Sample Truth in Lending Act (TILA) Audit Disclosure
Date: [Insert Date]
Audit Period: [Insert Period]
Prepared By: [Your Name/Title]
1. Purpose of the Audit
This audit evaluates compliance with the Truth in Lending Act (TILA) and Regulation Z. The primary objective is to ensure that [Dealership Name] provides clear, accurate, and legally compliant disclosures in consumer credit transactions.
2. Audit Scope
This audit covers all retail installment contracts and financing agreements for the audit period, including:
- Vehicle purchase contracts.
- Consumer credit agreements.
- Related documentation required by TILA and Regulation Z.
3. Key Audit Areas
3.1 Required Disclosures
- Ensure that all required disclosures under TILA/Regulation Z are provided to consumers before consummation of the credit transaction, including:
- Annual Percentage Rate (APR): Clearly disclosed as the cost of credit on an annual basis.
- Finance Charge: The total dollar amount of interest and fees paid over the life of the loan.
- Amount Financed: The loan principal excluding prepaid finance charges.
- Total of Payments: The total amount the consumer will pay over the life of the loan.
- Payment Schedule: The number, amounts, and timing of payments.
3.2 Timing of Disclosures
- Verify that disclosures are provided to the customer:
- Prior to contract signing.
- In a clear, conspicuous, and understandable format.
3.3 Accuracy of Disclosures
- Confirm that the disclosed terms match the executed contract terms and are free from calculation errors or inconsistencies.
3.4 Advertising Compliance
- Evaluate advertisements for credit offers to ensure compliance with TILA, including:
- Clear disclosure of trigger terms such as down payments, payment amounts, and APRs.
- Avoidance of misleading or incomplete credit offers.
4. Findings and Observations
4.1 Strengths
- [E.g., “All disclosures were provided in a timely manner and included required details.”]
- [E.g., “Payment schedules and APR calculations were accurate.”]
4.2 Non-Compliance or Deficiencies
- [E.g., “Three contracts had minor discrepancies in the finance charge calculation.”]
- [E.g., “Advertisements displayed on social media lacked clear APR disclosures.”]
5. Corrective Actions
- Errors in Finance Charges:
- Retrain staff on proper calculation methods for finance charges.
- Implement a second-level review of contracts before finalizing.
- Advertising Issues:
- Update all advertisements to include clear and conspicuous APR disclosures.
- Conduct a compliance review of all marketing materials before publication.
6. Recommendations for Improvement
- Conduct quarterly internal reviews of TILA disclosures to ensure ongoing compliance.
- Automate disclosure preparation to reduce calculation errors.
- Provide additional training for staff on TILA requirements and common compliance issues.
7. Conclusion
This audit confirms that [Dealership Name] is substantially compliant with the Truth in Lending Act and Regulation Z. Identified deficiencies are being addressed with corrective actions to ensure full compliance in future transactions.
Audit Prepared By:
[Name]
[Title]
[Signature]
[Date]
Reviewed By:
[Name]
[Title]
[Signature]
[Date]
This sample TILA audit disclosure ensures transparency in reporting compliance findings and outlines steps to address deficiencies. Let me know if you need help customizing it further!