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Internal Auditors in Banking

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Internal Auditors in Banking Matthew Cassar Introduction Auditing is the inspection and verification of the accuracy of financial records and statements. Banks conduct internal audits of accounting records and procedures. Its task is to examine the risks that the bank faces, to review the adequacy of the controls in place to protect it from those risks, and to verify that the controls are working as intended. This report aspires to outline the purpose, roles, and standards involved in the internal auditing of banks. The importance of internal auditing Banks take on the role of securing and investing its customer's funds; if they gain a reputation for being untrustworthy then customers will move onto another competing bank. Also, banks are to comply with a mandatory external audit which is sent in to confirm the findings of the internal audit and to make sure everything is correct. The external auditors present an audit statement that is made public in the bank's annual report. Thus, it is better off for the bank to het their books straight the first time rather than being caught in the external audit. ...read more.


As previously stated, controls are extremely important for an auditor to regulate properly. When examining the sufficiency of the controls, the auditor would be undertaking a systems audit. When testing the controls themselves, the auditor would be doing a compliance audit. If the auditor needed to verify the presence of physical financial assets, it would be a custody audit. Computer Audits Computer audits ensure that the bank's computers are properly controlled. An auditor must ask himself these questions: Are the physical controls over a computer site adequate? Are backups of data taken regularly? Are passwords changed frequently? When doing this work the auditor would be undertaking an operational audit. The computer applications themselves and the controls over them are usually the responsibility of the financial auditors since the applications form part of the business process. It is also important for auditors to become involved with any new computer system at the design stage, to ensure that proper controls are built in. This is a development audit. Value-for-money Audits These audits give management an opinion about the value for money that the bank gets from a particular process. ...read more.


These standards are based on what they have learned from the more experienced external audits. Conclusion Internal audits in general are extremely important to a company's success and are vital in ensuring good consumer confidence. But when internal audits take place in banks the stakes are that much higher. Workers and businesses savings are being trusted to banks. If that line of trust were to be broken the bank would suffer great losses. This is why internal auditing in banking is so important and thus the focus of this report. 1,055 words Sources (MLA Citation) 1. "Audit." Wikipedia. 1 April. 2007 <http://en.wikipedia.org/wiki/Internal_audit> 2. "High performance auditing in banking." Business and Finance. February 2003. Find Articles.com. 1 April. 2007 < http://www.findarticles.com/p/articles/mi_m4153/is_n1_v53/ai_18202725> 3. "Internal audit in banks and the supervisor's relationship with auditors." Basel Committee on Banking Supervision. August 2001. Bank for International Settlements. 1 April. 2007 <http://www.bis.org/publ/bcbs84.htm> 4. "Internal Audit FAQ." Internal Audit. University of Birmingham. 1 April. 2007 <http://www.internalaudit.bham.ac.uk/faqs.htm> ** Thank you Lewis M.L. Cassar CA, MBA for your part in explaining key concepts related to the topic of this research assignment. Note: Lewis is an expert in the field of accounting as well as banking with 30 years of work experience. Presently he controls the Toronto Internal Audit for States Street Bank and Trust. ...read more.

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