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Banks with more than $500 million in assets will receive temporary relief from FDIC audit requirements if they experienced growth by participating in the Paycheck Protection Program and other economic aid activities.

The FDIC on Tuesday issued an interim final rule to provide FDIC-insured institutions temporary relief from audit and reporting requirements, known as Part 363 of the FDIC’s regulations. The relief applies to institutions that experienced temporary cash flows and growth from participating in the PPP, the Paycheck Protection Program Liquidity Facility (PPPLF), the Money Market Mutual Liquidity Fund (MMLF), or other factors, such as other stimulus activities.

Part 363 requires institutions with assets of $500 million or more to obtain annual independent audits and meet related reporting requirements. It has additional requirements, including for audit committees, at institutions with $1 billion and $3 billion in assets.

The interim final rule will allow banks to determine whether they are subject to Part 363 requirements for fiscal years ending in 2021 based on the lesser of their consolidated total assets as of Dec. 31, 2019, or consolidated total assets as of the beginning of their fiscal years ending in 2021. An institution currently makes the determination using its consolidated total assets as of the beginning of its fiscal year

“The intent of the IFR is to neutralize burdens that [insured depository institutions] may incur or have incurred because of temporary increases in their consolidated total assets resulting from participation in recent COVID-19-related stimulus activities, including the PPP, PPPLF, and MMLF, as the effort to develop processes and systems to comply with the requirements of Part 363 can be substantial,” the FDIC said in the letter.

The interim final rule gives the FDIC the authority to require reporting if it determines asset growth was related to a merger or acquisition.

The American Bankers Association praised the ruling.

“With today’s actions on bank audit requirements, the FDIC has taken an important step toward alleviating the regulatory pressures on banks that have seen their balance sheets swell as a result of serving their customers during COVID-19, including absorbing an influx of deposits and participating in the critical Paycheck Protection Program,” Hugh Carney, ABA’s senior vice president of prudential regulation, said in a statement. “Banks have been a source of strength during these unprecedented times, and in the process of stepping up to help stabilize the economy, many are starting to grow beyond arbitrary asset thresholds that come with significant regulatory implications. Recognizing that the growth at these institutions is in safe assets and is a byproduct of the national response to the pandemic, we encourage other regulatory agencies and policymakers to consider taking similar steps.”