The Office of Inspector General (OIG) for the Federal Reserve System released an executive summary outlining an audit performed on the Consumer Financial Protection Bureau (CFPB) to assess the bureau’s operational efficiency and effectiveness. The OIG noted the difficult task associated with the creation and implementation of the new agency; however, the OIG found that improvements could be made.
"While we recognize the considerable efforts associated with the initial development and implementation of the program, we believe that the CFPB can improve the efficiency and effectiveness of its supervisory activities," the OIG report said.
Specifically, the report noted three areas of improvement for the CFPB.
First, the OIG recognized that the CFPB needs to “improve its reporting timeliness and reduce the number of examination reports that have not been issued.”
By its own reporting policy, regions have 30 days to submit draft examination reports to headquarters, allowing 30 days for headquarters to approve the draft, and an additional 5 days to share the draft with the regulator or issue a final product. The OIG found 59 percent of 82 drafts submitted did not meet the CFPB's timeliness requirement for submission within 30 days of fieldwork completion.
Second, the OIG believes the CFPB should "adhere to its unequivocal standards concerning the use of standard compliance rating definitions in its examination reports."
The report noted, "The CFPB examination manual includes templates to help examiners across the regions produce consistent reports of examinations and supervisory letters." The OIG found two instances that deviated from the prescribed language, actions that "do not support the agency's commitment to consistency in the examination process."
Finally, the CFPB should "update its policies and procedures to reflect current practices," the OIG said. The examination reporting policy developed in June, 2012, has not been updated to reflect reorganizations of the supervision offices in December, 2012.
Fieldwork for the OIG audit was completed in October, 2013, using past data from July 31, 2013. The CFPB responded, and "indicated that management has taken various measures to address certain findings in our [the OIG] report, including streamlining the report review process and reducing the number of examination reports that have not been issued."
The OIG offered 12 recommendations to the CFPB to improve its processes including an update to relevant policies and procedures, as well as tracking and monitoring of staffing examinations. Additionally, the OIG recommends the CFPB finalize its examiner commissioning program.
The OIG reported, "Management concurred with our recommendations and outlined actions that have been or will be taken to address our recommendations."