Pub. 7 2019 Issue 4

www.uba.org 6 WHEN IS THE LAST TIME YOUR BOARD REVIEWED THE CONTENTS OF THE BOARD PACKAGE? By Darlia Forgarty, President, Compliance Alliance I f you have not reviewed the informa- tion that your board reviews on a monthly basis in over 12 months, you may not be providing the information you should. The reports in the board package have traditionally been somewhat non-specific, often based on guidelines provided by the Office of the Comptroller of the Currency or FDIC. Our community bank boards have traditionally been focused on the analysis of the bank’s financial perfor- mance. This approach was based on the philosophy of “more is better,” so the bank made sure it provided everything the board needed to carry out its responsibilities. A shift in the banking industry as well as the overall economy has complicated board reporting for banks of all sizes. Each required policy has its own reporting requirements, which may not necessarily be directly linked to board reporting, it does influence it and requires reporting standards. This is primarily because such documentation may be expected to serve as a partial record of the bank’s processes and procedures for the benefit of regulators. While financial performance analysis continues to play a significant part in reporting to the board, the inclusion of operational risk management and com- pliance management adds to the amount of information that bank officers are ob- ligated to include in their presentation to bank directors. Considering that the data being reported to the Board comes under scrutiny from so many different avenues, and carries severe penalties for banks found not following a best practices; the importance of reporting has significantly increased. This can be quite challenging for smaller banks where senior manage- ment already finds themselves wearing more than one or even two hats. Heightened risk and compliance consider- ations call for a more thorough, broader analysis. The reactive approach is not considered adequate and must be re- placed with pro-active monitoring and reporting. In a nutshell, the reports have to be comprehensive, but meaningful. There is an implied obligation to educate the bank’s directors regarding the best practices employed by the bank, so they can effectively make decisions based on the information they are presented. For these reasons alone, banks need to reassess their approach to board report- ing, if they haven’t already. The two key overall areas to reevaluate are content and delivery. Board packages should be delivered well in advance of the scheduled board meeting to allow ample time to review the information before the time for discussion. Delivery encompasses more than just a timing factor. An effective delivery incorporates the following: • Easy-to-understand presentation • Useful information • Direct delivery from the data source, not a report that has been manually crafted by someone COMPLIANCE CORNER