Interagency Policy Statement on the Internal Audit Functio…

Press Releases BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEMFEDERAL DEPOSIT INSURANCE CORPORATION OFFICE OF THE COMPTROLLER OF THE CURRENCYOFFICE OF THRIFT SUPERVISION INTERAGENCY POLICY STATEMENT ON THE INTERNAL AUDIT FUNCTION AND ITS OUTSOURCING March 17, 2003 INTRODUCTION 1Effective internal control is a foundation for the safe and sound operation of a financial institution 2(institution). The board of directors and senior management of an institution are responsible for ensuring that the system of internal control operates effectively. Their responsibility cannot be delegated to others within the institution or to outside parties. An important element in assessing the effectiveness of the internal control system is an internal audit function. When properly structured and conducted, internal audit provides directors and senior management with vital information about weaknesses in the system of internal control so that management can take prompt, remedial action. 3The federal banking agencies' (agencies) long standing examination policies call for examiners to review an institution's internal audit function and recommend improvements, if needed. In addition, pursuant to Section 39 of the Federal Deposit Insurance Act (FDI Act) (12 U.S.C. 1831p-1), the agencies have adopted Interagency Guidelines Establishing Standards for Safety and Soundness that 4apply to insured depository institutions. Under these guidelines and policies, each ...