WASHINGTON/SINGAPORE (Reuters) - A panel of international air safety regulators on Friday harshly criticized the U.S. Federal Aviation Administration's (FAA) review of a safety system on Boeing's BA.N 737 MAX airliner later tied to two crashes that killed all 346 people aboard.

The Joint Authorities Technical Review (JATR) was commissioned by the FAA in April to look into the agency’s oversight and approval of the so-called MCAS anti-stall system.

The report also faulted Boeing for assumptions it made in designing the airplane and found areas where Boeing could improve processes.

“The JATR team found that the MCAS was not evaluated as a complete and integrated function in the certification documents that were submitted to the FAA,” the 69-page series of findings and recommendations said.

“The lack of a unified top-down development and evaluation of the system function and its safety analyses, combined with the extensive and fragmented documentation, made it difficult to assess whether compliance was fully demonstrated.”

Boeing did not directly address the report’s findings but said it “is committed to working with the FAA in reviewing the recommendations and helping to continuously improve the process and approach used to validate and certify airplanes.”

Regulators around the world continue to scrutinize proposed software changes and training revisions from Boeing aimed at returning the Boeing 737 MAX to service.

Boeing’s top-selling airplane has been grounded worldwide since a March 10 crash in Ethiopia killed 157 people, five months after a Lion Air 737 MAX crashed in Indonesia, killing 189 people on board.

Major U.S. airlines including Southwest Airlines Inc LUV.N and American Airlines Inc AAL.O currently do not expect 737 MAX flights to resume before January.

The JATR draft recommendations, obtained by Reuters ahead of their release on Friday, also said the FAA’s longstanding practice of delegating “a high level” of certification tasks to manufacturers such as Boeing needs significant reform to ensure adequate safety oversight.

“With adequate FAA engagement and oversight, the extent of delegation does not in itself compromise safety,” the report said.

“However, in the B737 MAX program, the FAA had inadequate awareness of the MCAS function which, coupled with limited involvement, resulted in an inability of the FAA to provide an independent assessment of the adequacy of the Boeing-proposed certification activities associated with MCAS.”

The report also questioned FAA’s limited staffing to oversee certification tasks it designated to Boeing and said there were an “inadequate number of FAA specialists” involved in the certification of the 737 MAX.

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There were signs that Boeing employees conducting FAA work faced “undue pressure. ..which may be attributed to conflicting priorities and an environment that does not support FAA requirements,” it said.

FAA Administrator Steve Dickson said in a statement he would look at the panel’s recommendations and take appropriate action following the “unvarnished and independent review of the certification of the Boeing 737 MAX.”

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MCAS UNDER SCRUTINY

The U.S. planemaker has stopped short of admitting any fault in how it developed the 737 MAX, or MCAS, which repeatedly pushed the plane’s nose down in the Indonesian and Ethiopian crashes while the pilots struggled to intervene.

However, it has said erroneous Angle of Attack (AOA) data fed to MCAS - the Maneuvering Characteristics Augmentation System - was a common link in two wider chains of events leading to the crashes.

The JATR report recommended the FAA review the stalling characteristics of the 737 MAX without MCAS and associated systems to determine if unsafe characteristics exist and if so, if a broader review of the system design was needed.

JATR said MCAS and those systems could be considered a stall identification or stall protection system, depending on how the aircraft handled without them.

Boeing has said MCAS was not meant to prevent stalls and was instead designed so that the 737 MAX would have similar handling characteristics to its predecessor, the 737 NG.

The European Union Aviation Safety Agency (EASA) last month said it planned to undertake flight tests of the 737 MAX including a test without MCAS to check its performance during high-speed turns and stall.

Boeing is revising the 737 MAX software to require the MCAS system to receive input from both AOA sensors, and has added additional safeguards. If the AOA sensors differ by 5.5 degrees or more then MCAS cannot operate, FAA Deputy Administrator Dan Elwell said last month.

If MCAS does operate it can only operate once unless the problem had been “completely resolved,” he added.

The JATR is headed by Christopher Hart, former chairman of the National Transportation Safety Board (NTSB), and includes air safety regulators from the United States, Canada, China, Indonesia, European Union, Brazil, Australia, Singapore, United Arab Emirates and Japan.

Last month, Hart said it was important to note “the U.S. aviation system each day transports millions of people safely, so it’s not like we have to completely overhaul the entire system, it’s not broken. But these incidents have shown us that there are ways to improve the existing system.”