AL 98-13
Subject: Year 2000 Q&A Guidance
Date: August 27, 1998

TO:  Chief Executive Officers of National Banks, Federal
     Branches, Service Providers, Software Vendors, Department
     and Division Heads, and Examining Personnel

This advisory is to alert you to the recent release of FFIEC
guidance, "Questions and Answers Concerning FFIEC Year 2000
Policy."  The guidance responds to commonly asked questions of
financial institutions and their service providers and software
vendors concerning the Year 2000 and focuses primarily on testing,
the most difficult and time-consuming phase of a financial
institution's Year 2000 preparation process.  

The Q&A guidance reiterates previous FFIEC guidance that, to the
extent possible, financial institutions should test their systems
for Year 2000 readiness in their own unique operating environments,
but responds to concerns expressed that it is not always feasible
for a financial institution that relies on service providers or
software vendors to perform Year 2000 testing in its own
environment.  Specifically, the guidance states that a financial
institution may rely on proxy testing by service providers,
provided certain conditions are met.  Also, for the first time, the
FFIEC states that proxy tests for products provided by software
vendors may be acceptable provided the specific conditions outlined
in the guidance are met. 

In addition, the guidance covers testing documentation, testing
expectations for updates to software programs, FFIEC agency
examination of service providers and software vendors, and
validation of contingency plans. 

Financial institutions, service providers and software vendors also
are reminded in the guidance that they may not disclose Year 2000
examination report information, including Year 2000 ratings.  The
FFIEC agencies are solely responsible for disclosing this
information to client financial institutions.

The FFIEC guidance is available on the OCC's Homepage at
www.occ.treas.gov.  For more information on Year 2000 issues,
contact the Year 2000 Supervision Policy Division at (202)
874-2340.

                                                     
Emory W. Rushton
Senior Deputy Comptroller, Bank Supervision Policy

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