The Office of Inspector General (OIG) for the CFPB and Fed has issued a report that found the CFPB can improve its practices related to examination workpaper documentation.  This report follows another OIG report issued last month that found the CFPB could improve the effectiveness of its Examiner Commissioning and On-the-Job Training Programs.

The report provides the results of an evaluation conducted by the OIG to assess the CFPB’s guidance and practices, including training and quality reviews, to promote effective and consistent examination workpaper documentation.  The OIG reviewed documentation in each of the CFPB’s four regions for compliance with the CFPB’s Supervision and Examination Manual and other policies applicable to examinations.

The OIG’s findings included the following:

• The CFPB’s approach was to grant examination employees in each region open access to examination workpaper documentation and supporting material.  That approach resulted in certain employees having access to materials with confidential supervisory information and personally identifiable information when they did not appear to have a business need to know such information, thereby creating an opportunity for insider abuse.
• A lack of information disposal guidelines limited the CFPB’s ability to protect sensitive information and a lack of a consistent process for limiting access rights limited the effectiveness of self-reporting of potential information security incidents.
• Documentation of supervisory review of workpapers by the Examiner in Charge and Field Manager did not fully comply with Examination Manual standards.  As a result, the CFPB could not be assured that all workpapers that support findings and conclusions had been reviewed and approved, which could affect the credibility of examination results.
• The CFPB did not have formal training for examiners on workpaper practices.
• The CFPB had not established an ongoing quality control review process for examination workpapers to evaluate whether workpapers met the requirements in the Examination Manual.

The report includes the OIG’s recommendations for addressing its findings and the CFPB’s responses to the recommendations.