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Attachmen t 

Supervisor y Consideration s fo r th e Communicatio n o f 

Supervisor y Finding s 

Purpos e 

T h e purpos e o f this supervisor y guidanc e is t o updat e an d clarif y th e manne r i n whic h 

Federa l Reserv e examiner s communicat e supervisor y finding s t o bankin g organization s an d 

institution s supervise d b y th e Federa l Reserv e (collectivel y referre d t o a s "bankin g 

organizations " o r "organizations " i n this guidance) . Thi s guidanc e discusse s th e Federa l 

Reserve' s standar d languag e fo r examination/inspectio n findings , whic h improve s th e 

consistenc y an d clarit y o f writte n communication s t o bankin g organizations, an d enhance s th e 

focu s o n matter s requirin g attentio n b y th e organization' s boar d o f directors. Thi s guidanc e als o 

highlights supervisor y consideration s fo r correctiv e action s an d Reserv e Ban k follow-up . I n 

particular , this guidanc e reaffirm s th e definition s fo r Matters Requiring Immediate Attention 

(MRIAs ) an d Matters Requiring Attention (MRAs ) an d thei r us e b y safety-and-soundnes s an d 

consume r complianc e examiner s whe n communicatin g supervisor y finding s t o bankin g 

organizations. [Footnote 1 

- Examiners' use of these standard terms (MRIAs and MRAs) facilitates the Federal Reserve's national systems of 

record fo r information related to examination and inspection issues. This standardization enables the Federal 

Reserve to access information about supervisory issues and remediation efforts and aids in the identification of 

systemic and programmati c challenges facing bankin g organizations supervised by the Federal Reserve . End of Footnote 1.] 

Communicatio n o f Supervisor y Finding s 

Communicatio n o f supervisor y finding s t o th e organization' s boar d o f directors is a n 

importan t par t o f th e supervisio n o f a bankin g organization . Whil e th e boar d itsel f ma y no t 

directl y undertak e th e wor k t o remediat e supervisor y finding s a s senio r managemen t is 

responsibl e fo r th e organization' s day-to-da y operations, it is nevertheles s importan t tha t th e 

boar d b e mad e awar e o f significan t supervisor y issue s an d ultimatel y b e accountabl e fo r th e 

safet y an d soundnes s an d assuranc e o f complianc e wit h applicabl e law s an d regulation s o f th e 

organization . 

Dependin g upo n th e siz e an d complexit y o f th e organization , supervisor y finding s ar e 

communicate d i n writin g throug h forma l examinatio n o r inspectio n reports, report s summarizin g 

t h e results o f targete d reviews , a roll-u p o f thos e review s int o a comprehensiv e report , an y othe r 

supervisor y communication , o r som e combinatio n thereof . Thes e writte n communication s 

(referre d t o collectivel y a s "reports " i n this document ) ar e generall y directe d t o th e boar d o f 

directors, o r a n executive-leve l committe e o f th e board , [Footnote 2 

- A n executive-level committee of the boar d (such as, the audit committee or risk committee) typically meets 

regularly, keeps minutes of those meetings, and is accountable to and routinely reports to the boar d of directors. End of Footnote 2.] 

a s appropriate . I n turn , th e boar d o f 

directors (o r executive-leve l committe e o f th e board ) typicall y wil l direc t th e organization' s 

managemen t t o tak e correctiv e actio n an d wil l provid e managemen t wit h appropriat e oversight , 

includin g approval s o f propose d managemen t action s a s necessary . 
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To be effective, the communication of supervisory findings must be: (1) written in clear 

and concise language; (2) prioritized based upon degree of importance; and (3) focused on any 

significant matters that require attention. 

Reserve Banks must formally communicate MRIAs and MRAs resulting from any 

supervisory activity to the organization in these written reports. In order to promote an 

understanding of these terms, examiners should include definitions of MRIAs and MRAs in all 

supervisory documents communicating supervisory findings. [Footnote 3 

- In a safety-and-soundness report, these definitions could be included on the "Scope" page, in an appendix, or as a 

footnote on the "Matters Requiring Attention" section. In a consumer compliance report, these definitions could be 

included on the "Executive Summary and Examination Ratings" section. End of Footnote 3.] 

When included in a safety-andsoundness examination or inspection report, MRIAs and MRAs should be listed in the "Matters 

Requiring Attention" section. In the case of findings from consumer compliance examinations, 

MRIAs and MRAs should be reflected in the "Executive Summary and Examination Ratings" 

section of the consumer affairs report of examination. Only outstanding MRIAs and MRAs are 

required to be discussed in the report; however, examiners have discretion to discuss closed 

MRIAs and MRAs in the report if such discussion would be meaningful. 

