The annual audit, if conducted by a qualified, bank-experienced, and independent certified public accounting firm, can be one of the primary oversight tools of a financial institution's board. Properly executed, the external audit can be insightful and should provide a primary defense against financial and managerial problems.

Managing this function is the primary responsibility of the institution's audit committee, which has increased in importance with the enactment of the Federal Deposit Insurance Corporation Improvement Act.

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