I know that it is not a regulation but more of a "best practices" rule that employees of financial institutions take annual leave consisting of five consecutive days away from the office for detecting instances of fraud or theft. Does anyone know where I can find a policy or an example of a policy so that I may show it to our HR VP?

Do you all have an external audit firm? A regulator might also be able to help you with this. Also, be sure that the five consecutive days away from the office are days that the office is actually open for business. Usually holidays do not count as the office being open for business. Also, someone else should be doing their duties while they are gone - otherwise them being gone is not beneficial because someone else isn't looking at the daily tasks performed by the absent employee.

I know that sometimes executive officers, like the President and Senior Vice Presidents, are requested to take two consecutive weeks. In these cases, it is impossible for someone to sit in and actually DO their job - what do you do then?

In the FDIC's Risk Management Manual of Examination Policies under section 4.2 Basic Elements of Internal Control the following is stated under "vacation policies" :

Vacation Policies
All banks should have a vacation policy, which provides that officers and employees be absent from their duties for an uninterrupted period of not less than two consecutive weeks. Such a policy is considered an important internal safeguard largely because perpetration of an embezzlement of any substantial size usually requires the constant presence of the embezzler in order to manipulate records, respond to inquiries from customers or other employees, and otherwise prevent detection. Examiners and bank management should recognize that the benefits of this policy may be substantially, if not totally, eroded if the duties performed by an absent individual are not assumed by someone else. Where the bank's policy does not conform to the two-week recommended absence period, examiners should encourage the board of directors to annually review and approve the policy actually followed and the exceptions allowed. In such cases it is important that adequate compensating controls be devised and strictly enforced. If after consideration of all relevant facts and circumstances it is determined that the vacation policies are deficient, the matter should be discussed with the chief executive officer and the board of directors. Comments and recommendations on the supplemental Internal Routine and Controls schedule may be appropriate.

We still require all bank employees to take 2 consecutive weeks vacation.

That's interesting. The bank I currently work for only requires you take 5 days. If you want to take more than 5 days you have to get special permission from Sr. Management. So I assume we are not complying with the FDIC risk policy?

There have been a couple of threads on this topic in recent years. I suggest you do a search to find them.

As I recall from these threads, various government agencies have guidelines but none have mandated length of leave. You need to have written policy and procedures that address vacations to the satisfaction of your particular regulator.

We are FRB regulated and recently went to a 5 day mandatory vacation for full-time employees. Some employees will tag a day or two onto an out-of-bank seminar to get their week away without using up all their vacation time.