All FDIC-insured institutions must be audited each year by an independent public accountant (IPA) who is licensed to practice and in good standing under state law. To ensure the accountant’s reliability and adherence to good accounting and auditing practices, IPAs must be peer-reviewed each year in a manner consistent with the standards of the American Institute of Certified Public Accountants.

IPAs must audit and report on the bank’s internal controls on financial reporting directly to the bank’s board of directors. Federal bank regulators prohibit banks from limiting an IPA’s legal liability for their audits and require that the IPA’s audit work papers, policies and procedures be made available to the bank’s examiners upon request.