1. Institutions shall establish and maintain systems and controls sufficient to provide prudent and reliable valuation estimates.
2. Systems and controls shall include at least the following elements:
(a) documented policies and procedures for the process of valuation, including clearly defined responsibilities of the various areas involved in the determination of the valuation, sources of market information and review of their appropriateness, guidelines for the use of unobservable inputs reflecting the institution's assumptions of what market participants would use in pricing the position, frequency of independent valuation, timing of closing prices, procedures for adjusting valuations, month end and ad-hoc verification procedures; and
(b) reporting lines for the department accountable for the valuation process that are clear and independent of the front office.
3. Institutions s