Internal audit, when properly implemented, is an essential element to assist your financial institution in discovering control weaknesses, regulatory and policy violations, and operational inefficiencies. Such self-scrutiny provides an institution with the ability to take timely, corrective action when needed to maintain its safety, soundness, profitability and integrity.
Proper implementation of an effective internal audit process begins with a comprehensive risk assessment. Financial institutions are not created equally; their mix of products and services and organizational structure vary. A risk assessment should take into account all operational areas specific to the institution, as well as recent regulatory changes, prior regulatory and internal audit issues, and risk appetite. An assessment should be documented to support the creation of the audit universe and plan. The utilization of a cookie-cutter audit plan and a general risk assessment may cause the institution to overlook key operational and regulatory deficiencies.