HAR §16-26-4. Purpose of examination

(a) Disclosure of any information related to an examination of an institution is prohibited by statute, but public knowledge of the examination process should promote confidence in the integrity of the financial system and in individual institutions. (b) The examination of a depository institution is designed to determine the financial condition of the institution, to evaluate the safety and soundness of its operations, to evaluate its management, and to determine compliance with applicable laws and rules. It is aimed at early detection of adverse trends and problems, so as to allow time for remedial action to be taken to correct unsafe and unsound practices or violations of laws and rules. (c) The examination provides the commissioner with an understanding of the nature, relative seriousness, and ultimate cause of an institution's problems and provides the factual foundation on which to order corrective actions or measures. The examination, therefore, plays a key role in the supervisory and enforcement process. (d) The examination of a depository institution does not serve the function of an audit. The examiner performs an evaluation function, rating capital adequacy, asset quality, management, earnings, liquidity, and sensitivity to market risk. The examiner accepts and relies on an institution's records and on statements and information provided by its employees, officers, and directors, and does not independently verify matters disclosed on an institution's books and records. 26-4 §16-26-6 (e) The examination is not undertaken for the detection of fraud, nor is its sole or primary purpose to assure the complete correctness or appropriateness of records. Nevertheless, where deemed appropriate, in those cases where the examiner in charge perceives the need, the examination branch chief may make the determination to expand the scope of an examination to include the use of certain audit techniques and procedures and shall notify the deputy commissioner in writing of the expansion of the examination scope. [Eff 8/13/87; am and comp 1/27/01] (Auth: HRS §§412:2-104, 412:2-107, 412:2-200, 412:2-201) (Imp: HRS §§412:2-100, 412:2-104, 412:2-200, 412:2-201, 412:11-102, 412:12-108, 412:13-223)