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#42706 - 11/13/02 07:42 PM How to become an Internal Auditor
KSherrell Offline
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KSherrell
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Anyone care to give me some career advice?

Recently our Internal Auditor position opened up, and I'd like to take a crack at applying, to me its window of opportunity for challenge and advancement. I think an IA is similar to what I do know as a Compliance Officer. However, I don't know much about what IA really do. The only thing I know our former IA did was go to meetings...

Anyone able to steer me in the direction of what IA's do? Or maybe some reference and resource material I can get to study up and familiarize myself with the job?

-Kevin Sherrell

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Audit
#42707 - 11/13/02 08:00 PM Re: How to become an Internal Auditor
Lestie G Offline

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How about a great big IT DEPENDS! The duties of a compliance officer, as you can tell from various other threads, vary greatly from bank to bank. It depends on the size of the institution, the complexity of their operations, the particular talents of the people in those positions, and in some cases the whims of that bank's regulator.

Generally - internal auditors are responsible for reviewing the operations and controls in the bank, including financial and accounting controls, physical security, IT, etc., etc. and identifying control weaknesses. They then report those findings to an audit committee, and track to see the resolution of each finding. They can suggest possible fixes, but they can't really put those fixes into place - that's the job of the line managers (one of the frustrating parts of auditing, IMO).

Compliance Officers, on the other hand, generally manage the compliance environment of the bank. They research, write policies, train, assist in product developement, and sometimes conduct audits of compliance functions. Most of the time, the duties of the two are intermingled to some degree.

I began my career as a staff auditor for a holding company audit department. Our banks were small for the most part, and operated pretty much autonomously - so I learned every basic facet of banking - an invaluable experience! IMO, both career paths have merits - there's demand for both types of professionals. You just have to evaluate what you like to do, and what your strengths and goals are!
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#42708 - 11/14/02 12:00 AM Re: How to become an Internal Auditor
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Here's an Assistant Internal Auditor position description that may provide insight:

Position Summary

This position is responsible for working with the Internal Auditor to provide an independent assessment of holding company and affiliate banks 1) internal controls and safeguards, 2) accounting systems, 3) regulatory and legal compliance, 4) adherence to Board approved policies, and 5) compliance issues.

The employee will be expected to work independently of management and exercise professional skepticism. The employee will be expected to display a positive attitude and flexibility in accepting varied work assignments. The employee has access to extremely sensitive information and confidential data and is expected to exercise professionalism and confidentiality in all relevant matters.

The employee is responsible for annually conducting and reviewing risk profiles for each department and will provide annual training to bank personnel.

Work is performed within the framework of standard audit program guidelines; however, independent judgment and discretion is required in performing assigned tasks.

Description of Duties Performed

The employee is responsible for assisting the Internal Auditor in developing and adhering to an internal audit program for the holding company and its affiliates. The program will be approved by the audit committee and will be subject to periodic review by the committee. (The program will address all significant organizational activities over an appropriate time cycle. Significant activities include, but are not limited to: loan quality and administration review, trust review, investment security review, data processing review, consumer compliance review, mortgage servicing review, fair lending review, community reinvestment review, certificate of deposit review, fixed asset review, proof review, demand deposit review, savings review, funds management review, safe deposit review, official check review, other asset/other liability review, due from bank review, collections review, credit card processing review, credit card lending review, payroll review, ACH (automated clearing house) review, travelers check review, wire transfer review, savings bond review, external security review, capital review, floorplan review, negotiable collateral review, other income/other expense review, and abandoned property review.)

The employee will assist in internal audits of all books, records, properties, securities, and accounting procedures relating to banking and fiduciary activities at any time deemed appropriate.

The employee will assist in making recommendations to bank management from time to time regarding 1) internal controls and safeguards, 2) the bank's accounting system, 3) regulatory compliance and 4) adherence to policies and procedures.

The employee will be evaluated by and receive feedback from the Internal Auditor and Audit Committee regarding audit effectiveness and efficiency.

The employee will remain apprised of management objectives and audits will be conducted, insofar as possible, consistent with management objectives.

The employee will be available to holding company and affiliate staff for advice and opinions concerning bank control procedures and compliance issues.

The employee will provide assistance to external auditors in preparing schedules, conducting testwork, and gathering requested documents.

The employee will work with management and regulatory examiners to facilitate the examination process by providing audit reports and work papers and responding to examiners' questions, comments, and/or recommendations.

The employee will collect and evaluate risk profiles from each bank department and provide assistance to areas lacking adequate security procedures.

