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2006 Annual Report

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Program Evaluation

The Corporation's 2006 Annual Performance Plan indicated that the FDIC would pursue the following Program Evaluation agenda in 2006:

During 2006, considerable corporate resources will be devoted to implementing both program changes necessitated by Deposit Insurance Reform and the several changes in the automated systems supporting related activities. In addition, OERM (the Office of Enterprise Risk Management) will lead or participate in program evaluation activities in such areas as: risk management oversight on the development of new automated systems supporting our major programs; determining the continuing effectiveness of program areas that experienced significant downsizing in 2005; continuing implementation of balanced scorecards throughout the Corporation; and continuing our participation in performance management and monitoring efforts at the division/office level.

As expected, the implementation of deposit insurance reform became the central focus of OERM's program evaluation efforts throughout 2006. In order to comply with the requirements of the Federal Deposit Insurance Reform Act of 2005 and the related Federal Deposit Insurance Reform Conforming Amendments Act of 2005, the FDIC had to analyze current business processes and operations in several program areas and to implement major changes in these programs by the end of the year. OERM program evaluation staff provided significant support in the documentation and analysis of current business processes.

In conjunction with the implementation of these program changes, the legislation also required the FDIC and the Government Accountability Office (GAO) to conduct a series of specific studies and targeted reviews/audits. Most significantly, the GAO was required to conduct an evaluation of the FDIC's overall structure and mission, with particular emphasis on the Corporation's frameworks for corporate governance, human capital management and risk management. This comprehensive, nine-month review encompassed all major FDIC programs and included operations at headquarters, regional and field offices. The review resulted in only two relatively minor recommendations, thus providing FDIC management with additional independent affirmation of the effectiveness of its existing corporate programs. The FDIC will complete its three studies in early 2007, covering "Accounting for Loss Contingencies: The FDIC's Policies and Practices 1992-2004," "An Evaluation of Further Possible Changes to the Deposit Insurance System," and "An Evaluation of the Denominator of the Reserve Ratio." The studies are scheduled to be delivered to Congress by February 15, 2007.

Independent internal control staff in key divisions also continued to carry out traditional program and operational evaluations in 2006. These included continuing reviews of the Division of Supervision and Consumer Protection's regional and field office operations to ensure consistency and integrity of the FDIC's examination programs; and a review of payment and other controls in the Division of Resolutions and Receiverships to ensure the continued effectiveness and control of operations in the wake of the significant staff reductions made in 2005. OERM also continued its review of the Office of Diversity and Economic Opportunity to identify ways to improve the accuracy and timeliness of reporting.