For large banking organizations, an annual roll-up report summarizes the significant 

findings, based on outstanding MRIAs or MRAs, included in the reports of targeted reviews or 

other supervisory activities conducted during the supervisory cycle. These findings may be 

grouped by major supervisory issues, rating components, risks, or themes. This information 

should enable the banking organization's board of directors and any executive-level committee 

of the board to understand the substance and status of outstanding MRIAs or MRAs and focus 

their attention on the most critical and time-sensitive issues. 

Communications to banking organizations concerning safety-and-soundness or consumer 

compliance MRIAs or MRAs must specify a timeframe within which the banking organization 

must complete the corrective actions. In certain circumstances, examiners may require the 

banking organization to submit an action plan that identifies remedial actions to be completed 

within specified timeframes. Action plans with intermediate- and long-term timeframes that 

span more than one supervisory or examination cycle with regard to safety-and-soundness 

matters, or a twelve-month period with regard to consumer compliance issues, should include 

interim progress targets. Both safety-and-soundness and consumer protection or compliance 

considerations will remain a priority in determining whether the organization's timeframes to 

correct the matter are reasonable. 

Matters Requiring Immediate Attention 

MRIAs arising from an examination, inspection, or any other supervisory activity are 

matters of significant importance and urgency that the Federal Reserve requires banking 

organizations to address immediately and include: (1) matters that have the potential to pose 

significant risk to the safety and soundness of the banking organization; (2) matters that represent 

significant noncompliance with applicable laws or regulations; (3) repeat criticisms that have 

escalated in importance due to insufficient attention or inaction by the banking organization; and 

(4) in the case of consumer compliance examinations, matters that have the potential to cause 
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significant consumer harm. An MRIA will remain an open issue until resolution and examiners 

confirm the banking organization's corrective actions. 

Required Language: Federal Reserve examiners are expected to use the standardized 

language below to communicate MRIAs to the board of directors (or executive-level committee 

of the board): 

• "The board of directors (or executive-level committee of the board), or banking 

organization is required to immediately... " 

Timeframe: The expected timeframe for a banking organization to address MRIAs is 

generally short, and may be "immediate," in the case of heightened safety-and-soundness or 

consumer compliance risk. For MRIAs that are necessary to preserve or restore the viability of a 

banking organization, the timeframe should take into account any potential losses to the Federal 

Deposit Insurance Corporation's Deposit Insurance Fund, including the possibility that a delay in 

action will increase the potential for loss or the cost of resolution. 

Organization Response: Following its review of MRIAs discussed in the report, the 

banking organization's board of directors is required to respond to the Reserve Bank in writing 

regarding corrective action taken or planned along with a commitment to corresponding 

timeframes. 

Supervisory Follow-up: The Reserve Bank must follow up on MRIAs to assess progress 

and verify satisfactory completion. The timeframe for follow-up should correspond with the 

timeframe specified for the action being required, and should be appropriate for the severity of 

the matter requiring the corrective action. The means of follow-up may vary depending upon the 

nature and severity of the matter requiring the action. Follow-up may take the form of a 

subsequent examination, a targeted review, or any other supervisory activity deemed suitable for 

evaluating the issue at hand. 

In some cases, when follow-up indicates the organization's corrective action has not been 

satisfactory, the initiation of additional formal or informal investigation or enforcement action 

may be necessary. In such cases, examiners should consult with enforcement staff. [Footnote 4 

-

Such consultation should be made in accordance with existing guidance to Reserve Bank supervisory staff on the 

processing of enforcement actions, which provides that recommendations concerning formal enforcement actions 

should be submitted simultaneously to both the Board's Legal Division and Division of Banking Supervision and 

Regulation. End of Footnote 4.] 

In all 

instances, examiners are expected to exercise judgment as to the supervisory activities best suited 

for evaluating a particular issue. Once follow-up is completed, examiners are expected to clearly 

and fully document the rationale for their decision to close any issue. Examiners are also 

expected to communicate in writing the results of their work and findings to the banking 

organization. 

Matters Requiring Attention (MRAs) 

MRAs constitute matters that are important and that the Federal Reserve is expecting a 

banking organization to address over a reasonable period of time, but when the timing need not 

be "immediate." While issues giving rise to MRAs must be addressed to ensure the banking 
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organizatio n operate s i n a safe-and-soun d an d complian t manner , th e threa t t o safet y an d 

soundnes s i s les s immediat e tha n wit h issue s givin g ris e t o MRIAs . Likewise , consume r 

complianc e concern s tha t requir e les s immediat e resolutio n shoul d b e communicate d a s a n 

MRA . A n MR A typicall y wil l remai n a n ope n issu e unti l resolutio n an d confirmatio n b y 

examiner s tha t th e bankin g organizatio n ha s take n correctiv e action . I f a bankin g organizatio n 

doe s no t adequatel y addres s a n MR A i n a timel y manner , examiner s ma y elevat e a n MR A t o a n 

MRIA . Similarly , a chang e i n circumstances , environment , o r strateg y ca n als o lea d t o a n MR A 

becomin g a n MRIA . Th e ke y distinctio n betwee n MRIA s an d MRA s i s th e natur e an d severit y 

o f matter s requirin g correctiv e action , a s wel l a s th e immediac y wit h whic h th e bankin g 

organizatio n mus t begi n an d complet e correctiv e actions . 

