Last November, federal regulators announced they were looking into a $54 million impairment charge resulting from reconciliation errors in Fifth Third’s Treasury Department.
The assets in question were investments of equity owned by the company and did not involve customer accounts or business or personal loans, Paul Reynolds, general counsel and executive vice president, told the Business Journal.
The agreement also gives Fifth Third 90 days to submit a written plan to strengthen and improve risk management processes in its operations and financial activities.
According to the agreement with regulators, the company also must submit within the same period an “acceptable” written plan detailing accounting, financial and internal control policies to “enhance the accounting control environment; strengthen procedures for access to books and records; strengthen internal account opening processes and charge-off processes and controls; and to provide a sound accounting framework, with appropriate guidance on accounting matters.”
Under terms of the agreement, the bank is required to reconcile all general ledger accounts on at least a monthly basis. In addition, the Fed gave the company 180 days to submit a company-wide strategic plan and budget relating to its proposed business activities for the three-year period beginning in 2004.
The agreement was executed as of March 26. The day before, at its annual shareholder meeting, Fifth Third announced a series of initiatives it said were designed to strengthen and solidify corporate governance practices, such as new charters for its Audit, Nominating and Corporate Governance, Executive, and Stock Option and Compensation committees.
Other initiatives include:
- A new Risk and Compliance Committee
- A new Code of Business Conduct and Ethics
- New Corporate Governance Guidelines
- New Insider Trading Policy
- New Information Disclosure Policy
- A newly created Risk Management function to manage all areas of risk.