HAWKE: We don’t have, obviously, an independence concern in that regard

HAWKE: We don’t have, obviously, an independence concern in that regard

We haven’t surveyed our other regions, but if that ratio is typical of what’s going on throughout the country, I think it’s an issue that should present serious concerns.

We have had situations where banks have out-sourced internal loan review to their external auditors, for example, and we have prohibited that because we think that’s a violation of the independence rule

MR. We would want to make sure that management is still paying attention to the quality of internal audit. This is a key concern for management, and we would want to make sure that boards of directors and management didn’t view their responsibilities at an end just because they had out-sourced an audit to an external firm.

COMMISSIONER CAREY: Do you feel that audit committees at the banks under your regulation are playing a sufficient role in monitoring these practices on the boards of the banks that you regulate?

MR. HAWKE: I Jasper installment loans near me would be reluctant to make an across-the-board judgment on the quality of audit committee performance. This is a subject, though, that we put a tremendous amount of importance on.

We think that both in dealing with the external auditors and particularly in assuring the independence ofinternal audit, the function of audit committees is criticalMISSIONER HUNT: Doesn’t it bring to the argument, sir, that when an auditing firm performs outside functions, other functions for a client, it gets to know the client better and therefore can do a better audit?

MR. HAWKE: I think there is certainly something to the notion that the external auditors know the institution well and can perform an internal audit perhaps without some of the start-up learning and costs that might be involved if audit were out-sourced to a different external firm.

But I think that the price in the long run that one pays for that is not worth that efficiency.

HAWKE: Well, I can’t say that we have found problems

COMMISSIONER UNGER: You had said earlier that the firms or, rather, the banks that out-sourced their internal audit function are, perhaps, examined more closely.

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