Financial Institutions: Internal Audits Offer More Than Compliance Assurance
As your financial institution’s regulatory responsibilities continue to grow, your internal resources may be left with little time for keeping on top of program requirements or conducting an internal audit. As a result, financial institutions are increasingly looking to third parties to help meet these responsibilities. Outside assistance makes good business sense — it can reduce costs and provide relief when your institution’s resources are already stretched.
You may have an internal control system in place that isn’t as advantageous as you have been led to believe.
An internal audit is responsible for monitoring the effectiveness of the internal control processes that have been established in an organization. With financial services, delivery systems, and branches becoming more complex, your institution is continually taking on more risk. It’s no longer enough to just keep up with the industry’s constant changes — you should be one step ahead.
A good internal control system gives back
You may have an internal control system in place that isn’t as advantageous as you have been led to believe. An internal auditor can help you identify what’s working and what areas could use more attention. Internal audits can:
- Help protect assets and reduce the possibility of internal and external fraud
- Improve the efficiency of your operations
- Increase financial reliability and integrity
- Make sure your institution is in compliance with laws and statutory regulations
- Establish ongoing monitoring procedures
Effective internal controls should cover all bases
An internal audit serves many purposes. Your financial institution’s control activities should include:
- A risk assessment — Assisting management with identifying and prioritizing areas or processes that require attention and audit focus
- Process walkthroughs and documentation — Gaining an understanding of the processes and procedures as they currently exist, especially with respect to the systems utilized in processing branch operations, wires, loans, and deposit activities
- A control assessment — Identifying gaps where procedures and controls are not properly designed
- Testing — Performing tests of controls to verify whether they are working as designed
- Reporting — Providing observations and recommendations to improve processes, note efficiencies, and controls
A third party audit offers an objective point of view
An internal audit “reports” directly to your management team or board of directors, making the institution process-dependent instead of person-dependent. As a result, it ultimately increases accountability within the organization.
An audit serves as an early warning sign; it can detect deficiencies and remedy them on a timely basis (i.e., prior to regulatory or compliance audits). It can also identify redundancies in operational and control procedures, which can help improve the efficiency and effectiveness of procedures.
With this kind of reassurance, your management, audit committee, board, and external stakeholders can move your institution forward with the confidence that a strong control environment is established.
How we can help
With the growing list of regulations and requirements your institution must meet, bringing in an internal audit team can ease the burden your employees may be facing. Our internal auditors can bring experiences from other financial institutions to help address potential pain points in your institution. We can also provide an objective perspective and address issues without the internal pressures that complicate internal employees who monitor these same areas of your organization.