Pub. 7 2010-2013 Issue 3

www.nebankers.org 14 Extraordinary Service for Extraordinary Members. performing audits. Internal auditors are not to subordinate their judgment on audit matters to that of others. It is impor- tant to note that external auditors are governed by as strict of guidelines as the internal auditors. Designing, installing, and operating systems are not audit functions. Also, the drafting of procedures for systems is not an audit function. Performing such activities is presumed to impair audit objectivity. The greatest risk of violating the independence principle comes from mixing consulting with auditing. The “gray area” between auditing and consulting offers opportunities for observers (more specifically, regulators) to conclude that auditors have violated the independence principle when they write policies and procedures to be imple- mented in the banks in which they perform audit functions. For themost part, auditors and regulatory agencies believe that performing consulting services carries a relatively high risk of jeopardizing independence. Senior management needs to establish criteria to differ- entiate auditing and consulting work. The bank should ap- preciate and expect the auditors to protect the independence and objectivity of the audit function and not expect or allow the auditor (internal or external) to participate in any activity that would jeopardize the independence. Considering the strict standards required of the audit function and the regulatory view of independence, the board should ensure the audit function is clearly separate from the management function of policymaking and the writing of procedures. Remember, auditorsmake recommendations for “best practices” to include in a policy, but should in no way be involved in the actual writing or implementation of the policy. Many banks are falling into the trap of using auditors to write critical documents as a result of a lack of resources, such as time to find the documents elsewhere or the cost of purchasing each policy. Compliance Alliance is ideal for compliance officers looking to be more efficient and to save their banks money. Banks using Compliance Alliance are currently saving a half to one full-time employee. Compliance Alliance was developed to assist banks in navigating the expansion of compliance rules and regula- tions. Compliance Alliance currently provides more than 450 products, including calculators, cheat sheets, check lists, cliff notes, enforcement actions, flowcharts, forms, handouts, ma- trices, policies, procedures, risk assessments, training tools, webinars, and worksheets, with new documents uploaded  Policy and Procedures — continued nebraskablue.com MEMBERS BENKELMAN We’re here where you are... and we’re working for you. Blue Cross and Blue Shield of Nebraska is an Independent Licensee of the Blue Cross and Blue Shield Association.