A CSA program is an essential component for financial institutions. A Compliance CSA Program typically encompasses retail branches, deposit operations, and loan operations/administration.  An Audit CSA Program is a useful internal control mechanism for retail branches and certain departments. For the Audit CSA cost savings is achieved via not needing to commit resources to low risk branch audits.

The CSA is typically performed quarterly. The completed CSA is generally forwarded to the Compliance Officer and Internal Auditor for review and feedback. The program steps are typically maintained on the financial institution intranet which allows for ease of updating due to external/regulator/internal review findings, and regulatory and internal control changes.

The CSA program provides a periodic monitoring system and a more frequent independent review. The program assists in preparation for external reviews and regulator reviews. The Compliance CSA is one component of an effective Compliance Management System.

Within the program, an independent CSA coordinator is appointed. Any items maintained or handled by the CSA coordinator should be reviewed by another individual independent of the function. For example, a CSA coordinator cannot verify his/her own cash fund for the Audit CSA or test HMDA input if a part of the HMDA input function.

Other key terms of the CSA outside or independence include a Surprise Basis – in many instances to be effective, no prior knowledge of the review should be present.

Advantages to the CSA include:

  • Flexibility to be performed throughout the quarter but not for a surprise basis at quarter end.
  • Cross-training of personnel.
  • Regulators expect evidence of exceptions and corrective follow up.

Program step example for Retail Branch Compliance include:

  • Evidence of staff training
  • properly posted disclosures
  • check of customer information security,
  • check of CRA file
  • awareness of location of CRA Exempt List

For Departmental Compliance:

  • HMDA LAR data accuracy review
  • denial file review
  • accuracy and integrity of Credit Bureau reporting
  • authorized use of CBI report
  • main office CRA file content
  • Regulation CC completion review

For Retail Branch Audit CSA:

  • Surprise cash counts
  • ATM reconciliation
  • safe deposit and night depository reviews and comparison to
    properly complete contracts and logs
  • consignment items reconciliation
  • internal control analysis for keys and combinations and duplicates
  • cash items reconciliation

The benefits of a Compliance and Audit CSA program are numerous from reduction of compliance errors to internal control benefits to cost savings. Hopefully, your institution has such a program that is in place and functional.