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089105 1 (1975-04-10)

handle is hein.gao/gaobacvcx0001 and id is 1 raw text is: UNITED STATES GENERAL ACCOUNTING OFFICE q WASHINGTON REGIONAL OFFICE FIFTH FLOOR 803 WEST BROAD STREET FALLS CHURCH, VIRGINIA 22046 APR 1 19 Mr. Robert E. Barnett, Director Office of Management Systems and Financial Audits Federal Deposit Insurance Corporation 550 Seventeenth Street, NW. Washington, D.C. 20429 Dear Mr. Barnett:, As part of our ahnual audit of the Corporation we relied to the extent feasible upon the internal audits performed by the Financial Audits Branch. Internal auditing is widely'recognized as an important part of internal control. Accordingly, GAO is concerned with the usefulness and effectiveness of internal audits in the agencies we review. Continued improvement in the internal audit function is helpful in that it will permit us to reduce the scope of our work. The benefits to the Corporation from this are not only the probable reduction in our billing, but also enhanced management control that is achieved through this means. We are aware that there are plans to restructure the internal audit function but that currently no formal plan exists. You may wish to consider suggestions which we have discussed with your associates in this effort. As you are aware, independence is basic to the effec- tiveness of any internal audit function. This function should be separate from all officials directly responsible for the operations which may be reviewed. Organizationally, the Financial Audits Branch is within the Office of Manage- ment Systems and Financial Audits (OMSFA), which is an operational division. Whenever the internal auditors review the operations of other branches within OMSFA, their independence could be impaired. Ideally, the internal audit function should be separate from operating functions and should report directly to the Chairman. If this is not feasible, we suggest that the plans to restructure the internal audit function provide that the Director of Iiligi~ ~ ~~nnnM U~I,,,,II ul I I ar M illlluhnI uIP

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