Dynamic Legal Representation for You and Your Business

Quality Control Audit vs. Internal Audit

Q: I'm applying for Fannie Mae approval but am unsure of the difference between a Quality Control Audit (QC) and Internal Audit. What exactly is the difference?

A: A mortgage lender is required, for a variety of reasons, to implement a QC program that identifies credit and/or regulatory issues in its origination and servicing functions, as applicable. A QC audit looks at the end product, regardless of whether the process is credit or compliance focused. Generally, QC audits, which are forms of transactional testing, are narrower in scope than Internal Audits.

Internal Audits review for and identify a variety of items such as credit, regulatory, operational, financial, and reputational risks. An Internal Auditor looks at the process itself and independently evaluates the risks and control activities within the process. To this end, an Internal Auditor will perform a number of tasks, such as review policies, procedures and reports, conduct management interviews with the respective business units to gather information on the process evaluated, document evidence of the process through walkthroughs, and perform transactional testing, as needed. The focus is not necessarily on the end product as is the case with a QC audit, but rather the focus is on the adequacy, soundness, and effectiveness of internal controls within a process to ensure that the mortgage lender attains the end result sought while complying with Agency and investor guidelines, laws and regulations and industry best practices.

Share the AGMB Compliance Question of the Week:

Facebook   LinkedIn   Twitter

New York Attorney Advertising: This email is designed for general information only.
The information presented in this email should not be construed to be formal legal advice nor the
formation of a lawyer/client relationship. Prior results do not guarantee a similar outcome.

© Copyright 2019 by Abrams Garfinkel Margolis Bergson, LLP. All rights reserved.
This email is designed and developed by PR4Lawyers.
Facebook Twitter LinkedIn Google+ Youtube Neil Garfinkel Michael Barone Neil Garfinkel E-Mail Michael Barone E-Mail Marie O' Brien Marie O'Brien E-Mail