Preschoolers can be challenging. They consistently test the limits of what they can do independently but in an instant can also revert to wanting things done for them. They require teachers’ and parents’ consistent oversight of activities and behaviors to ensure they are on the right path. On the other hand, my son’s grandparents live out of town and see him only occasionally. When they see him, they don’t get stuck in the day-to-day struggles/rewards of parenting but instead can more easily see the bigger picture of how much he has grown and the things he is doing differently from when they last saw him. It really does take a village to raise a child.
A financial institution’s audit function should be treated like a preschooler in many ways. You need those who are in the “parent” role, those who take on the day-to-day functions and ensure they are operating effectively. These include your loan processors, teller department managers, controllers, and the like. These individuals should be keeping a pulse on the regular functions and controls of their departments and monitoring consistent compliance with financial institution procedures. You also need those in the “grandparent” role, those who see the bigger picture and can independently analyze the risks in each department. This includes your in-house or outsourced audit personnel.
Just as both parents and grandparents have their roles in raising a successful human being, a financial institution should have both ongoing, consistent monitoring and completion of an independent, risk-based audit plan in order to truly ensure procedures and controls are in place and operating effectively.
If you aren’t sure your village is prospering, we can help; just give us a call.