  21. LaFond, R., and H. You. 2010. The federal deposit insurance corporation improvement act, bank internal controls and financial reporting quality. Journal of Accounting and Economics 49: 75–83.

    Article  Google Scholar 

  22. Independent Community Bankers of America. 2016. Comments Regarding Amendments to Smaller Reporting Company Definition (August 29).

  23. Economic Growth and Regulatory Paperwork Reduction Act. 2017. Federal Register (March 30).

  24. Ibid.

  25. Awrey, D. 2011. Regulating financial innovation: A more principles-based approach? Brooklyn Journal of Corporate, Financial & Commercial Law 5: 273–315.

    Google Scholar 

  26. FDIC. 2005. 12 C.F.R. Part 363, Final Rule, November 28, 2005 (Part 363).

  27. Independent Community Bankers of America. 2016. Comments Regarding Amendments to Smaller Reporting Company Definition (August 29).

  28. Awrey, D. 2011. Regulating financial innovation: A more principles-based approach? Brooklyn Journal of Corporate, Financial & Commercial Law 5: 273–315.

    Google Scholar 

  29. FDIC. 2005. 12 C.F.R. Part 363, Final Rule, November 28, 2005 (Part 363).

  30. Economic Growth and Regulatory Paperwork Reduction Act. 2017. Federal Register (March 30).

  31. Lautenschlager, S. 2017. Walled Off? Banking regulation after the crisis. Bank for International Settlements (March 13).

  32. Economic Growth and Regulatory Paperwork Reduction Act. 2015. Hearings in Boston.

Download references

Acknowledgements

The views expressed are those of the individual authors and do not reflect official positions of the Federal Reserve Bank of St. Louis, the Federal Reserve System, or the Board of Governors.

Author information

Authors and Affiliations

  1. Division of Bank Supervision, Federal Reserve Bank of St. Louis, P.O. Box 442, St. Louis, MO, 63166, USA

    Drew Dahl & Larry Sherrer

Authors
  1. Drew Dahl
    View author publications

    You can also search for this author in PubMed Google Scholar

  2. Larry Sherrer
    View author publications

    You can also search for this author in PubMed Google Scholar

Corresponding author

Correspondence to Drew Dahl.

Rights and permissions

Reprints and permissions

About this article

Check for updates. Verify currency and authenticity via CrossMark

Cite this article

Dahl, D., Sherrer, L. The complexity of bank regulation: audit requirements in the USA. J Bank Regul 20, 286–289 (2019). https://doi.org/10.1057/s41261-018-0091-2

Download citation

  • Published:

  • Issue Date:

  • DOI: https://doi.org/10.1057/s41261-018-0091-2

Keywords

Search

Navigation