As we enter the third quarter, it’s the ideal time for financial institutions to begin planning their annual internal audit and compliance risk assessment. This process is critical to shaping a meaningful and responsive audit plan for the upcoming year.
Relying on the same plan year after year can leave key risks unaddressed, especially in a changing regulatory and operational environment. The risk assessment should be reviewed and updated at least annually. A strong risk assessment ensures your audit focus remains aligned with current priorities.
Key Factors to Consider During Your Risk Assessment:
- Inherent risk level of each functional area
- Potential exposure or financial impact
- Prior audit or examination findings
- Time since last audit or required annual coverage
- Growth or attrition in balance sheet or income statement items
- Changes in processes, products, systems, or vendors
- Recent or upcoming regulatory changes
- Internal staff turnover
- Skill level and training requirements
- Overall complexity of the function or regulation
As you evaluate these areas, consider whether you have the internal expertise to effectively assess all risks—or if it may be time to engage a third party for more complex or high-risk areas.
If you need further guidance or have any questions, we are here to help. Please do not hesitate to reach out to discuss your specific situation.
This material has been prepared for general, informational purposes only and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. Should you require any such advice, please contact us directly. The information contained herein does not create, and your review or use of the information does not constitute, an accountant-client relationship.
