The Impact of Off-site Internal Auditing on Risk Control: A Case Study of a Bank in Taiwan

Since the outbreak of the COVID-19 pandemic in early 2020, domestic banks in Taiwan have replaced on-site audits of their overseas branches with off-site audits for a period of three years. In response to this situation, the Financial Supervisory Commission (FSC) of Taiwan has also acknowledged and approved the use of off-site auditing methods under such exceptional circumstances. This study conducts in-depth interviews with senior executives and experienced internal audit supervisors of domestic banks to explore whether off-site auditing can effectively fulfill the internal control functions traditionally expected of on-site audits. Furthermore, the study seeks to identify necessary improvements to ensure that off-site audits can meet the internal auditing standards set by regulatory authorities. In addition to a comprehensive literature review, the study includes interviews with senior management and audit leaders from domestic banks. The interview data were organized into eight major themes, and insights were gathered from eight participants. The key research findings are as follows: 1. Off-site audits are generally less effective in risk control compared to on-site audits. 2. During the COVID-19 pandemic, off-site audits were still able to meet the regulatory requirements for risk control. 3. The implementation of off-site audits in overseas branches is not supported. 4. Off-site audits face greater challenges in terms of information security and internal control management. 5. Overall, the evaluation of off-site audits remains suboptimal.