US Bank Oversight: Reliance on Auditors Raises Regulatory Concerns

U.S. Bank regulators are increasingly relying on internal audits, a shift that is raising concerns among risk managers about potential compromises to independence and oversight, according to a report published Monday by Risk.net.

The trend comes as the three U.S. Prudential agencies – the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation – have narrowed their supervisory remits and reduced staff levels. Risk managers warn this pullback is leading to greater dependence on the work performed by internal auditors at financial institutions.

“Everyone pays lip service to audits being independent, but the reality is that anytime audit has findings, there’s pressure from the business units,” Risk.net reported, citing concerns within the industry. The article detailed that this pressure could undermine the objectivity of internal audit functions.

The growing reliance on internal auditors was highlighted in a recent article on Risk.net, which noted the trend as a potential risk to effective bank supervision. The publication similarly reported on related issues in the financial industry, including the shuttering of S&P’s NMRF solution in November 2025 amid audit questions, suggesting broader scrutiny of risk management practices.

Industry efforts to improve risk integration may also be playing a role. A July 2025 article in Internal Auditor magazine highlighted the importance of an integrated risk model to break down silos between internal audit and Enterprise Risk Management (ERM) functions. However, the Risk.net report suggests that even with such integration, the reduced capacity of external regulators could still lead to overreliance on internal findings.

Risk.net’s reporting indicates that access to the full article requires a paid subscription, with options available through info@risk.net or via their subscription website.