Financial Institution Regulatory Agencies Should Perform Internal Audit Reviews of Their Examination and Supervision Activities

GAO conducted a series of reviews of the internal audit organizations and functions at the Federal Deposit Insurance Corporation, the Federal Home Loan Board, the National Credit Union Administration, the Federal Reserve System, the Office the of Comptroller of the Currency, and the Farm Credit Administration to ensure that the agencies' activities were receiving adequate internal audit scrutiny.

The Federal Deposit Insurance Corporation's Office of Corporate Audits has made significant progress toward achieving an effective internal audit function. The Office of Internal Review of the Federal Home Loan Bank Board began to improve its internal audit operations. However, GAO suggested that the Office should make a strong commitment to auditing the Board's data processing operations and should increase its guidance to the internal audit offices at each Federal Home Loan Bank. GAO found that the National Credit Union Administration needed to give more support to its Office of Internal Audit and Investigations. The Office's responsibilities are broad, yet the size of its permanent staff is very small, which makes it difficult for it to meet its responsibilities. In addition, the Office's leadership has changed frequently. Although two Board organizations and an external auditor make periodic reviews of the Board's operations, the Board of Governors of the Federal Reserve System does not have a permanent, independent internal audit group. The Office of the Comptroller of the Currency's internal audit organization is very small in relation to its responsibilities. Many activities and operations are being left unaudited. The Farm Credit Administration has no permanent, independent internal audit group. Rather, internal audits are conducted by staff from two of its other organizations on a part-time basis. GAO believes internal auditors should review their agencies' examination and supervision activities.