When an audit reveals late adverse action notices, what should the auditor be advised to do next?

When audit findings reveal late adverse action notices, the next prudent step for the auditor is to review more items to determine a root cause. This approach is essential for several reasons.

First, identifying the root cause of the issue allows the institution to understand why the late notices occurred rather than simply noting that they did. It’s critical to investigate underlying processes, compliance practices, or systemic issues that led to these notifications being sent out of alignment with regulatory requirements.

Second, addressing root causes enables an organization to implement corrective actions that mitigate the risk of recurrence. Without understanding the "why" behind the delays, any measures taken might merely treat symptoms rather than solve the fundamental issues.

Moreover, reviewing additional items can help quantify the extent of the problem, assessing whether late notices are an isolated incident or indicative of a larger trend that requires more comprehensive solutions.

This approach goes beyond compliance checking; it emphasizes continuous improvement, which is a key principle in effective regulatory compliance management.