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#358272 - 05/11/05 04:45 PM
SAR to external auditors
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Anonymous
Unregistered
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Hi...our external auditors is requesting to review our SARs?
Are they permitted to review them? Any advise would be great. Thanks.
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#358274 - 05/11/05 05:07 PM
Re: SAR to external auditors
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Anonymous
Unregistered
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Dave,
Thank you for the response. They are external auditors from a financial standpoint. Apologies for not being clear.
Is it still okay for them to review? There was a Fraud issue that needed to be disclosed and required a SAR filing.
Thanks.
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#358276 - 05/11/05 11:52 PM
Re: SAR to external auditors
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Anonymous
Unregistered
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Dave,
"External auditors" that audit/attest our financial statements. The CPA's, KPMG, E&Y, D&T, etc. Non consulting and non internal audit.
Hope that clarifies my usage and terminology of external auditors.
I thought SARs were confidential and even at a "need to know" basis only within the institution.
Your assistance and input is appreciated.
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#358277 - 05/12/05 02:18 AM
Re: SAR to external auditors
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Platinum Poster
Joined: Mar 2005
Posts: 687
New Albany, IN
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David,
I would have to disagree with you. Once a SAR is filed with the federal agencies, such disclosure of these materials to non-authorized legal entities is a violation of the Act unless you can provide me with guideance that states differently. The FDIC examiners have actually been asking whom has reviewed SAR materials. We do not even disclosure name or information to our Board of Directors or the Audit Committee of the Board of Directors. Just the number of SARs filed in a particular time period.
_________________________
The opinion stated here is what it is, My Opinion.
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#358281 - 05/12/05 11:06 AM
Re: SAR to external auditors
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10K Club
Joined: Aug 2001
Posts: 21,939
Next to Harvey
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Anyone responsible for reviewing BSA compliance needs access to your SARs and SAR filing processes. The AmSouth decree should adequately support that premise.
If a fraud was material to a financial audit, then external auditors would certainly need all pertinent information regarding the fraud. However, they do not need to see the SAR.
_________________________
In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.
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#358284 - 05/13/05 07:39 AM
Re: SAR to external auditors
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Anonymous
Unregistered
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thank's kaybee.... just one question can or can't the EXTERNAL auditors review the SARs due to fraud? The reason I'm asking is because you stated " this isn't for their edification, so they can peruse SARS..."
Thanks to everyone
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#358285 - 05/13/05 01:44 PM
Re: SAR to external auditors
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10K Club
Joined: Nov 2000
Posts: 18,762
Central City, NE
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Quote:
I think the questioner is referring to the bank's EXTERNAL auditors, the public auditing firm auditing the financials, vs AN external firm engaged for a BSA audit. Big difference! If it is the the external financial auditors, this isn't for their edification, so they can peruse SARS. If it is AN external firm you hired to audit BSA, no problem.
Here's the original post: Hi...our external auditors is requesting to review our SARs? Are they permitted to review them? Any advise would be great. Thanks. ----------------------------------------------------------- You might be right kaybee, but I didn't see anything that said this was for a public auditing firm auditing the financials, vs AN external firm engaged for a BSA audit. I consider Banker's Compliance Consulting to be "external auditors" yet we conduct BSA reviews.
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#358288 - 05/13/05 05:12 PM
Re: SAR to external auditors
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Gold Star
Joined: May 2004
Posts: 274
New England
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I would agree with David and others here who state that you should not provide the actual SAR form (e.g., For FDIC it's OMB No. 3064-0077, for OCC OMB No. 1557-0180, for OTS OMB No. 1550-0003, etc.) to the external CPAs as part of an attestation. However, there is a dilemma which requires a degree of flexibility and thinking outside of the proverbial box: The auditors must attest that there is no intentional misapplication of GAAP; no falisification of accounting records or documents; must certify that there are no misstatements arising from any misappropriation of assets; and must attest to your institution's board of directors that nothing has occurred, such as a theft, which has materially caused the financial statements not to be fairly presented. They must, therefore, address Statement of Auditing Standards No. 99, Consideration of Fraud in a Financial Statement Audit. www.aicpa.org/antifraud www.cpa2biz.comThere is nothing wrong with your providing other documents, such as report narratives and other information which do not constitute the SAR form. Many institutions' investigative reports and anti-fraud processes are in separate reports. Though conducted in juxtaposition with the SAR completion, these separate documents can and should be shared with external attestation auditors. The CPAs would probably not be concerned with matters related to external BSA currency issues under 31 CFR Part 103, but they would certainly be concerned with the materiality to the financial statements of a computer intrusion, a large commercial loan fraud, a significant embezzlement, insider fraud, and other matters which obviously relate to their fiduciary duty to attest to the control systems preventing, detecting, and mitigating fraud in the institution. Using a degree of flexibility will allow you to find a way to share substantive data about fraud matters with them, without getting hung up on the SAR issue. Most third party anti-fraud prefessionals know now not to ask for "the SAR" itself, but merely ask for a listing of any financial frauds and a narrative -- but not the SAR -- identifying the status and resolution of the fraud matter. In the post-Enron/Worldcom environment resulting in the creation of the Public Company Accounting Oversight Board (PCAOB), a request by a CPA (who, after all, is acting as fiduciary) for the disclosure of fraud information and its resolution -- but not the SAR form itself -- is a very reasonable and necessary request.
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#358289 - 05/13/05 06:41 PM
Re: SAR to external auditors
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100 Club
Joined: Mar 2004
Posts: 102
New York
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The external auditors preparing the financial statements do not normally do a BSA audit. That would be a specific assignment for auditors qualified to do compliance audits, which would not include most CPA firms doing the annual audit.
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#358290 - 05/13/05 08:03 PM
Re: SAR to external auditors
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Gold Star
Joined: May 2004
Posts: 274
New England
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Quote:
The external auditors preparing the financial statements do not normally do a BSA audit. That would be a specific assignment for auditors qualified to do compliance audits, which would not include most CPA firms doing the annual audit.
Although your statements are correct, the original anon appears to be questioning the appropriateness of releasing to the attestation auditors a copy of a SAR that was completed as part of a fraud investigation. The anon qualifies in post 362679 that his/her institution did sustain a fraud.
We all agree: Don't provide a copy of the actual SAR.
Forgetting for a moment the SAR, there is the matter of a fraud having occurred. I don't see anywhere where the anon mentions a BSA audit, a compliance audit, or any other type of audit other than a financial attestation. This means that the CPAs have a duty to attest to the status of material fraud in the institution. For the record, we don't know if the CPAs actually said, "Let us see the SAR", or if they said, "May we see internal reports related to the detection and resolution of the fraud". There are numerous regulatory issuances stating, specifically, that attestation auditors may see reports of examination and other reports of condition, so it is proper that they view reports associated with a fraud. This is not that complex.
(For the record, many Big-4 audit and third-party audit firms employ CRCMs and CAMS and have very large BSA audit units, such as KPMG and PricewaterhouseCoopers, so the SAR confidentiality issue is not a foreign subject to these firms).
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