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A Supplemental Audit Report on the Department of Savings and Mortgage Lending

November 2009

Report Number 10-013

Overall Conclusion

The Department of Savings and Mortgage Lending (Department) has participated in monitoring and oversight of financial institutions. However, the Department does not consistently (1) document its examination and monitoring activities or (2) comply with its policies and procedures. As a result, the Department cannot demonstrate that it consistently complied with all applicable statutes, administrative rules, and agency policy in monitoring the safety and soundness of institutions and overseeing the institutions identified as having a poor or deteriorating financial condition.

This audit report is the result of the continuation of a prior State Auditor's Office audit conducted at the Department from March 2009 to June 2009 (see An Audit Report on the Department of Savings and Mortgage Lending, State Auditor's Office Report No. 09-049, August 2009). The Department conducts the majority of its examinations jointly with the Federal Deposit Insurance Corporation (FDIC), and the August 2009 audit report included information regarding an audit scope limitation because the FDIC had not permitted the State Auditor's Office to access information necessary to address the objectives of the audit. After that audit report was published, the FDIC granted conditional access to certain records in August 2009 (see Appendix 2 for the FDIC's letter). This audit report covers only the audit work performed after the receipt of the conditional access to examinations of institutions.

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