Federal Financial Institutions Examination Council announces two significant changes

Authors: Jason Brett and Danyel Marrs

Recently, the Federal Financial Institutions Examination Council (FFIEC) announced two significant changes that affect how financial services regulators will approach examining the information technology general controls (ITGC) at banks, credit unions, and fintech companies. These changes impact how financial institutions will design and implement controls in the affected areas of information technology (IT).

• The Development and Acquisition booklet will now be known as the Development, Acquisition, and Maintenance (DA&M) booklet. The new DA&M booklet includes an increased focus on risk management for IT systems throughout their lifecycle, whether acquired from third parties or developed in-house. It also includes newer software development standards, updated requirements for acquisition policies and procedures, and a stronger focus on system maintenance (such as change controls and preventative maintenance). Financial institutions are expected to immediately comply with its requirements.
• Effective August 31, 2025, the FFIEC’s Cybersecurity Assessment Tool (CAT) will be retired. Published in 2015, the FFIEC CAT has been the staple risk management solution for financial institutions to assess their cybersecurity maturity. Instead of maintaining the CAT with an everchanging landscape of cyber threats, controls, and regulatory guidance, the FFIEC is pushing the financial services industry towards utilizing other assessment resources and cybersecurity frameworks to measure itself against. Examples include the National Institute of Standards and Technology (NIST) Cybersecurity Framework 2.0, the Cybersecurity and Infrastructure Security Agency’s (CISA) Cybersecurity Performance Goals, the Cyber Risk Institute’s (CRI) Cyber Profile, or the Center for Internet Security Critical Security Controls. With no specific endorsement from the FFIEC on which assessment framework to use, institutions will need to evaluate the most appropriate for their risk assessment needs.

Not sure how to assess your organization’s compliance with the new FFIEC DA&M booklet or your cybersecurity readiness without the FFIEC CAT? Contact our Digital Risk Services team to discuss your needs and how we can help.

The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.

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Elliott Davis was asked: “We are currently utilizing a small provider for our taxes, but believe we need a specialist for state and local taxes, is that correct?”

Context

• World-wide supplier of wood products
• Headquartered in South Carolina
• Wanted to identify if company could take advantage of additional tax opportunities

Our Approach

• Elliott Davis State and Local Tax (SALT) team was introduced
• Team completed a Nexus study and identified the company was taxable in other states
• Apportionment study also completed when 100% South Carolina apportionment identified
• Team also investigated South Carolina job tax credits to offset income tax liability

Customer Impact

• Found nexus activities in Georgia and was able to reduce apportionment income of South Carolina
• Also identified $50,000 in annual job tax credits
• Overall, amended 2017, 2018, 2019 and 2020 returns
• Reduced apportioned income by 85%
• Amended returns generated refund claims of approximately $200,000
  

Plus, Tax saving measures will continue to be realized in future filings!

We Can Help

For more information on how Elliott Davis can assist you and your business, contact a member of our team.

The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.

Management asked Elliott Davis: “Can you help us professionalize our accounting processes and financial reporting, as well as identify missed tax opportunities?”

Context

• A manufacturer of metal fabricated components for OEMs
• 35+ years old with over 50 employees
• Received Letter of Intent (LOI) and needed to:
  • Stand up and professionalize accounting processes and financial reporting
  • Evaluate previously filed state income tax returns for accuracy and to identify missed tax savings opportunities
  • Identify fair market value of the company’s equity

Our Approach

• Providing weekly, monthly, and quarterly accounting advisory services, including:
  • Analyze general ledger accounts ,including reconciliation of balance sheet accounts
  • Assist management with preparing schedules for prepaids, debt, and accruals
  • Maintain a detailed schedule of all depreciable and non-depreciable assets
  • Reconcile bank accounts to bank statements and loan balances to loan statements and record interest expense
  • Process federal and state filing form
• Examined company’s position regarding ‘right to apportion’ income on state tax returns and provided additional state tax consulting
• Performed a business valuation engagement to determine fair market value of equity, including financial analysis of financial statements of business and trends over time

Customer Impact

• Professionalized the finance and accounting processes and financial statements of the organization to better support business decisions, financial success and enable business growth
• Amended previous three years of returns to generate an immediate $110,000 refund
• In first three years of service identified additional $200,000 in state tax credits and
• $280,000 in state tax savings from income apportionment strategy
• With the valuation analysis, the owners understood the fair market value of the business and negotiated the transaction with confidence.

We Can Help

For more information on how Elliott Davis can assist you and your business, contact a member of our team.

The information provided in this communication is of a general nature and should not be considered professional advice. You should not act upon the information provided without obtaining specific professional advice. The information above is subject to change.