Small banks that do not prepare an audited financial statement may continue to use a directors' exam instead, the Federal Deposit Insurance Corp. said this week.

In a memorandum Wednesday to FDIC-supervised banks, the agency said it prefers banks with less than $500 million of assets to hire a public accountant to do a full-scale audit. Directors' exams are acceptable, the FDIC said, but examiners will review their adequacy more carefully.

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