The Institute of Internal Auditors (IIA) defines internal auditing as “an independent objective assurance and consulting activity designed to add value and improve an organization’s operations. It helps an organization accomplish its objectives by bringing a systematic disciplined approach to evaluate and improve the effectiveness of risk management, control, and governance process.”
Because of the unique mix of products and services, management style, and policies and procedures in place, each organization will have a different degree of risk tolerance and methods for addressing the risks it believes are warranted. In addition, an institution's system of internal control plays an important part in risk management. An internal control system should provide reasonable assurance regarding the effectiveness and efficiency of operations, the reliability of financial reporting, compliance with applicable laws and regulations, and the safeguarding of assets. Lastly, Management’s ability to effectively monitor its process of identifying and addressing risk will determine the adequacy of your risk management system.
Nearman, Maynard, Vallez, CPAs, P.A. takes a risk-based approach to the internal audit process. We work with Management and the Supervisory/Audit Committee to anticipate and address risks early on by performing a risk assessment as the first step in developing an internal audit plan for your institution.
This risk-based approach is dynamic. The audit plan changes from year to year as the risk factors in your environment change, your operations change, and new products and services are added. Our approach is also flexible – you determine the number of visits each year based on your budget and the results of the risk assessment.
Perhaps you have an internal audit department or one full time internal auditor, but staff may not have the time to complete parts of their audit plan, want to add areas not previously covered, or bring expertise to a particular audit and prefer to co-source specific projects with our team. The internal audit co-sourcing provides additional internal audit coverage on a regular basis without the expense of hiring an additional staff member.
Keeping abreast of regulatory compliance issues can be a daunting task. Compliance covers all areas of your institution’s operations and the regulations are constantly changing. In order to ensure ongoing compliance with critical regulations, a regular review and assessment is a must.
Nearman, Maynard, Vallez, CPAs, P.A. offers a wide range of compliance services, some of which are described below. To proceed in an organized manner, and given your staff’s time restraints, we have found it is sometimes easier to break down compliance into smaller areas. Doing so gives your staff time to develop a plan to correct any deficiencies found, in addition to doing their “regular” jobs, before moving on to the next compliance area.
Bank Secrecy Act Review
Bank Secrecy Act compliance continues to be at the forefront of the financial services industry. Both federal and state examiners have increased scrutiny of your bank secrecy compliance programs. Examiner emphasis remains on identifying risk, monitoring programs, and training for both employees and officials of your organization. In addition, focus is on ensuring you have an independent review of your bank secrecy compliance program.
The Federal Financial Institutions Examination Council (FFIEC) published an examination manual to provide guidance to examiners for carrying out Bank Secrecy Act (BSA) and Office of Foreign Assets Control (OFAC) examinations. The manual contains an overview of BSA compliance program requirements, BSA risks and risk management expectations, industry sound practices, and examination procedures. We use the guidance provided in the FFIEC’s examination manual, and subsequent information, as applicable to your institution to help ensure you receive a comprehensive, independent review that will meet regulatory requirements.
The National Automated Clearing House Association (NACHA) requires any financial institution that originates or receives ACH transactions to have an annual ACH review performed by December 1st of each year.
We perform specific procedures in accordance with Appendix 8, "Rule Compliance Audit Requirements" of the ACH Rules. In addition, we review other areas pertaining to ACH operations, including, but not limited to, a review of specific administrative controls, internal operating controls points, and a quality assurance program. The audit programs we use are structured to examine your institution’s compliance with NACHA requirements!
Suspect fraud? We can help do the research and, if required, help you file a bond claim. Most importantly, we can help you improve prevention and detection controls for the future.
We can provide assistance with ballot tabulation and verification in your annual elections for the Board of Directors. We help maintain strict confidentiality and security over the election process.
We can assist the Supervisory Committee and the Board of Directors in completing the necessary change in Management functions for the protection of the Credit Union’s assets and to maintain member confidence. Under the Supervisory Committee and Board of Director’s direction, we can maintain Management oversight of the Credit Union. The interim CEO analyzes situations and provides input to the Board of Directors for final decisions. Our interim CEO will then execute the Board’s decisions.
Your credit union may offer a wide variety of loan products, such as vehicle loans, first and second mortgages, lines of credit, home equity loans, and credit card loans. The lending area must address a myriad of regulations, such as Truth-In-Lending, Real Estate Settlement Procedures Act, Flood Disaster Protection, the Home Mortgage Disclosure Act, and the Equal Credit Opportunity Act to name a few! Our review in this area can encompass all loan products; be limited to specific loan product groups such as Consumer Loans or Real Estate Loans; or focus on a specific loan product such as credit cards.
We can perform cash counts for your Credit Union's branch location(s). After identifying ourselves to branch personnel, we observe the branch opening procedures and then count and reconcile cash and other negotiable instruments.
Key Employee Change
We understand the loss of a key employee can raise concerns of the Board of Directors and Management. We can assist the Board of Directors and Management with their concerns by assessing areas of risk and developing a work plan to evaluate those areas. To accomplish this objective, we use statistical sampling, review documentation, conduct third party inquires, and interview appropriate Credit Union personnel and officials.