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#232757 - 08/17/04 04:01 PM
In House Audit Dept vs. Outsourcing
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Anonymous
Unregistered
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We are looking at bringing internal audit in-house versus our current situation of outsourcing. We are a $160 million bank with possibility of having only 1 person devoted to this with an assistant. Those of you in a similar situation, how do you cost justified staying in-house?
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#232758 - 08/17/04 04:17 PM
Re: In House Audit Dept vs. Outsourcing
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10K Club
Joined: Nov 2003
Posts: 12,846
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Quote:
We are looking at bringing internal audit in-house versus our current situation of outsourcing. We are a $160 million bank with possibility of having only 1 person devoted to this with an assistant. Those of you in a similar situation, how do you cost justified staying in-house?
What are you spending to monitor compliance and perform internal audit currently?
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#232759 - 08/17/04 04:33 PM
Re: In House Audit Dept vs. Outsourcing
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Anonymous
Unregistered
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Currently we are spending in the neighborhood of $35,000 to $40,000 for internal audit alone with another $9,000 for outside compliance audits. So a total of $50,000 approximately. (maybe a little more)
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#232760 - 08/17/04 04:54 PM
Re: In House Audit Dept vs. Outsourcing
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10K Club
Joined: Jul 2001
Posts: 83,364
Galveston, TX
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For your size, I would say that it might be a little premature to bring it in in-house. Depending on your market, a good all-around bank auditor plus a part time assistant is going to cost you much more. Salaries are only part of the equation. Outsourcing allows you to buy a portion of a well trained individual.
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The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#232762 - 08/17/04 04:59 PM
Re: In House Audit Dept vs. Outsourcing
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10K Club
Joined: Jul 2001
Posts: 83,364
Galveston, TX
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Quote:
You could pass on other duties to the Auditor such as SAR reporting and special projects.
So then who would they get to audit SARs???? IMHO - Hiring a auditor when you can't keep them 100% busy with auditing and filling the gaps with operational duties really defeats the purpose of having an independent auditor in-house.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com
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#232763 - 08/17/04 05:10 PM
Re: In House Audit Dept vs. Outsourcing
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10K Club
Joined: Nov 2003
Posts: 12,846
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Quote:
Currently we are spending in the neighborhood of $35,000 to $40,000 for internal audit alone with another $9,000 for outside compliance audits. So a total of $50,000 approximately. (maybe a little more)
Depending on your location, finding someone qualified to perform these functions (and perform them better than when they are outsourced, in my opinion) at about the same price is not out of the question.
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#232764 - 08/17/04 05:15 PM
Re: In House Audit Dept vs. Outsourcing
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Platinum Poster
Joined: Jan 2004
Posts: 555
Louisiana
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I agree that you need to keep the IA independent, but I think having an IA has other benefits over outsourcing. Our bank used to outsource and they did an excellent job. However, they were only here for 2 weeks, where I'm here all the time. I have a better handle on what our bank's needs are. I can also be used in the event of an emergency (ex: investigating fraud) where that may not fit into the outsourced auditors schedule. Many of the benefits of an IA can not be put on a spreadsheet. I think it's great to have an Internal Auditor, but I'm a little biased. Believe me, they will have plenty of work to do. We are $100MM and I have my hands full.
_________________________
You gain education by reading the fine print. You gain experience by not.
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#232765 - 08/17/04 05:25 PM
Re: In House Audit Dept vs. Outsourcing
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Anonymous
Unregistered
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our bank uses a co-sourcing arrangement. it works great.
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#232767 - 08/17/04 07:27 PM
Re: In House Audit Dept vs. Outsourcing
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Diamond Poster
Joined: Jul 2002
Posts: 1,722
Oklahoma
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Quote:
Quote:
You could pass on other duties to the Auditor such as SAR reporting and special projects.
So then who would they get to audit SARs???? IMHO - Hiring a auditor when you can't keep them 100% busy with auditing and filling the gaps with operational duties really defeats the purpose of having an independent auditor in-house.
That would be the examiners. We are a small bank..as is the original poster. Therefore most of us perform duties you might not expect in a larger institution, this just happens to be one of my duties. In addition I am the Compliance Officer who knows the regulatory requirements for filing SARs so that makes me uniquely qualified.
