What Does A Financial Examiner Do?
Financial examiners are professionals that work to ensure that financial institutions like banks and lenders only issue loans that are within the borrower’s ability to pay. They also see to it that laws and policies established by regulators are being followed in each transaction and that the bank or financial institution has all the necessary documents to support these. A very crucial aspect of their job is ensuring that these financial institutions practice safe lending practices and remain viable no matter what the financial setbacks are. This means that they need to have ready cash on hand to take care of losses that the bank may experience later on. While there are a lot of other factors that will determine whether a bank goes under, it can safely be said that the financial examiner plays a very huge role in ensuring that they don’t do so.
For example, the losses may be in the form of borrowers defaulting their personal or mortgage loans. It can be remembered that the latter contributed to the housing boom and bust from 2006 to 2008 which plunged United States into recession. Financial examiners look into the capital reserves of the bank to check that they have enough to sustain their operations even during these times. Moreover, they also see to it that banks have followed established underwriting practices that would help protect against borrowers defaulting from their loans.
When financial examiners are asked to scrutinize a particular company or bank, their work involves a lot of checking of number-ridden documents. In addition to just looking at the numbers, the focus of financial examiners is to analyze the data found in these loan documents and balance sheets to see where the company is standing financially. They also scrutinize the firm’s operating income and expense accounts to make sure that the company is managing its cash flow well. They also check audit reports and even minutes of meetings that have taken place especially among the board of directors and high-ranking executives of the company.
When financial examiners have all the necessary documentation in their hands, they begin the lengthy and arduous process of computing, checking and rechecking and finding links between the numbers and the financial health status of the company. Once they have studied all the documents, they would then prepare their reports explaining why a company is in sound financial footing or not. They give the rationale behind their reports and attach the evidence that they have gathered to support their evaluation. Because of the need to constantly write reports, financial examiners need to have excellent technical writing skills and the ability to make highly complex numerical information easy to understand even for those without a financial or economics background.
Financial examiners are also tasked with studying newly-minted laws or regulations about the finance world and then coming up with the policies and guidelines to direct clients and other stakeholders regarding compliance of these laws. They see to it that the procedures they set up to be able to implement these new laws are in line with the newly-established regulations. Financial examiners may also be called upon to determine how a new set of laws will affect an organization. Their analysis of the situation would serve as a guide for the organization in their next steps forward.
Some financial examiners specialize only on looking at records involving tax documents. When working for the Internal Revenue Service, they focus their attention on checking the accuracy of the documents filed and ensuring that the taxpayers do not get more or less than the exemptions that are due them. If there were errors in the tax filing or there really was intent to cheat the government by claiming tax benefits that they don’t deserve then the financial examiners will recommend the most appropriate course of action to take.
Financial examiners typically learn the duties of their position on the job. Thus, it is also part of the responsibilities of experienced examiners to give training to those who are just starting out. They teach them the ins-and-outs of the job as well as the day-to-day duties that they are expected to perform. If there are special tasks that are unique to the agency or company that they must do in their workplace, senior financial examiners also teach these to the new ones who are in the process of learning the ropes.