As an internal auditor, you would probably disagree with the change in policy. Evergreen Bank has some normal business risk associated with default on bank loans. One way to help minimize this is to carefully evaluate loan applications. Large loans present greater risk in the event of de-fault than do smaller loans. Thus, it is reasonable to have more than one person involved in making the decision to grant a large loan. In addition, loans should be granted on their merits, not on the basis of favoritism or mere association with the bank president. Allowing the bank president to have sole authority to grant large loans can lead to the president granting loans to friends and business associates, without the required due diligence. This can result in a bank becoming ex-posed to very poor credit risks. Indeed, this scenario is one of the causes of the savings and loan failures of the past.