Banks that hire outside companies to conduct internal audits must retain enough people to oversee the inspections, said Gerald A. Edwards, Federal Reserve assistant director for regulatory reporting and accounting issues.

Speaking Friday before the American Institute of Certified Public Accountants, Mr. Edwards said Fed officials have "several concerns" about the increasing use of accounting firms for internal audits.

Subscribe Now

Access to authoritative analysis and perspective and our data-driven report series.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.