Since the 1970’s the U.S. has been plowing financial experts from all over the world, especially in the arena of finance, auditing, and banking. In terms of cost of living, the US market is not only a crimeless sanctuary. Still, it is also the primary bread-earner for the expatriates, who remit their savings to support their families living in developing countries. The US market did not only absorb the influx of expatriates but also industrialized its manufacturing and service sectors through technology and automation. In terms of its regulated infrastructure and civil framework, the growth of the US has been exponential. With the advent of the new millennium, the US has been proactively strategizing in expanding its financial hub, which is why the enormity of accounting, banking, and auditing is an expansionary phase that provides lucrative amenities to serve the needs of the non-locals.
As far as the significance of internal audit predates, it has functioned as a basic yet fundamental process. Unlike any other administration department, an internal audit serves as an internal regulator, whose purpose encompasses scrutinizing documents, reconciling accounting assets, and frequent informing of any anomalies to the board members.
In the U.S., the importance of internal audit function has gained momentum in the recent year, particularly when speaking of International Financial Reporting Standards (IFRS), financial record keeping, and overviewing the financial statements. The scope and dependency have gained prominence in the bank’s core management. Nearly all kinds of banks in the US have concluded that internal audit’s physical presence is embryonic in cultivating the administration of tangible and intangible assets in the banking sector, steering recuperated financial productivity of financial institutions.
There are various objectives and embodiments of internal audit, and utmost compliance with different frameworks is of paramount importance. In actuality, the bank’s audit committee and the board of directors are, in principle, accountable for employing effective management systems at all levels. The onus and magnitude of internal audit within the bank circumvents in gauging the risk of any banking transaction or activity, such as maintaining Capital Adequacy Ratio (CAR), Cash Reserve Requirement (CRR), procedures for opening up consumer and organization accounts, and approving loans to consumers and entities.
In any bank, the function of an internal audit serves as a liberated unit. The overall objective of having an internal audit is to fortify the business operations of the banks. Furthermore, augment it through the activities of assurance and consulting when it comes to business process re-engineering. Thus, implying that it does not act as a support function but as an enabling unit that adds value to enhance the organization’s performance. It compels the management and stakeholders to take a holistic view by adopting a scientific approach in implementing innovation. It empowers the human resource to be inoculated with discipline, integrity, and creditability. The fence of audit control has no boundaries, as it is able to diversify its implementation in enhancing the effectiveness of the risk management process and corporate governance.
The Board of directors and management steering committee in banks have also given sole independence to an internal audit. They provide a transparent and unbiased purview of the bank’s financing performance. Furthermore, auditors also provide suggestions to boost performance and improve efficiency while minimizing time-consuming tasks. They may also come up with the novelty of generating extra profits by resorting to alternate income streams.
The spectrum of internal control should not be restricted and necessitate the desired requirements of the top management. The purposes of having this division are; to assess if the prevalent framework is in conjunction with the infrastructure of the bank, scrutinize each process and product if it is cost-efficient or not, and ensure uniformity and integrity of financial reporting and business operations.
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