Audit finds tarp program effective

Instead, provide specific data which allows them to have a better understanding of the issues to determine how to best resolve them. Write with clarity — Have a clear understanding of the issue before writing the audit report.

Use simple words when possible. Yes, some technical jargon may be needed, however excessive use of complex terminology may lead to confusion, causing the reader to check out mid-way through the report. This can be a challenge when writing to different levels of readers, such as senior management and Supervisory Committee members.

The use of a glossary to define more technical terms can be very helpful, especially in the credit union world which loves acronyms. When using these terms assume the reader does not know what they mean.

Spell it out when first introducing it in a report. If further explanation is necessary, expand the description to help ensure understanding. Share background insight on the scope and objectives — Set the stage for how the audit was initiated, what it strives to achieve and the scope of procedures. Without providing adequate information regarding the scope, one may conclude the scope was not significant and discount the efforts of internal audit.

When communicating, filter findings based on risks, and current or potential impact to the organization. If your findings are a big deal, then communicate them as such, but if they are insignificant be careful not to make them bigger than they are.

If everything is important, then nothing is. Audit reports with a constructive tone are more likely to get the buy-in from management. Most audit reports are by nature focused on the negative.

Although 97 percent of the audit procedures and testing may be found to be accurate, the report will address the findings from 3 percent of the procedures. If the auditee deserves to be complimented for positive performance, be sure to do so.

However, when communicating the positive in an audit report, be cautious not to issue an opinion. Be careful to only communicate the positive based on what procedures you completed at that time. While detail testing 50 loans may identify a systemic underwriting issue, it does not mean fraudulent or loans outside of the policy have not have been granted.

Most audits are designed to test the effectiveness of internal controls, not identify fraud. Review your report — It may seem silly, but simple mistakes can divert the attention of the reader from the content to questioning the content of the report or competency of you as an auditor. After staring at a computer screen for most of the day, it may be difficult to spot errors in your own writing. Try printing the report on paper to review it. This can help identify errors that may not be caught on screen.

Always use grammar and spell check, and review numbers and math. A common hurdle in the review process is disagreements between the auditor and their supervisor. These can range from grammar and spelling, to logic or formatting. Supervisors should develop templates and consistent report-style formats to ensure consistency and help improve efficiency. But that doesn't mean that the TARP was completely effective.

In fact, there are seven ways in which the TARP failed, according to the report. I wanted to go through those briefly, and add one more: Getting Credit Flowing No matter how red-in-the-face Congressmen got during hearings, they just couldn't get the bailout banks to lend more.

And that's not surprising: the TARP contained no tangible mechanism with which to require them to do so. But that's okay -- it shouldn't have. By forcing banks to lend more in their fragile state, such a strict lending requirement could have endangered the very capital cushion that the TARP sought to create. So I think this was more of a misguided goal of the legislation.

Regional Bank Failures While the TARP did a great job in healing the big banks very quickly, the same can't really be said of the smaller regional banks. I wrote about this problem yesterday, so I won't rehash all of that analysis here. As the report says, since January 1, there have been bank failures.

As commercial real estate struggles, there may be more to come. So while Wall Street is stabilized, regional banking is hardly out of the woods. For whatever reason, former Treasury Secretary Hank Paulson couldn't make that happen, so it used the fund as a blunt instrument to recapitalize banks instead.

That worked for stabilization purposes in the short-term. But in the long-term, these bad assets continue to plague bank balance sheets. No effort to purge them with the TARP has been successful.

At this point, banks will likely slowly sell some here and there and just allow the others to run off, with the losses spread out over time. Despite the more positive tone, Barofsky did criticize TARP for not helping ordinary Americans and not doing enough to thwart market perceptions that some large financial firms are considered too big to fail.

A previous audit by Barofsky found that Citigroup's C. N bailout was ad hoc and that the bank was still too big and interconnected to be allowed to fail. The administration had initially predicted the program would help 3 million to 4 million homeowners stay in their homes.