The employee will operate office and bank equipment (e.g., CRT terminal and printer, personal computer, calculator, typewriter, telephone, fax machine, copier, etc.)

The employee performs job related, day and overnight travel to facilitate the audit function.

The employee attends meetings, training seminars, conferences, etc.

The employee may be subpoenaed to testify in court.

The employee will perform training and monitor the bank’s performance regarding compliance issues and/or regulations. The employee will issue reports on compliance activities as needed.

The employee will perform other work-related duties, as assigned.

Knowledge's, Skills, and Abilities Required

Knowledge of bank regulations and compliance requirements.

Knowledge of accounting practices and principles.

Knowledge of auditing procedures.

Knowledge of bank operating policies and procedures.

Knowledge of the role of a holding company in bank operations and the rules and regulations that apply to same.

Knowledge of or ability to learn about compliance issues.

Skill in finding and documenting deficiencies in department operations via the internal audit program as detailed in the description of duties.

Ability to work closely with the Internal Auditor and Audit Committee and bank management personnel in the application and execution of the bank's mission and strategic plan.
Ability to work independently and be self-motivated.
Ability to deal with adverse and stressful working conditions in a professional manner.
Ability to have access to and deal with highly confidential information in a discretionary manner.
Ability to prepare and distribute complex forms, audit reports, correspondence, and memoranda.
Ability to communicate effectively.
Ability to write clear and concise documents.
Ability to conduct internal audits by reviewing all requisite documentation and interviewing appropriate bank personnel.
Ability to review findings of fact and make recommendations to Internal Auditor.
Ability to serve as an expert in the areas of accounting and auditing principles and procedures.
Ability to prioritize and organize internal audit function to maximize performance and cost effectiveness.
Ability to work closely with and serve as a liaison for external auditors and examiners.
Ability to think logically and resolve problems.
Ability to process detailed information regarding management objectives.
Ability to perform day and overnight job-related travel.
Ability to attend meetings, training seminars, conferences, etc.
Ability to make decisions and exercise discretionary authority necessary to successfully perform job duties.
Ability to operate office and bank equipment detailed in the description of duties.
Ability to testify in court.


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#42709 - 11/14/02 07:45 PM Re: How to become an Internal Auditor
Maria Offline
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Good grief yours does not even cover Compliance Manager so for us that do both, we definitely do not get paid enough!!!! We definitely never have enough of time to get it all done!!

By the way, Good Luck with your decision. I think it depends on if you just like compliance or would you like to deal with the operations of the bank, internal controls, risk management, general ledger functions, etc. They each are a challenge and provide opportunity for growth of knowledge, but whatever we do in our careers, we are always learning.

Opinions are mine and definitely not my employer!!

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#42710 - 11/14/02 09:33 PM Re: How to become an Internal Auditor
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If I were the poster of this question, I'd stick with Compliance if that is an option. Internal Auditing isn't even a "skill" that is useful if you want to go into regulatory work as the regulators don't do virtually any internal auditing like they did in years past. Compliance Auditing, in my opinion is way more interesting and an open door to more opportunities down the road. Also, I think that Compliance Auditors have (and need) a bigger brain, generally, than Internal Auditors.

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#42711 - 11/14/02 09:59 PM Re: How to become an Internal Auditor
Bartman Offline
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Grist, I guess it depends on the regulatory agency. Michigan recently did some early buyouts, and as a result a number of state compliance personnel left. The postings to fill their positions almost exclusively requested audit / CPA based qualifications.

So to the original poster, the question is "where do you want to go?" If a stint in the audit dept. would be a benefit, go get 'em. Personally, I don't think it could hurt - this from a guy with poor accounting skills...
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Opinions are Bartman's, not those of my employer. "A noble spirit embiggens the smallest man."

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#42712 - 11/14/02 09:59 PM Re: How to become an Internal Auditor
KSherrell Offline
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Thanks for the advice.

In my company the Compliance Officer is subordinante to the Internal Auditor who is also the manager of my department, so becoming the IA would be an "promotion". I am also thinking long term in which I'd someday head in the CFO direction. And I think and IA could offer some good experience.

However, I enjoy compliance much more than I believe I would IA. So, I have decieded to stick with Complaince and hopefully expand the position and the department to a higher level.

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#42713 - 11/14/02 10:53 PM Re: How to become an Internal Auditor
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Each path is different, but internal auditing is such a bore and you don't end up very popular - but, as you stated, any experience helps, but don't stay to long.

