Due Diligence and Ongoing Monitoring

Hello,

I am wondering what timing people use for completing their annual reviews and reports to the Baord? Ex - we start our annual reviews in 4Q but it reflects typically outdated financials (YE23 for example if we start in 4Q24).  We are considering changing the timing to reflect more up to date financials.  I was curious what process other institutions use in terms of reviewing and reporting?

Thanks.

Personally, I rate my vendors based on risk tiers. Tier 1 is reviewed annually, tier 2 is reviewed every two years, etc. If you're quite firm on doing annual reviews at the same time, you'll have to insist that the information they're providing to you is the most current and reported. Obviously there are online resources you can use (for example, if you're in the UK, you can pull financials from Companies House). When I was doing regulatory CDD, it was acceptable to collect information that was still valid within the past 12 months. But if you're doing reviews in 4Q24 and you're still given financial numbers from YE23, sometimes the only thing you can really do is take the vendor's word for it that what they're providing you is most accurate. One would hope that a company's financials wouldnt stray too far from what it was previously :) 

We begin annual Ongoing reviews each year in April when most financials and SOC reports are published for the prior year. We send all due diligence and documentation requests out at once and they trickle in over the following months. Our annual goal is to complete all reviews by October 31st because many people are taking time off through November and December and it's difficult to obtain consistent responses from everyone. We send our annual reports to the Board in December when all reviews are complete. Hope this helps!

My company has enough vendors to keep our vendor management team busy the entire year. I agree that the month of April is typically an ideal window since many of the publicly-traded companies' SEC Form 10-K financials become available for the previous year.