On January 23, 2013, the Federal Reserve issued a Supplemental Policy Statement on the Internal Audit Function and Its Outsourcing.

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Would an internal audit function staffed by Colonial employees instead of an outside vendor have been sued under the same circumstances?

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Effectiveness of the internal audit function including management focus and action on reports that cited weaknesses and other serious issues to address.

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The four primary responsibilities, he says, are ensuring that there is an effective CEO in place and determining their compensation, that the audit function is working well and that the company has a coherent strategy that is being executed properly.

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The audit committee function is vital, as is the governance, compensation, and in some cases executive committee obligations.

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In addition, we recommend that the PCAOB make this in-depth analysis of audit failures an on-going function of the Board, in order to ensure that changes in policy and oversight practices are adopted in a timely fashion to address correctable weaknesses in the audit process.

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