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#653556 - 12/18/06 03:20 PM Loan Review
A_G Offline
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Joined: Jul 2004
Posts: 18,957
Do independent loan reviews fall wihtin the scope of your Audit Committee? I do not mean the loan review function that is performed in-house, but for example if the Bank hires an outside firm to perform an independent loan reivew. Should the AC be engaging the firm, seeing the reports, etc. or is it really outside of their scope of duties?

I am thinking not, but I just wanted to get an idea how others go about this. Thanks!
With the lights out, it's less dangerous.

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#653756 - 12/18/06 07:31 PM Re: Loan Review A_G
SavannahOne Offline
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Joined: Sep 2005
Posts: 1,163
I imagine this will vary considerably based on bank/company structure and preference. Ours reports to Risk Management, with reports provided to the Audit Committee.

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#654575 - 12/20/06 11:40 AM Re: Loan Review SavannahOne
Andy_Z Offline
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I would ask, who reviews the internal loan reviews and if the audit committee does that, they should review this as well. If they don't, who is the appropriate committee?

The second question is, why was an outside firm needed? If there were "issues" with prior reports or who they went to, a new direction may be needed which may be the AC or some other group.
My opinions are not necessarily my employers.
Rules and Regs minus Relationships equals Resentment and Rebellion. John Maxwell

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#656580 - 12/22/06 07:52 PM Re: Loan Review Andy_Z
Jokerman Offline
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Posts: 12,846
AuditGuy, I would want some audit coverage of the function. If you don't have qualified audit staff to provide a review, that may answer Andy's question about why an outside firm was needed. If you want examiners/external auditors to rely on this firm's review of your loan review function, then, yes, your AC should engage the firm.

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#657151 - 12/26/06 06:30 PM Re: Loan Review Jokerman
rexinaudit Offline
Gold Star
Joined: Dec 2001
Posts: 292
New England
Internal audit schedules third party reviewers, provides loan data to reviewers, coordinates onsite work, receives and distributes loan review comments and reports, and tracks completion of corrective actions. The audit committee reviews all loan review reports and meets with loan reviewers sometimes to discuss results. Our examiners and external auditors like this arrangement and to an extent rely upon the independent work.
Internal audit sometimes also audits some aspects of commercial lending not covered in the loan review scope.
My opinions are not legal advice, not my employer's, and may change anytime.

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