The four federal banking agencies issued an Interagency Policy Statement on the Internal Audit Function and its Outsourcing (the "Policy Statement"). The Policy Statement first highlights that the board of directors and senior management of a bank are responsible for ensuring effective internal controls (e.g., assuring safeguarding of assets, reliable financial reporting and legal compliance) and this responsibility cannot be delegated. The Policy Statement further notes that this function is often outsourced and that the banking agencies have safety and soundness concerns derived from their examination of existing outsourcing arrangements.
Nature of the Internal Audit
. The Policy Statement describes the proper internal audit function and declares that business line managers should not be responsible for reviewing their own internal controls. Instead, the Policy Statement generally recommends that internal audits be conducted in accordance with the Institute of Internal Auditors’ Stan
