aspects of a transaction, reducing the risk of unauthorized activities. Many banks authorize broader user access in times of software conversion and should remember to restrict capabilities post-conversion. 4. ENHANCE TRAINING AND AWARENESS Effective internal controls rely on the knowledge and vigilance of your staff. Providing regular training and raising awareness about the importance of internal controls can empower staff to recognize and report potential issues. When staff understand the objective of their controls, including specific examples of what could go wrong if the control fails, it increases the buy-in and effectiveness of control operators. When new processes or technologies are introduced or when new risk trends are identified, targeted training sessions can help employees understand their roles and responsibilities within the updated control framework. Control operators also have the opportunity to provide feedback on how to make the controls operate more effectively or efficiently. 5. CONDUCT INDEPENDENT AUDITS Independent audits provide an objective evaluation of a bank’s internal control system. The internal audit function — whether in-house or co-sourced with an external audit partner — can offer valuable insights and identify areas for improvement. Audits are especially important during times of change, as they provide an unbiased assessment of how well the bank’s controls are adapting to new circumstances. Internal audit scope and coverage should be responsive to the regular risk assessment. 6. EVALUATE WHEN ERRORS ARE IDENTIFIED When there’s a breakdown identified in the operation of a control, management should pinpoint the root cause of the error and implement actions to correct it. Too often, these operating deficiencies are met with band-aid fixes, which often allow additional future errors if the source of the problem isn’t addressed. 7. FOSTER A CULTURE OF ACCOUNTABILITY Creating a culture of accountability is essential for the success of internal controls. Encouraging employees to take ownership of their roles and responsibilities fosters a sense of commitment to maintaining control standards. When changes occur, clear communication and leadership support can reinforce the importance of adhering to internal control policies. Executives can demonstrate their commitment to quality by participating in risk assessments, helping prioritize control enhancements and providing positive reinforcement when controls operate effectively. 8. UTILIZE TECHNOLOGY SOLUTIONS Technology can play a significant role in enhancing internal controls. Implementing robust software solutions for transaction monitoring, data analysis and reporting can streamline control processes and improve accuracy. For example, many banks have realized the benefits of automating elements of their Bank Secrecy Act (BSA) programs and other compliance-based requirements where software can be trained to mine through a large quantity of data and flag for follow-up items that meet predetermined risk-based criteria. As banks adopt new technologies, it’s important to ensure that these tools are integrated into the control framework and that staff are trained to use them effectively. 9. MAINTAIN DOCUMENTATION Keeping documentation to support control evidence is essential, and using technology effectively can help in this area as well. Many document storage solutions offer review capabilities and detail tracking. These tools can notify users of unreviewed or incomplete documents, helping to identify control failures and enabling timely corrective actions. By integrating these tools into the internal control framework, banks can ensure thorough documentation and more efficient control operations. 10. REVIEW AND UPDATE POLICIES AND PROCEDURES Policies and procedures should be regularly reviewed and updated to reflect changes in the bank’s operations and regulatory environment. Clearly defining control procedures can be especially beneficial for management review controls, where the control owner should clearly define what their criteria for investigation are, what their review entails and what must be documented as evidence that the control operated. When new processes or technologies are introduced, it’s crucial to revise control policies to ensure they remain relevant and effective. Clear and up-to-date documentation helps guide employees and maintain consistency in control practices. SAFEGUARD YOUR REPUTATION WITH REGULAR MONITORING AND EVALUATION Community banks can strengthen internal control systems and navigate changes with confidence with these best practices. Regular monitoring and evaluation of controls help banks remain resilient and capable of addressing emerging risks, ultimately safeguarding operations and a very valuable asset — your reputation. Scan the QR code to see how Plante Moran can help your bank. https://www.plantemoran.com/industries/ financial-services/banks?utm_source=qrcode&utm_ medium=association&utm_campaign=PENFSG-2025_ICBC INDEPENDENT REPORT | 21
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