Every now and then, regulatory bodies around the world issue guidance documents that make a profound statement about internal auditing. Last week, the U.S. Federal Reserve issued some new guidance that clearly falls into that category.
The 15-page document, titled Supplemental Policy Statement on the Internal Audit Function and Its Outsourcing, technically applies only to U.S. banks with assets of US $10 billion or more. However, from my perspective, the Fed has made a powerful statement on the importance of a strong and effective internal audit function in financial services institutions in the “post financial crisis” era.
With this statement, the Federal Reserve also comes closer than virtually any other regulator in the industry to endorsing or mandating The IIA’s International Standards for the Professional Practice of Internal Auditing.…