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FCA Examination Manual updates

The FCA Examination Manual is updated regularly to reflect changes in laws, regulations, or other examination criteria, and to address emerging risks affecting the Farm Credit System and changes to its products and services. The list below includes all updates since August 2014.​​
  
  
Update Details
4/23/2024EM 31.1 Direction & Control of Operations

Update included the following:

  • Added new procedure titled Stress Testing Framework.
  • Added guidance on wholesale funding arrangements to the Cooperative Principles procedure.
  • Updated the UBE procedure to clarify guidance expectations and regulatory requirements.
  • Made other misc. technical and grammatical edits.
4/23/2024EM 41.2 Earnings Management
Update included the following:
  • Updated hyperlinks to eCFR.
  • Changed all references of ‘pricing model’ to ‘pricing framework’.
  • Added an evaluative question on stress testing to the Plans & Strategies procedure.
  • Made revisions in several procedures to address guidance from FCA BL-074.
  • Made other misc. technical and grammatical edits.
3/5/2024EM-31.4 Human Capital Management

Update included the following:

  • Added language to the topic overview and several procedures to address outsourcing human capital functions.
  • Added a reference and link to the diversity and inclusion IM in the Plan and Strategies procedure.
  • Revised links to go to the eCFR and added hyperlinks to the AAP regulations.
  • Added additional guidance in the Compensation Committee procedure to expand on considerations for committee effectiveness.
  • Removed the section on maximum bank director compensation and moved applicable content to a bank only board policy evaluative question.
  • Added a couple notes to the Employee Compensation procedure to address the incentive rules for insurance sales and not using FIRS ratings as incentive criteria.
  • Updated the Audit procedure to be consistent with the other audit procedures in the Examination Manual.
  • Made misc. other technical and grammatical changes. 
3/5/2024EM 31.5 Mission Compliance
Update included the following:
  • Updated hyperlinks to eCFR.
  • Added reference to IM on revisiting diversity and inclusion 10 years later and added additional guidance.
  • Updated the YBS procedure to address the new regulation and revised BL-040.
  • Revised the Investments procedure to include an evaluative question on guidance and controls for investing in public mission purposes and another on RBICs.
  • Updated the Audit procedure to be consistent with the other audit procedures in the Examination Manual and added a reference to the revised BL-040.
  • Made other misc. technical and grammatical edits.
2/2/2024EM- 33.1 Federal Lending Regulations
Published new guidance for most of the procedures. Updated guidance in the following procedures for consistency in structure and to address outdated guidance, and technical and grammatical updates:
  • HMDA
  • TILA
  • RESPA
  • Margin Stock
11/17/2023WP 33.3-1 Annual Report to Shareholders
Update included the following:
  • Added a 620.2(c) regulatory cite to the “note” sections in rows 5, 9c, and 10c.
  • Added text to more closely mirror regulatory language in rows 9d, 11, and 25j.
  • Revised language around allowance for credit losses to accurately reflect regulatory expectations in row 47b.
  • Fixed incorrect number reference to accurately reflect #104 in rows 105 and 106.
  • Made miscellaneous other technical and grammatical updates.
9/27/2023EM-1.1 Structure and Use of Manual
Updated guidance to reflect 30 Examination Manual topics, added link to Summaries of Examination Manual Updates, added language that the Examination Manual for System institutions excludes Farmer Mac, and made miscellaneous other technical and grammatical updates.
9/27/2023EM-1.2 Overview of FCA Examination Process
Updated guidance to add a section on FCA access to institution documents and records, add a new requirement for institutions to request an IRS Express Determination letter, and made miscellaneous other technical and grammatical updates.
