What can result from a lack of a proper internal audit function in a credit union?

The lack of a proper internal audit function can lead to an increased risk of errors and fraud within a credit union. An effective internal audit function plays a critical role in ensuring accurate financial reporting, compliance with regulations, and the overall integrity of operations. Without it, there is insufficient oversight of processes and controls, which can result in significant lapses that may go unnoticed.

The absence of regular audits means that potential issues relating to financial mismanagement, procedural violations, or fraudulent activities may not be identified in a timely manner. This environment of reduced scrutiny can encourage reckless behaviors among staff and diminish the effectiveness of existing internal controls. Thus, the organization's ability to safeguard its assets and protect itself from operational risks is severely compromised, highlighting the crucial necessity of a robust internal audit function.