The role of internal audit in today's financial institutions is multi-faceted and constantly evolving.
Here's what you can expect to learn on this page:
Auditing is a fundamental tool to mitigate risk for banks and credit unions. Audit findings provide the information you need to ensure that your bank or credit union is not only protected, but exam-ready at all times.
Knowing (ahead of time) is half the battle!
Audits provide an independent evaluation of a bank or credit union’s activities, controls, and information systems. The focus is on compliance, to ensure that company practices are in line with regulations and industry standards.
An audit determines whether your organization's financial activities are
Auditing has changed in recent years. A predictable annual audit no longer enough — you need a dynamic process that allows you to use audits to manage risk in real time.
You can improve your audit management by taking these 4 steps:
Increase audit frequency
Expand depth & breadth of testing
Add new internal controls
Don’t wait for an examiner to uncover an issue with lending compliance. Auditing is the third line of defense for banks, credit unions, and mortgage companies. By focusing efforts on the areas where risk exposure is the greatest, auditing can help your financial institution improve processes and fix problems ahead of exam time.
Need to build up your third line of defense? Read on >
In school, we were often told to “show our work” so our teachers would know that we understood the processes.
In auditing, an audit trail helps demonstrate compliance by capturing the most up-to-date version of your policies, procedures, strategic plans, board minutes, risk assessments, activity logs, and other documentation. And it needs to be detailed — if an examiner needs to dive into your data, a three-page report from an outside firm won’t cover it.
A good audit trail also acts as a warning system so you can make changes that will ensure better exam results.
Digging into your organization’s vulnerabilities might seem stressful, but audits aren’t something to fear. Audit findings comprise data that can help financial institutions gain an understanding of performance, compliance, and risk. But this data is only helpful if you act on it. To do that effectively, you must have a process in place to conduct audits and manage audit findings.
For risk management to be effective, everyone at your financial institution needs to be involved. Here’s where auditing can play a key role. Your board can leverage audit results for oversight and strategic planning.
Many financial institutions are tempted to implement cost-cutting measures to maintain their margins, especially in difficult economic times. But cutting costs in auditing
“Cost-cutting considerations need to be carefully balanced with a proper control and testing environment as well as risk management practices that can prevent increased losses.”
- The Office of the Comptroller of the Currency (OCC)
Luckily, there are solutions that can help reduce costs and time, while increasing audit effectiveness.