Risks & Rules RISK MANAGEMENT Internal audit: in-house or third-party? An internal audit reveals opportunities for improvement across the board, making your community bank safer and more efficient. Take a look at the pros and cons of conducting an internal audit in-house versus outsourcing to a third-party firm. By Mary Thorson Wright I nternal auditing is 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 processes. " -The Institute of Internal Auditors The fiduciary responsibilities with which community banks are charged make internal audits a fact of life. These audits carry explicit and implied standards for both effectiveness of performance and the auditor's qualifications. Regulatory agencies encourage institutions to incorporate professional standards, such as those of the Institute of Internal Auditors, into their audit architecture. Regulators scrutinize internal audit 70 ICBA IndependentBanker November 2017 procedures and results, and the suitability and preparedness of the internal auditor. A community bank's internal audit system should provide for: »Adequate monitoring of internal controls » Independence and objectivity » Qualified persons to conduct internal audits » The testing and review of information systems