9/26/2023WP 33.3-1 Annual Report to Shareholders
Updated guidance to remove the reference to historical capital ratios, adjust terminology to reflect the allowance for credit losses, update links to the eCFR, and made miscellaneous other technical and grammatical updates.
9/22/2023EM-31.9 Standards of Conduct, Whistleblower, & Criminal Referral
Updated guidance to provide more direction over Standards of Conduct (SOC) related benchmarks and thresholds, revise SOC Official review guidance, and clarify guidance on SOC Official investigations.  Added additional regulatory expectations for whistleblower programs, criminal referrals, and SOC audit requirements. Made miscellaneous technical and grammatical updates.
6/29/2023EM- 31.1 Direction & Control of Operations
Revised the topic name from Corporate Governance to Direction & Control of Operations. Added link to new Interagency guidance on Third-Party Risk Management. Revised FCA regulation hyperlinks to take you to the Electronic Code of Federal Regulations. Made other miscellaneous technical and grammatical updates.
6/29/2023EM-31.8 Director Elections & Qualifications
Elevated as a standalone topic (was formerly addressed as part of the Corporate Governance topic). Added an audit procedure and related guidance. No other changes were made. 
6/29/2023EM-31.9 Standards of Conduct, Whistleblower, & Criminal Referral
Elevated as a standalone topic (was formerly addressed as part of the Corporate Governance topic). Added an audit procedure and related guidance. No other changes were made.
6/22/2023EM 1.3 FIRS
Updates included the following:
  • Changed the Managing Risk Concentrations qualitative factor to Concentration Risk Management.
  • Changed the Corporate Governance qualitative factor to Direction & Control of Operations.
  • Added two new qualitative factors under the Management component, Director Elections & Qualifications and Standards of Conduct, Whistleblower, & Criminal Referral.
  • Moved criteria from the old Corporate Governance qualitative factor to the new qualitative factors and added additional criteria under the new qualitative factors.
  • Made miscellaneous technical and grammatical updates.
6/16/2023EM- 22.4 Concentration Risk Management
Published new guidance for the Concentration Risk Management topic. Additionally, WP 22.4-7 Lending (and Leasing) Limit Base Computation was rescinded.
6/14/2023High-Risk Asset Accounting and Reporting
Updated the guidance to address new CECL terminology and remove guidance related to Troubled Debt Restructures. Revised FCA regulation hyperlinks to take you to the Electronic Code of Federal Regulations. Made other miscellaneous technical and grammatical updates.
6/14/2023EM-22.2 Risk Identification
Updated the guidance to address new CECL terminology and remove guidance related to Troubled Debt Restructures. Revised FCA regulation hyperlinks to take you to the Electronic Code of Federal Regulations. Made other miscellaneous technical and grammatical updates.
5/11/2023EM 1.3 FIRS
We made miscellaneous technical and grammatical updates in addition to the following changes in the qualitative factor criteria and statistics:
  • Overview – Revised allowance for loan loss references to be allowance for credit losses.
  • Assets – Revised allowance for loan loss references to be allowance for credit losses and also added a new statistic for allowance for credit losses on debt securities. Specified the qualitative factor for Allowance for Losses qualitative factor is focused on loans and added comments to address allowance for credit losses on debt securities in the Investments qualitative factor.
  • Management – Added rating criteria around internal controls over financial reporting to the Financial & Shareholder Reporting qualitative factor.
  • Earnings – Revised provision for loan loss references to be provision for credit losses on loans and also added a new statistic for provision for credit losses on debt securities.
  • Liquidity – Added rating criteria around the banks statutory collateral margin to the Liquidity Risk qualitative factor.
1/27/2023EM-21.2 Allowance for Losses

