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Credit Union Internal Auditors Need Skills Beyond Auditing
A credit union’s internal auditor is responsible for much more than reviewing loan files, completing a wire transfer audit, or assessing controls over investments. Today, an internal auditor must have an effective relationship with the supervisory committee and management, continuous training, and a short- and long-term audit plan that addresses the credit union’s changing needs and risks.
In most credit unions, the internal audit department maintains a dual reporting relationship with the supervisory committee and chief executive officer. Effective communication is the most important factor in maintaining a strong relationship with both. An internal audit charter approved by the board of directors is a key component in communications, because it defines the roles and responsibilities of the internal auditor.
Communicating with the supervisory committee
Ideally, you should be able to communicate candidly with the supervisory committee. Be sure to issue reports on a regular basis, both formally through regular meetings, and informally through phone calls or email. Using various forms of communication allows you to keep the supervisory committee up to date and be responsive to its needs.
Prepare for scheduled meetings by providing the committee with an agenda and a packet prior to the meeting with audit reports, a status of your work plan, or relevant industry articles and information.
Communicating with management
While you need to remain independent and objective, you also need to maintain a relationship with management in order to create effective reports. To gather the necessary information, you may need to:
- Solicit feedback from management in developing an audit plan
- Talk to the appropriate management groups at the start of the audit
- Provide a status update throughout the audit
- Schedule an exit meeting with management to communicate the results of the audit
After taking these steps, consider including the management’s responses in the audit reports — this is a good way for all the report’s users to understand the management’s feedback to your findings.
In addition to excellent communication skills, a successful audit department must also have ongoing training to develop audit proficiency, key technical skills, and industry knowledge.
Preparing an annual and long-range professional development plan is a valuable way to develop skills to meet the audit needs of the credit union, or determine if outside specialists are needed.
The internal audit department’s staff usually has a supervisor who conducts work paper reviews, surveys from management of completed audit areas, and a periodic assessment of audit staff. This can help determine the specific training needs of staff. You may also want to have an independent external assessment of the department to ensure it complies with standards of organizations like the Institute of Internal Auditors.
Short- and long-term plans
Due to the significant changes in the industry, it is crucial to develop a short- and long-term audit plan to help your credit union succeed. Most internal audit departments will prepare a three- to five-year audit plan that is updated annually.
Ideally the audit plan should be developed after the credit union has had a strategic planning session. That way, you can assess how the audit may be affected by the credit union’s operational and strategic risks. When developing the audit plans, a risk assessment that addresses the risk of fraud should be considered. An individual audit plan should also be prepared prior to initiating any audit. An engagement letter is an effective way to formally communicate the scope of the audit.
A successful internal audit department has more skills than just auditing. By being strong communicators, open to learning new skills, and focused on preparing for the future, the department can help secure its credit union’s success.
Dean Rohne, Principal, Financial Institutions
dean.rohne@CLAconnect.com or 507-434-7046