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#232768 - 08/17/04 07:39 PM
Re: In House Audit Dept vs. Outsourcing
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Anonymous
Unregistered
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What should be the requirements (educational and bank experience) of a person heading up the IA department? CPA/CIA?
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#232769 - 08/17/04 08:14 PM
Re: In House Audit Dept vs. Outsourcing
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10K Club
Joined: Nov 2003
Posts: 12,846
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Quote:
What should be the requirements (educational and bank experience) of a person heading up the IA department? CPA/CIA?
Those would certainly give you an idea of their competence, but I would not limit yourself to only individuals with those qualifications. Someone who has banking experience, examiner experience, etc., might be just as productive as someone with less experience but both of those certifications. (Full disclosure: I have both.)
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#232771 - 08/17/04 09:06 PM
Re: In House Audit Dept vs. Outsourcing
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Power Poster
Joined: Mar 2004
Posts: 2,507
Up North
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My bank is a $160MM bank and I am the sole Internal Auditor. Let me tell you I am not lacking for things to do!
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Sometimes you have to burn a few bridges to keep the crazies from following you.
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#232772 - 08/17/04 09:56 PM
Re: In House Audit Dept vs. Outsourcing
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Platinum Poster
Joined: Jul 2002
Posts: 832
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I am the sole Internal Auditor and Compliance Officer for a bank of $165MM. I agree with Sarah, there is not an abundance of free time. I previously held the same position at a bank of $50MM but also wore other hats, with the blessing of the examiners.
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Marilyn, CRCM
I'd rather be fishing.
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#232773 - 08/18/04 01:17 AM
Re: In House Audit Dept vs. Outsourcing
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Anonymous
Unregistered
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Would you be interested in sharing a schedule of how you manage both compliance and audit?
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#232774 - 08/18/04 02:20 PM
Re: In House Audit Dept vs. Outsourcing
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Anonymous
Unregistered
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Would anyone be willing to share with me their Internal Audit Schedule if you are also a compliance officer?
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#232776 - 08/18/04 02:51 PM
Re: In House Audit Dept vs. Outsourcing
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Anonymous
Unregistered
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Pardon me..I am new to this. Would you please explain how I PM you?
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#232778 - 08/18/04 05:10 PM
Re: In House Audit Dept vs. Outsourcing
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Diamond Poster
Joined: Jul 2002
Posts: 1,722
Oklahoma
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Quote:
Pardon me..I am new to this. Would you please explain how I PM you?
At the top of the threads where it says "Main Index, Search, etc." there is a link to "New User". That will take you to the sign-up page. Once you are registered you can click on someone elses screen name and there is an option to send them a Private Message. This allows two users to talk privately. Most posters will not put their email address in the threads for everyone to see, but they are willing to share information in private.
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#232779 - 08/18/04 08:31 PM
Re: In House Audit Dept vs. Outsourcing
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Gold Star
Joined: Dec 2002
Posts: 345
New England
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Will you still outsource IT audit? Depending on your area, I think you may be hard pressed to find someone in that price range that can perform an adequate IT audit (what the examiners will look for). I am a proponent of outsourcing with a skilled liaison working with them. I was in house- then we outsourced and I changed jobs but still work as a liaison (talented??not sure). With outsourcing you are able to avoid the political bs that comes with everyone working for the same company. "Don't tell the auditor" syndrome goes away. You also get "best practices" from the outsourced firm because they gain information from other banks for processes and exams, etc. In addition, as you grow, your examiners are probably going to want a CPA or CIA on staff or performing the audits (that happened here, that's how I got hired in the first place). We are about $600 million w/ 10 branches. Outsourcing saved us tens of thousands. Also, think about all the training and seminar expense to keep someone up to date to audit everything. Good luck, let us know what happens.
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Its risky business, but someone has to do it.
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#232780 - 08/18/04 08:49 PM
Re: In House Audit Dept vs. Outsourcing
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10K Club
Joined: Nov 2003
Posts: 12,846
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#232781 - 08/18/04 10:19 PM
Re: In House Audit Dept vs. Outsourcing
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Anonymous
Unregistered
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We outsource our IA to a big 4. It's expensive, and in my opinion, senior management limits the full scope of the engagement to just the bare minimum to save money. For example, I have to hire an external consulting firm to get any kind of independent compliance reviews done (like BSA) because the big 4 can't or won't do it (cost and lack of expertise - ) Be sure your senior management is willing to enter into an adequately scoped engagement if you do outsource.
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