Require d Language : Federa l Reserv e examiner s ar e expecte d t o us e th e standardize d 

languag e belo w t o communicat e MRA s t o th e boar d o f director s (o r executive-leve l committe e 

o f th e board) : 

• "Th e boar d o f director s (o r executive-leve l committe e o f th e board) , o r bankin g 

organizatio n i s require d to... " 

Timeframe : Communication s t o bankin g organization s abou t MRA s mus t specif y a 

timefram e withi n whic h th e correctiv e actio n i s expecte d t o b e completed . Th e timeframe , a t 

leas t initially , ma y requir e estimatio n becaus e th e bankin g organizatio n ma y firs t nee d t o 

complet e preliminar y plannin g t o establis h th e timefram e fo r initiatin g an d completin g th e 

correctiv e action . Th e timeframe s fo r MRA s ar e likel y t o becom e mor e precis e ove r tim e a s 

plannin g evolve s an d circumstance s mak e th e completio n o f th e MRA s mor e urgent . 

Timeframe s tha t spa n mor e tha n on e examinatio n cycl e fo r safety-and-soundnes s issue s o r tha t 

excee d twelv e month s fo r consume r complianc e issue s shoul d includ e appropriat e interi m 

progres s reports . 

Organizatio n Response : Followin g it s revie w o f th e report , th e bankin g organization' s 

boar d o f director s i s require d t o provid e a writte n respons e t o th e Reserv e Ban k regardin g it s 

plan , progress , an d resolutio n o f th e MRA . 

Supervisor y Follow-up : Th e Reserv e Ban k mus t follow-u p o n MRA s t o asses s progres s 

a n d verif y satisfactor y completion . Th e timefram e fo r follow-u p shoul d correspon d wit h th e 

timefram e durin g whic h action s ar e t o b e completed . Fo r intermediate - o r long-ter m correctiv e 

action s fo r MRAs , Reserv e Ban k follow-u p ma y consis t o f assessin g th e organization' s progres s 

t o addres s th e MRAs , whethe r satisfactor y o r unsatisfactory , an d notin g whethe r th e initia l 

estimate d timefram e continue s t o b e reasonabl e o r warrant s adjustment . 

T h e mean s o f supervisor y follow-u p ma y var y base d upo n th e natur e an d severit y o f th e 

matte r fo r whic h correctiv e actio n i s expected . Follow-u p ma y tak e th e for m o f a subsequen t 

examination , targete d review , continuou s monitoring , relianc e o n validatio n wor k conducte d b y 

a n interna l audi t function , [Footnote5 

- Examiner s ma y choos e t o rel y o n th e wor k o f interna l audi t whe n interna l audit' s overal l functio n an d relate d 

processe s ar e effective , a s discusse d i n S R lette r 13-1/C A lette r 13-1 , "Supplementa l Polic y Statemen t o n th e Internal Audit Function and Its Outsourcing." W

expected to review the relevant work papers and, when necessary, meet with internal audit staff who documented the 

resolution of the issue. End of Footnote 5.] 

relianc e o n th e result s o f examination s conducte d b y othe r 

supervisors , o r an y othe r supervisor y activit y deeme d suitabl e fo r evaluatin g th e issu e a t hand . 
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In some cases, when follow-up indicates the organization's corrective action has not been 

satisfactory, the initiation of additional formal or informal investigation or enforcement action 

may be necessary. In all instances, examiners are expected to exercise judgment regarding the 

supervisory activities best suited for evaluating a particular issue. Once follow-up is complete, 

examiners are expected to clearly and fully document the rationale for their decision to close any 

issue. Examiners also are expected to communicate in writing the results of their work and 

findings to the organization. 

Supervisory Considerations 

The volume of MRIAs and MRAs should be one of the many considerations in assigning 

a supervisory rating to a banking organization. The presence of a large number of MRIAs or 

MRAs may indicate that additional formal or informal investigation may be necessary or that the 

initiation of a formal or informal enforcement action may be warranted. 

Irrespective of the number of MRIAs or MRAs, in some cases, additional formal or 

informal investigation may be necessary or the initiation of a formal or informal enforcement 

action may be warranted based on the severity of the issues, the repeat nature of issues, lack of 

responsiveness of management, violations of law, insider abuse, fraud, or other material 

deficiency. In any of these cases, examiners should consult with the Board enforcement staff in 

the Legal Division and the Division of Banking Supervision and Regulation.