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CFPB Report: 2014-AE-C-005 March 27, 2014

The CFPB Can Improve the Efficiency and Effectiveness of Its Supervisory Activities

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Finding 4: The CFPB Did Not Consistently Retain Evidence of Required Communication With the Prudential Regulators

The CFPB did not consistently retain evidence that it shared reports of examination with the prudential regulators. In addition, key dates related to sharing the reports with the prudential regulators were incorrectly recorded in SES. The Dodd-Frank Act requires the CFPB to share draft reports of examination for depository institutions with the prudential regulators prior to issuing the final report. A senior official stated that the regions are responsible for retaining evidence that this requirement has been fulfilled. However, the CFPB does not currently have a policy or quality assurance function to ensure that the regions retain this documentation. The CFPB cannot demonstrate its compliance with this Dodd-Frank Act coordination requirement without sufficient documentation. In addition, without accurate dates in SES, the CFPBís ability to accurately track and report on the status of examination reports is hindered.

The CFPB Did Not Sufficiently Document Communications With the Prudential Regulators

We found that when the CFPB shared reports of examination with and received comments from the prudential regulators, in some cases CFPB staff entered an incorrect response date into SES. We also reviewed the supporting documentation and found 2 instances out of 15 in which the CFPB did not retain evidence of sharing a draft report with the prudential regulators. Specifically, the CFPB did not document its transmittal of draft reports to the prudential regulators or the receipt of their response.

A senior official stated that the four regions are responsible for retaining documentation of report transmission with the prudential regulators. However, the CFPB does not currently have a policy or quality assurance step to ensure that the regions are retaining documentation. The senior official also noted that the agency plans to create a quality assurance function in the Office of Supervision Examinations.

Without accurate dates in SES, the CFPBís ability to accurately track and report on the status of examination reports is hindered. In addition, without sufficient documentation, the CFPB does not have evidence of its compliance with the Dodd-Frank Act information-sharing requirements.

Recommendation

We recommend that the Associate Director for SEFL

  1. Establish a quality assurance step to ensure that the process for sharing reports with the prudential regulators is sufficiently documented and accurately recorded in SES.

Managementís Response

Regarding recommendation 7, the Deputy Director and Associate Director for SEFL stated the following:

As part of its ongoing quality assurance measures incorporated into supervisory processes, the CFPB will refine its internal process to ensure accurate documentation of communications with the prudential regulators, which have occurred as required.

Managementís full response is included as appendix B.

OIG Comment

In our opinion, the actions described by the Deputy Director and Associate Director for SEFL appear to be responsive to our recommendation. We plan to follow up on the CFPBís actions to ensure that the recommendation is fully addressed.