Just curious...... Is there a benchmark used (externally/internally) regarding how many internal auditors are needed based on a bank's asset size?

Asset size is important, but the number of lines of business (i.e., consumer,commercial, mortgage, retail banking, business banking, personal banking, etc.) will make a difference also. I've never seen a majic formula.

I've never heard of one, but I would wager that many banks are understaffed in their audit department.

I think that it really comes down to the overall risk management stratigy that a bank is operating under. You can rely heavily on an audit staff or have other processes in place to mitigate the risks, i.e., an on-going self-evaluation process, etc. It depend where they want to spend the money and how much risk they feel certain operations represent.

I agree with you on the risk management, but self-evaluations only go so far in providing a true picture. In my opinion, an auditor who is truly independent is much more effective than a self-evaluation. However, many banks don't have the bottom line to afford a full-time internal auditor, so they have to outsource. That's better than nothing, but outsourced auditors show up generally quarterly. The mere presence of a (competent) full time internal auditor (or auditors) is a reminder to staff and management that there is a system of accountability. That can serve as a control in itself.