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 Financial Institution Services
We have been providing services to financial institutions since inception. Our firm takes all appropriate measures to ensure compliance with all regulatory issues, accounting, auditing and related disclosures. Our firm has a long history of excellence achieved in our services provided to financial institutions. We pledge to continue the same commitment to you. We can perform a wide range of services to our financial institution clients and are flexible enough to incorporate the specific needs of our clients. Some of the services we provide include the following:
External Audits (link)
Internal Audits and Internal Control Evaluations (link)
Payroll Services (link)
Tax Preparation (link)
Regulatory Compliance
Bank Secrecy Act
Loan Review
Information Technology Examination
ACH
ALLL Consultation and Analysis
Regulatory Compliance
Hilliard & Milton, LLC strives to work with your internal team to provide and independent look at your processes and providing recommendations for improvement. Through this relationship we can achieve a higher quality of service. Our regulatory compliance services include assistance with:
· Regulation B – Equal Credit Opportunity
· Regulation C – Home Mortgage Disclosure
· Regulation D – Interest on Deposits
· Regulation E – Electronic Fund Transfers
· Regulation H – Flood Insurance
· Regulation X – Real Estate Settlement Procedures
· Regulation Z – Truth in Lending
· Regulation AA – Unfair and Deceptive Practices
· Regulation BB – Community Reinvestment (technical compliance only)
· Regulation CC – Expedited Funds Availability
· Regulation DD – Truth in Savings
· Privacy of Consumer Financial Information
· Fair Credit Reporting
Bank Secrecy Act (Back to Top)
We offer financial institutions with an independent Bank Secrecy Act/Anti-Money Laundering testing. This independent testing is required by the Bank Secrecy Act (BSA). We have developed procedures designed to assist you in evaluating the bank’s compliance with the BSA; Subpart B of Part 326 of the Federal Deposit Insurance Corporation (FDIC) Rules and Regulation. We provide procedures in the following areas:
· Planning
· Internal Compliance Programs and Procedures
· Internal Controls
· Anti-Money Laundering Program
· Customer Identification Program
· Education
· Customer Due Diligence
· Suspicious Activity Reporting
· Currency Transaction Reporting
· Exemptions
· Sale/Purchase of Monetary Instruments
· Wire (Funds) Transfer
· Office of Foreign Assets Control
· Money Service Business
· Brokered Deposit
Loan Review (Back to Top)
We can perform a loan quality review of selected loans in order to address the following areas relating to the Bank’s administration of its loan portfolio:
1. Review documentation of the financial, credit and collateral underwriting procedures employed by the financial institution for each loan reviewed.
2. Determine compliance with the Institution’s Board approved loan policy.
3. Determine that loans reviewed were originated within the Board approved lending authority.
4. Determine that loans reviewed contain adequate perfection of collateral and loan files are complete of related legal documentation required for each type of loan originated.
5. Review the related credit quality of selected loans as of lending date and subsequent deterioration.
6. Review the Bank’s methodology and documentation of its Allowance for Loan and Lease Losses (“ALLL”).
7. Address the adequacy of the Bank’s ALLL in light of the loans reviewed.
The loans reviewed will be based on discussion with management but should include all credit relationships over a certain scope. The loans reviewed are to ensure the Bank is in compliance with sound underwriting procedures and with the requirements set forth in the Bank’s Loan Policy.
Information Technology Examination (Back to Top)
An institution's technology risk profile is determined based on a review of core processing systems, internal networks, electronic banking products, connectivity to external networks, the location of sensitive information, and other technology components. Hilliard & Milton, LLC can provide you with an information technology examination based on our detailed procedures developed in accordance with the Federal Financial Institutions Examination Council and Federal Deposit Insurance Corporation’s recommended work programs. Our procedures incorporate the following areas:
· Audit
· Management
· IT Policies
· Vendor Management
· Development and Acquisition
· Support and Delivery
· Data and Physical Security
· Disaster Recovery / Business Continuity
· E Banking and Telephone Banking
· Wire Transfer / EFT
· Gramm-Leach-Bliley Act
The institution should have in place policies and procedures relating to information technology as well as the daily operating procedures of the institution, including computer operations, related maintenance and control of desktop and microcomputers. Job descriptions, job titles, reporting relationships and job duties should also be documented.
Our procedures will be to determine that controls are in place and properly designed to ensure:
· Management and organizational controls are sufficiently documented.
· Generally accepted operating standards are followed during data reception and processing and the data is properly distributed and maintained.
· Facilities containing computer hardware, software, personnel and data are adequate and properly controlled.
· Adequate security controls are in place to protect hardware, software and data files from damage, loss or unauthorized use or modification.
· Information is adequately backed up off-site.
ACH (Back to Top)
According to the NACHA ACH Rules - Appendix Eight – Rule Compliance Audit Requirements, each Participating Depository Financial Institution (DFI) shall conduct an internal or external audit of compliance in accordance with the requirements of Appendix Eight. The audit is to ensure compliance with the NACHA ACH Rules and to minimize risk associated with ACH payment processing.
ACH audits should be performed under the direction of the audit committee, audit manager, senior level officer, or an independent (external) auditor. Hilliard & Milton, LLC would be happy to assist you in performing this audit.
The ACH audit must be completed no later than December 1 of each year for financial institutions that are able to receive deposits from customers or credits from the Federal Reserve Bank.
ALLL Consultation and Analysis (Back to Top)
Loan loss provisioning methodology has become a focus for regulators of community banks. A majority of recent supervisory recommendations have dealt with the methodology of the allowance as opposed to the adequacy. SFAS No. 5 Accounting for Contingencies and SFAS No. 114 Accounting by Creditors for Impairment of a Loan as well as interagency guidance are the principal documents guiding the ALLL methodology.
Recent pronouncements by the accounting industry have made it clear that there should be two components of the allowance: a component for SFAS No. 114 and a component for SFAS No. 5. SFAS No. 5 sets the standards for when to establish a loss reserve--when it's probable that an asset is impaired and when the amount of loss can be reasonably estimated. In other words, when it's probable or likely that a loss will be incurred, an allowance or reserve should be established.
With SFAS No. 114, a bank needs to determine how it identifies those loans that will be individually evaluated for impairment. Once they've identified the group of loans to analyze for individual impairment, they need to determine how they're going to analyze the loans. SFAS No. 114 lays out three methods.
1. Fair value of collateral
2. Present value of expected cash flows
3. Observable market price
Hilliard & Milton, LLC can assist you in determining the adequacy of your methodology as well as determine the adequacy of your current ALLL in relation to current industry and economic trends, geographic issues and political issues.
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