The FDIC is amending its regulations concerning annual independent audits and reporting requirements. Section 314 of the Riegle Community Development and Regulatory Improvement Act of 1994 (RCDRIA) amended sections 36(i) and 36(g)(2) of the Federal Deposit Insurance Act (FDI Act). Section 36 of the FDI Act is generally intended to facilitate early identification of problems in financial management at larger insured depository institutions through annual independent audits, assessments of the effectiveness of internal controls and of compliance with designated laws and regulations, and more stringent reporting requirements. Section 314(a) provides relief from certain duplicative reporting under section 36 of the FDI Act for sound, well managed insured depository institutions with over $9 billion in total assets which are subsidiaries of multibank holding companies. Section 314(b) requires the Corporation to notify a large insured depository institution in writing if it decides a review by an independent public accountant of such an institution's quarterly financial reports is required. This regulation governs annual independent audits and implements section 36 of the FDI Act. This amendment conforms the regulations to the amended statute. In addition, the FDIC is making several technical amendments to the Guidelines and Interpretations (Guidelines) that were published as an appendix to the annual independent audit regulations. The FDIC also is amending Schedule A to the appendix, ``Agreed Upon Procedures for Determining Compliance with Designated Laws'', to implement recent amendments to the federal regulations concerning loans to insiders, improve the format of the procedures, streamline the specific procedures, and eliminate ambiguities. These amendments reflect the experience of the Corporation, financial institutions, and accountants using the existing procedures during the past two years.