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#42714 - 11/14/02 11:04 PM Re: How to become an Internal Auditor
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Well, I've been a CFO for years and Compliance is way more important than internal auditing. A CFO always has operating people that actually have the knowledge to complete tasks in a way that gives full consideration to documentation, policy, procedure - so internal auditors simply check on those people.

Technology, accounting, and writing skills are the most important skills to develop on a path to CFO.

If you have an opportunity, serve some time as an assistant to a Controller or CFO - start with accounts payable, etc. if necessary.

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#42715 - 11/15/02 03:06 PM Re: How to become an Internal Auditor
Anonymous
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Gosh, Internal Auditors have a bad reputation all over!

Actually, I feel there is a whole different realm of auditing outside of compliance. It has been a terrific learning experience for me. It's okay not to be everyone favorite person. You don't get paid to be liked!

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#42716 - 11/15/02 04:15 PM Re: How to become an Internal Auditor
c.a.r Offline
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All of this makes me want to question why I just excepted the IA, Compliance job today. I thought it was an important area of the bank....
(don't count off for spelling)
Last edited by C.A.R; 11/15/02 05:14 PM.
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#42717 - 11/15/02 04:18 PM Re: How to become an Internal Auditor
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I agree with you, but internal auditing is, at best, a good place to be from! You not only don't get paid to be liked, you don't get paid much at all. People that actually do the work get paid (well) with people that audit the work paid not so well. Compliance work requires a lot more brain power.

Just take a look at what has happened over the years in the regulatory arena. Internal audit tasks were eliminated years ago, compliance auditing appears to be a step down from Safety and Soundness auditing. The highest risk area is Safety and Soundness, so it follows that if you are an auditor, compliance/safety/soundness are the issues you should be looking to audit.

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#42718 - 11/15/02 05:17 PM Re: How to become an Internal Auditor
c.a.r Offline
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IF, I am understanding the new job, I will do IA, Compliance and SS... Along with of course my other duties (hhmm memo to self... talk about pay raise)
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#42719 - 11/15/02 05:36 PM Re: How to become an Internal Auditor
rlcarey Online
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I think that your narrow opinion concerning internal auditors is an overblown simplification of the real world. I've worked in both capacities and I can tell you the job is what you make it in the organization that you work. I have had the opportunity to guide major policy decisions in banks through the internal auditor role simply due to the fact that I was well respected and able to present rational risk based opinions to management. Oh yeah, you have auditors that do nothing but check the checkers, but the role can and should be an integral part of developing a properly functioning organization. I could say the same things that you have mentioned about internal auditors and relate that to a half a dozen compliance officers that I have known. Meek, weak individuals that had absolutely no influence on management and only had the position so that management could point at them and say "yes, we have a compliance officer". Positions and jobs are what you make of them.

P.S. I have also been paid rather handily as the DIrector of Internal Audit - more than being the Veep in charge of compliance - you may want to consult some salary surveys.
Last edited by rlcarey; 11/15/02 05:38 PM.
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#42720 - 11/15/02 05:37 PM Re: How to become an Internal Auditor
KSherrell Offline
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IA and Complaince are a lot of work in themselves...start thinking of getting some assistants. You gonna need em

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#42721 - 11/15/02 05:55 PM Re: How to become an Internal Auditor
c.a.r Offline
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I could use all the help anyone is willing to give. I have to find training by this year end and an IA/Compliance audit sched. I feel a little nervous, I have BSA, OFAC etc training, But loan and other new stuff makes my head swim..
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#42722 - 11/15/02 05:57 PM Re: How to become an Internal Auditor
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You sound like an extreme exception to the general rule.

It would be better to compare the pay of those who do the work, versus those who audit the work. Compliance/Audit salaries go all over the map and the fact that you are skillful enough to receive generous compensation does not result in generally sufficient pay for anyone in your field.

The bottomline is that your experience does not represent the norm.

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#42723 - 11/15/02 06:03 PM Re: How to become an Internal Auditor
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The pay raise should have been built into the assignment of new tasks, or within a reasonable time thereafter.

By the way, take that "I am new so don't rely on my thoughts" off your signature, as this is an equal playing field and your thoughts are evaluated by each poster and valued by each poster as grist for the mill, not right or wrong.