Updated the guidance to address the new CECL requirements that were effective as of January 1, 2023. Specifically: 

  • Changed the procedure name for Policy, Procedures, Methodologies, & Controls. (It was previously named Policy, Procedures, & Controls.)
  • The Allowance Level and Policy, Procedures, Methodologies, & Controls procedures were rewritten to address the new CECL requirements.
  • The Audit and Transaction Testing procedures included minor revisions to address the new CECL requirements. 
  • Made other miscellaneous technical and grammatical updates.
1/27/2023EM- 21.3 Investments
Updated the guidance to address the new CECL requirements that were effective as of January 1, 2023. Specifically:
  • Changed the procedure name for Financial Impact. (It was previously named Accounting.)
  • Moved the examination of financial impact to the Financial Impact procedure from the Portfolio Characteristics & Trends procedure.
  • Updated the various procedures under the Investments topic to address the new CECL requirements. The majority of the revisions were in the Financial Impact procedure to address ACL processes, ACL zero-loss, ACL at acquisition, and ACL level.
  • Made other miscellaneous technical and grammatical updates.
1/13/2023EM- 31.1 Corporate Governance
We made the following various updates to the Corporate Governance Examination Manual topic:

Standards of Conduct (SOC)

  • Changed the procedure name SOC Policy and Procedures to SOC Program.
  • Updated the guidance in the SOC Program procedure to reflect the new SOC regulations that became effective on January 1, 2023.
  • Removed procedures SOC Internal Controls and SOC Disclosure Statements. The updated guidance for these areas is now incorporated in the SOC Program procedure.
  • Removed Workpaper WP 31.1-13 SOC Policies and Procedures.
Other Updates
  • Published a new Board Committees procedure.
  • Updated outdated hyperlinks in the Enterprise Risk Management procedure.
  • Revised reference to the Board Policies and Charters Workpaper as this is now a supplemental document in the Policy Administration procedure. (Removed WP 003 Board Policies and Charters as this new supplemental document replaced the workpaper.)
  • Added considerations for additional policy direction in the Internal Control Policy procedure.
  • Added reference to specific SOC audit expectations and transaction testing for insider loans and criminal referrals in the Audit procedure.
  • Removed reference to FCA Regulation 612.2155 in the Transaction Testing procedure.
  • Made miscellaneous other technical and grammatical updates.
11/22/2022EM-31.7 Information Technology & Security
Published new guidance for the Information Technology & Security topic.
11/17/2022EM- 31.3 Audit & Review Programs
Made revisions to the guidance to encourage examiners to weigh the costs versus the benefits of applying the International Standards for the Professional Practice of Internal Auditing at certain low-risk institutions. Provided additional clarifications in our expectations regarding audit coordinators and external assessments. Made miscellaneous other technical and grammatical updates.
9/1/2022EM- 61.3 Derivatives
Published new guidance for the Derivatives topic.
4/1/2022EM- 1.3 Financial Institution Rating System
We made miscellaneous technical and grammatical updates in addition to the following changes in the qualitative factor criteria:
  • Capital Management – Added reference to assessing capital needs and additional criteria under the weak rating regarding insufficient management processes.
  • Allowance for Losses – Added criteria regarding allowance levels.
  • Risk Identification – Added criteria for risk rating processes.
  • Credit Administration – Added criteria for credit analysis and internal controls.
  • Loan Underwriting Direction – Removed criteria for credit analysis, compensation programs, and delegated lending authorities.
  • Corporate Governance – Removed reference to the IT governance framework and added criteria for the following areas:
    • Board reporting processes
    • Corrective action processes
    • Internal control policy
    • Board committees
    • Policy administration
    • Enterprise, third-party, and model risk management and IT governance programs
  • Audit and Review Programs – Removed reference to the internal control policy and added criteria for the following areas:
    • Audit plan
    • Audit policies and procedures
    • Internal audit structure and staffing
    • Audit reports and effectiveness/reliability of audits
    • Resolution of audit findings
  • Information Technology & Security – Removed reference to the vendor management program and added criteria for the following areas:
    • IT governance framework
    • IT security controls
    • IT operational controls
    • Cybersecurity threats and vulnerabilities
  • Financial & Shareholder Reporting –  Added additional criteria regarding compliance with regulations.
  • Liquidity Risk – Added criteria for the high risk rating for associations regarding funding penalties or risk-based premiums.
  • Interest Rate Risk – Rewrote the criteria for this factor. Removed the differentiation for banks and associations.
3/21/2022EM- 21.1 Portfolio Quality & Composition
Rewrote the Direct Loans (banks only) procedure guidance into an evaluative question format. Additionally, reorganized some content into other procedures in the examination manual for consistency in examination approach as reflected in the 3/21/2022 Credit Administration and Risk Identification topic revisions.
3/21/2022EM- 22.2 Risk Identification
Added an evaluative question regarding direct loans (banks only) to the Uniform Classification System procedure; added additional guidance to the High-Risk Asset Accounting procedure regarding management and disposal of OPO; added considerations for selecting a loan sample and evaluating testing results for direct loan transaction testing in the Transaction Testing procedure; and made miscellaneous other technical and grammatical updates to the topic.
3/21/2022EM- 22.3 Credit Administration
Published new guidance for the Regulatory Compliance and Administration of Lending Programs procedure groups. Made updates to the General Credit Controls group: added a reference to the High-Risk Asset Accounting guidance in the topic Overview; added guidance for FCA Regulation 614.4200(c) and removed evaluative questions regarding Eligibility and Authorities, Due Diligence, and Other Property Owned (OPO) in the Credit Administration Guidance & Standards procedure; added a reference to the Institute of Internal Auditors Three Lines Model and added additional guidance around disbursement and payment controls as well as management review and supervision in the Internal Controls procedure; revised the Audit/Review procedure guidance to provide additional detail and examples and incorporate references to professional standards; reorganized the Transaction Testing procedure guidance and added a list of areas considered for examination of credit administration transaction testing and added considerations for selecting a loan sample for direct loan transaction testing; removed an evaluative question on adherence to lending guidance and added additional guidance on direct loan monitoring in the Direct Loan & OFI Administration (banks only) procedure; and made miscellaneous other technical and grammatical updates to the procedure group.
3/14/2022EM- 11.2 Capital Mangement
Made revisions to the guidance to address the Tier 1/Tier 2 Regulatory Capital Framework final rule that became effective on January 1, 2022.  Specifically, changed the regulation references to 628.21 from 615.5200 where needed. Included revisions to address BL-074. Made miscellaneous other technical and grammatical updates.
 
3/14/2022WP 11.2-3 Capital Distributions
Made revisions to the guidance to address the Tier 1/Tier 2 Regulatory Capital Framework final rule that became effective on January 1, 2022.  Specifically, revised guidance in questions 1b &1c to address the requirements in the final rule.  Made miscellaneous other technical and grammatical updates.
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