Financial Markets and Institutions:

Opportunities To Further Improve Internal Auditing in the Federal Home Loan Bank

GGD-80-90: Published: Jul 16, 1980. Publicly Released: Jul 16, 1980.

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GAO undertook a review of the Federal Home Loan Bank Board's internal audit function. Internal auditing at the Bank Board has undergone many organizational changes since its inception. Among these changes has been the creation of a new Office of Internal Review. The Internal Review Office's current responsibilities include providing guidance for the effective performance of internal auditing at the Federal Home Loan Banks; coordinating the annual financial audits of each Bank performed by certified public accounting firms; performing financial control, economy and efficiency, and program results audits of Bank Board activities; and acting as a liaison with GAO.

In its review, GAO found that improvements are needed in the area of data processing audits. Currently, data processing activities are not included in the 1980 audit plan and data processing audit responsibilities will not be consolidated under a specific audit manager. Moreover, the Internal Review Office has not conducted an operational survey of data processing activities to determine if audits are warranted as it has done for other Bank Board operations. GAO also feels that in line with other supervisory responsibilities, the Internal Review Office should provide additional guidance to Bank internal audit units in the areas of audit charters, program planning, and report recommendation followup. Revisions to the annual program plan should not be made by the Internal Review Office without first submitting the reasons for those changes in writing. A number of changes were made to the audit plans for 1979, and the status of the audit work was presented orally to the Board each quarter. The results of these practices were that 10 of the 25 audits originally planned were not initiated. Also, 8 reviews experienced delays ranging from 4 to 10 months.

Recommendation for Executive Action

  1. Status: Closed

    Comments: Please call 202/512-6100 for additional information.

    Recommendation: The Chairman of the Federal Home Loan Bank Board should instruct the Director of the Internal Review Office to: (1) reconsider his view that data processing activities should not be included in the audit plan and request a fulltime data processing auditor position, if appropriate; (2) complete and present to the Bank Board the Bank audit charters being considered to correct the problems identified in the surveys of Federal Home Loan Bank internal audit practices; and (3) provide the Bank Board with a written status report, as a part of the Internal Review Office's quarterly reporting, listing the initial estimated completion dates of each planned review, the current status of each review, and any changes to the annual audit plan which may have occurred.

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