AL 2000-6
OCC ADVISORY LETTER
Comptroller of the Currency
Administrator of National Banks
Subject:  Audit and Internal Controls


To:  National Bank Directors, CEOs, and All Examining Personnel

The purpose of this advisory is to underscore the importance of strong
audit and internal control programs.  Recent examinations have identified
an increasing number of audit and internal control deficiencies at many
national banks.  Some of these deficiencies have caused significant
operating losses and led to bank failures.

With new products, services, delivery channels, and other rapid changes
taking place in the banking environment, it is increasingly important that
bank managers and directors heighten their oversight of audit and control
systems to ensure that they are effective.  Effective internal control and
audit programs are essential in safeguarding assets, assisting in the
timely detection of operational errors, and producing accurate bank
records and financial reports.

Going forward, the OCC will be re-emphasizing bank internal controls and
audit processes and will soon issue an updated section of the
Comptroller's Handbook addressing internal and external audits.  National
bank directors and CEOs are encouraged to use the guidance contained in
the handbook to assess the adequacy of their bank's internal control and
audit programs and identify areas where they may need to be strengthened.
Additionally, your Assistant Deputy Comptroller or Examiner-in-Charge will
be discussing the need for strong audit and control programs with you as
part of their ongoing supervision activities.

The OCC will continue to evaluate the effectiveness of audit and internal
control programs in the context of a bank's size, complexity, and overall
risk profile.  Programs will be rated as "strong," "satisfactory," or
"weak" in the Report of Examination and will be incorporated into CAMELS
and the Risk Assessment System ratings.  The OCC's examination efforts
will be balanced and fully discussed with bank management and the bank's
board of directors to ensure that identified issues are promptly resolved.

If you have questions or comments about the OCC's focus on internal
controls and audits, please contact your supervisory office.

__________________________				______________________________
Emory W. Rushton                             Leann G. Britton
Senior Deputy Comptroller                    Senior Deputy Comptroller
Bank Supervision Policy                      Bank Supervision Operations

Date:  July 6, 2000