8.1 External-Internal Audit Narr-1

External and Internal Audit ______________________________________________________________________________ Introduction The board of directors and senior management have the ultimate responsibility for the design, implementation, and monitoring of the FHLBank’s risk management and internal control environment. The control environment provides the discipline and structure for the achievement of the primary objectives of the system of internal control. Specific examples of internal control are as follows: 1) Integrity and ethical values; 2) Management’s philosophy and operating style; 3) Organizational structure; 4) Assignment of authority and responsibility; 5) Human resource policies and procedures; and 6) Competence of personnel. Broadly defined, internal control is a process that and encompasses all activities of the FHLBank, reflects the attitude of the board of directors and senior management, and is designed to: 1) Provide reasonable assurance that assets are safeguarded, and financial and operational information is timely and reliable; 2) Detect and correct errors and irregularities in a timely manner; 3) Ensure compliance with policies, plans, procedures, laws and regulations; and 4) Promote the economical and efficient use of resources. Control is an integral part of managing operations, and is any action taken by a manager to enhance the probability that established goals and/or objectives will be achieved. Those actions may ...