Who is auditing the fed

So what does Audit the Fed actually do? The principal effect of the bill would be to make meeting-by-meeting monetary policy decisions subject to Congressional review and, potentially, Congressional pressure.

The bill would do this by repealing existing restrictions, imposed by Congress nearly forty years ago, on what the GAO can examine when reviewing the Fed. Effective Congressional oversight of the Fed is essential, of course, but it involves some complex tradeoffs. On the one hand, Congress has the ultimate responsibility of assuring itself and the public that monetary policy is being conducted reasonably and in the national interest.

On the other hand, institutionally, Congress is not well-suited to make monetary policy decisions itself, because of the technical and time-sensitive nature of those decisions. Moreover, both historical experience and formal studies for example, here , here , and here have shown that monetary policy achieves better results when central bankers are allowed to focus on the longer-term interests of the economy, free of short-term political considerations.

In turn, the Fed must regularly report and explain its decisions to Congress and the public, and in particular it must demonstrate that it is meeting its Congressional mandate. For example, in speeches and other public appearances, Fed policymakers lay out in detail the considerations affecting current and future policy moves, including arguments on both sides of the issue.

The Fed chair faces reporters in four press conferences each year and testifies before a variety of Congressional committees, including two rounds explicitly focused on monetary policy.

Public Congressional testimonies are supplemented by dozens of meetings and calls each year between the chair and members of Congress, as well as frequent contacts between Fed and Congressional staff members. Detailed minutes of each FOMC meeting are released three weeks after the meeting is held, and verbatim transcripts after five years. Fed activities are also periodically audited by the U. In addition, the Board of Governors publishes the Fed's balance sheet on a weekly basis, rather than quarterly as many companies do.

The weekly report includes a statement of condition of each Reserve bank. See the Board of Governors' audit page for additional information. Monetary policy is not audited in the traditional sense because there are no clear-cut standards for auditing policy decisions as there are for auditing financial statements, for example. However, the Fed has become increasingly transparent in its decision-making over the past few decades. The Federal Reserve Act seeks to balance political accountability and operational independence for the Federal Reserve System.

About Us. About Us Menu. About Us Home. Mission and Core Values. What We Do. Bank Officers. Board of Directors. Advisory Councils. DEI at the St. Louis Fed. Employee Resource Groups. Supplier Diversity. Our Branches. External audits were instituted in recent years in place of annual examinations by the Board of Governors to ensure total independence in this process. However, GAO auditors are restricted by law from reviewing monetary policy operations and transactions carried out by the Federal Reserve on behalf of foreign central banks.

This restriction was imposed by Congress to assure the independence of the Federal Reserve from political influence. The Scope of Audits The scope and frequency of audits are based on the specific risk factors inherent in each Bank's operations, including the nature of the activities it conducts, the prevailing level of controls surrounding these activities, and the quality and experience of the individuals assigned to the operation.

Internal audits at each Reserve Bank involve verification of assets, liabilities, and items held in custody. Auditors check both the physical presence of these items and the timely and accurate reporting of their movement.

An evaluation of the adequacy of controls throughout the Bank and of compliance with prescribed procedures also is done. Audits are performed periodically in order to determine if the auditors' perceptions of prevailing risk levels and operating conditions since the last review remain valid.

Periodic audits also help to determine whether previously identified problems and issues were adequately addressed and remedied, and to ascertain whether new problems or issues have emerged.