September 30, 2014
Since it began operations in July 2011, the Consumer Financial Protection Bureau (CFPB) has made significant progress toward developing and implementing a comprehensive supervision program for depository and nondepository institutions. The agency has implemented this program on a nationwide basis across its four regional offices. While we recognize the considerable efforts associated with the initial development and implementation of the program, we believe that the CFPB can improve the efficiency and effectiveness of its supervisory activities. Specifically, our evaluation work indicates that improving this program's operational effectiveness will be a focus of management's attention in the coming year as the agency works to (1) clear a considerable number of draft examination reports that have yet to be issued, (2) improve its reporting timeliness, (3) ensure the timely recording of data in its tracking system, and (4) formalize the process for scheduling and tracking examiner hours.
The results of our evaluation work demonstrated that as of July 31, 2013, the CFPB had not met its goals for the timely issuance of examination reports, and a considerable number of draft examination reports had not been issued. A senior CFPB official explained that management's goal of treating similar supervisory issues consistently slowed the examination report review process. This priority and several novel substantive examination issues were contributing causes of the volume of unissued examination reports. Delays in the issuance of examination reports can leave supervised institutions uncertain about the CFPB's feedback on the effectiveness of the institutions' compliance programs or processes, which could delay the implementation of required corrective actions.
We understand that management has taken a series of actions to (1) improve its timeliness in issuing reports and (2) reduce the number of examination reports that have not been issued. To improve the timely issuance of reports, the CFPB initiated a project focused on clarifying roles and responsibilities, including clarifying the decision rights and accountabilities related to specific aspects of the examination and report review process for key staff members. The agency also hired a third-party vendor to identify possible efficiency opportunities in the examination report review process. As part of these and other efforts, the agency created standard report templates, created an expedited report review process for low-risk reports, and updated the management dashboard to include forward-looking metrics. The agency has implemented many of these enhancements as part of a pilot program that includes 12 examinations. The agency is now in the process of formally codifying these enhancements and developing associated training.
The CFPB has also significantly reduced its volume of unissued examination reports. Senior officials have expended considerable effort to monitor and track the progress of the Division of Supervision, Enforcement, and Fair Lending in issuing reports at an individual-examination level. As part of these efforts, senior officials receive summary information concerning how many examination reports were issued in the preceding month and projections identifying how many reports are likely to be issued in future months. In addition to summary status updates, the report also contains detailed status information on specific examinations. Senior CFPB officials have also stated that they intend to formalize many of the steps the agency has taken to address the volume of unissued reports.
Our evaluation work revealed that the CFPB has not established standards for the timely input of data in the Supervisory Examination System (SES). The CFPB uses SES to monitor and track on a weekly basis its examination teams' progress toward completing key milestones. Because the CFPB has not established a requirement for the timely recording of examination data, we used seven days as a standard that would allow consideration for logistical impediments to recording examination data immediately but would still provide managers with up-to-date and reliable information. Using that standard, we found that examination milestones were not entered in a timely manner in at least one-fourth of the instances for each of the seven key examination milestones we reviewed. The lack of timely SES data may hinder management's ability to monitor and track its examination teams' performance against expectations, as well as to forecast staffing availability for planned examination activities. The agency routinely makes updates to the system, and we understand that a comprehensive update to the system is planned. Ensuring timely data input and implementing this comprehensive system update will be management challenges for the agency.
The CFPB has drafted and circulated for comment a policy that covers the timely input of data into SES. The draft policy establishes time parameters for when data should be entered and holds examiners accountable for adhering to those parameters. Senior management anticipates that the policy will be finalized by October 2014, and training will be provided at headquarters and in the regions.
As part of its overall efforts, the CFPB continues to develop and expand SES in order to maximize the effectiveness of its supervisory work. The upcoming comprehensive update to SES will enable the CFPB to compile information across its regions and supervised institutions. The system upgrade will also address examination scheduling, document management, examination management, report generation, and analysis.
Our evaluation work found that the CFPB does not have a formalized policy for scheduling or tracking staff member hours on examinations. The agency's four regions do not follow a consistent approach for forecasting and scheduling examiner workloads. Currently, the agency relies on a fluid and informal process for planning and staffing examinations in which field managers meet to discuss examiner availability and experience. Having a policy for scheduling and tracking examination hours will bolster the CFPB's ability to hold staff members and regions accountable for the staff resources allocated and time expended on examinations and to forecast future staffing needs.
The agency is currently conducting an internal analysis to evaluate the current processes for coordinating examination staff scheduling across regions and to identify areas of potential inconsistency regarding regional staff scheduling. After completing this analysis, an examiner workgroup will be convened to review the results of the analysis and to propose needed enhancements to those processes for managing staff members' workloads and identifying future staffing requirements. Further, the agency has begun tracking actual staff member hours worked on examinations and plans to develop an associated policy. As it collects more of this type of data, management can establish benchmarks for resources allocated and time spent on examinations. Management also intends for the SES upgrade to address consistency in examination scheduling across the agency's regions.
