I was wondering what others do. We do adverse action testing for commercial loans with gross annual revenues $1 million or less and don't test for those with gross annual revenues greater than $1 million, thinking there is more risk with the former. Our outside auditing firm wants us to test both. Do others test both populations? Thanks.

For under $1 million, why are you not giving the statement to the right of receiving a notice at application instead of an adverse action form?

For over $1 million, how do you test the oral notifications?

On oral notification, we made the point it would be difficult to test and their contention was there should already be procedures in place to ensure compliance which would allow us to test. As far as adverse action notice, it was felt this would document the timeliness and avoid any follow-up with the customer.

When oral notice is provided, this should be documented. I'd test to ensure the documentation is correct and that procedures are clear that oral notice is acceptable for certain applicants as long as it is documented appropriately within the loan file and/or non-origination tracking spreadsheet/report.