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#42724 - 11/15/02 06:48 PM Re: How to become an Internal Auditor
Anonymous
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Being an internal auditor certainly does not make you popular with the rest of the staff. However an auditor is supposed to work independently and most of the time the questions you ask, the recommendations you make and the audit findings will definately not open a path to being the best liked person in the bank. Boring, definately not. We look at things that no else does and know things no one else does. Confidentiality is important and knowing who and what to target is a skill. Knowing where to look and what to look for is a skill. Auditors must have know regulations, legal requirements, have accounting skills and more. A good auditor works closely with security officers and compliance officers. Yes I would say compliance officers are more skilled in regulatory compliance, that's their job, however, some us have to also audit regulatory compliance, so we have to be quite knowledgeable about it or else how can we do a thorough enough job of reviewing the bank's overall internal controls. There, I'v said it and I feel better. Don't knock the poor internal auditor, they keep the bank out of trouble and are a direct link to the Board of Directors. Sometimes we have to tell the Board things that will not make us popular with management. But, as our President once told the Board, "we may not like what she has to report, but it certainly helps us see things that we wouldn't have seen otherwise. It has certainly been a learning experience for me and frankly I'm glad she's here. If all she had to say was good, she wouldn't be doing her job." Can't beat that kind of support from Sr. Management and the Board. I was in compliance before becoming an auditor and the experience certainly has helped me. I was in operations before too. I had accounting skills and now I have auditing skills. Do I like my job? Not always, but I do believe that an internal auditor is very important to the organization. If you don't believe me, ask your Safety and Soundness examiner next time you see him. I say go for it and good luck. gg

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#42725 - 11/15/02 07:12 PM Re: How to become an Internal Auditor
MackenzieS Offline
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The first thing to do is try not to get too overwhelmed. If you can't find the type of training before year end, there is a lot you can do yourself to prepare. When I became the Compliance Officer, I had only been an asst auditor for 9 mos and the Acctg Mgr for 9 mos. I knew I was not qualified for the job, but management felt that I had the potential. I am now the Compliance Officer and Internal Auditor so reading these posts is funny to me to see how one views the other. Since I was feeling inadequate and overwhelmed and I too had a time lag before they sent me to Compliance School, I printed off every reg and began to read. You have to first have the basic knowledge of what the regs say, then when you go to school you won't feel so intimidated by the lingo and feel like you know nothing. There is a ton of websites, including this one, where you can simply read and read and read on all subjects. Pick one and read the reg and then research it from a couple of different angles so you can understand the legalities of the reg. A lot of these regs do require interpretations and you will need some assistance. Anyway, this is just what I did to prepare myself until school, if you have questions, these threads are a great place to voice them, we have all been the "new guy" before so there is some compasion here where you might not find elsewhere. Good luck and I hope you enjoy your job, it is never a dull place to be!

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#42726 - 11/15/02 07:44 PM Re: How to become an Internal Auditor
LinMarie Offline
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Thanks for sharing your opinion. I share it as well. I enjoy being the auditor and feel that my position benefits the bank. I believe Internal Audit is an important function.

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#42727 - 11/15/02 07:57 PM Re: How to become an Internal Auditor
c.a.r Offline
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I feel every position is an important one, I just know this position is rapidly making me nervous. I guess I will take it one day at a time. Does anyone have a schedule of audit/compliance they would be willing to share?
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#42728 - 11/15/02 08:29 PM Re: How to become an Internal Auditor
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I say go for it and good luck.

I hope that you are not talking to me. I have a personality, therefore, I'm not an internal auditor - never wanted to be - never will be, as I'd rather do the work that needs to be done. Don't get me wrong, internal auditors have a place of value within any organization, but the value is risk weighted, in my opinion, at a lower level then noted by you. With that said, a job well done by a "contributing" internal audit is a different ball game.

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#42729 - 11/15/02 08:46 PM Re: How to become an Internal Auditor
Lestie G Offline

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I'm glad the CFO at my first bank didn't have your opinion! I'd probably be in a completely different career now (I'm not an auditor any longer - I'm a Compliance Manager).

Attitudes toward Internal Audit (and Compliance, Loan Review, Loan Operations, any other support function) have a great deal to do with the personalities of the people in those functions - and management's attitude toward them. I think I'll email my CEO and tell him thanks, again, for having such a healthy attitude about the role Compliance, Audit, Loan Review, etc.
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#42730 - 11/15/02 09:09 PM Re: How to become an Internal Auditor
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And, perhaps you would be better off in a different career. All I'm saying is that when you are starting out, look around at the players in the banking environment, personalities, skills, tasks, etc. Look up pay ranges covering seasoned people, look for real bottomline value based on contribution. There are stars in every setting, but when you make your bet, don't go with the game that has a house advantage, go with your level of drive to make things happen, not simply checking on what's happening.

As far as you are concerned, you sound happy with your work and that is a worthy goal to achieve that is not achieved by many people.

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