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Audit Says CFPB Mostly Doing a Good Job

by devteam October 8th, 2014 | Share

A recent audit of the Consumer Financial ProtectionrnBureau (CFPB) found that it was doing a good job in general in its role ofrnregulatory rule-maker.  The Office ofrnInspector General (OIG) of the Federal Reserve Board of Governors under whichrnCFPB operates, conducted the audit, officially designated as an “evaluation to assess the ConsumerrnFinancial Protection Bureau’s compliance with section 1100G of thernDodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).”  </p

The auditrnwas conducted under the Regulatory Flexibility Act which requires federalrnagencies to analyze the impact of their regulatory actions on small entities.  In this case the CFPB is required to conductrnregulatory flexibility analyses to assess the impact of any proposed rule onrnthe cost of credit for small businesses and to convene panels to give them directrninput from small businesses before issuing certain rules.</p

OIG found that overall the Bureaurnhad complied with the requirements above as well as with two interim policy andrnprocedures documents issued by the CFPB’s Division of Research, Markets, andrnRegulations (RMR).   Of the six new rules that CFPB had issuedrnunder the Dodd-Frank Act, OIG found that the rulemaking process had includedrnthe required analysis for both the proposed and final rules.</p

The audit did find a few flaws andrnissued recommendations to correct them. rnThey faulted CFPB for not updating or finalizing the RMR’s interimrnpolicies and procedures after two years of use (something that CFPB completedrnshortly after the audit and before the report was issued), and found that thernpolicies and procedures gave the rule-making teams a level of discretion inrntheir approach to regulatory analysis which contributed “to a variance inrndocumentation and inconsistent knowledge transfer practices.” </p

Finally, OIG found that RMR uses anrninconsistent approach to storing supporting documentation related to 1100Grnrulemakings. The Bureau has an agency-wide records management policy thatrnobligates the agency to maintain readily accessible records but RMR did notrnprescribe a formal structure to catalog RMR’s records; thus, retrievingrndocuments in response to requests was time consuming.

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About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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