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Internal Audit Of Bank

Internal Audit Of Bank


The Banking Regulatory Committee (Committee) issues this
a revised guidance guide to evaluate the effectiveness of the internal audit function
banks, which is part of the Committee’s ongoing efforts to address banking regulation
news and improve monitoring through guidance that promotes sound internal processes
banks. This document replaces the 2001 document of internal audit of banks and
management relationships with auditors. It considers the development of direction
in banking organizations and covers lessons learned from the latest
financial crisis.

Principles of Business Administration Development11 states banks
must have an internal audit function with sufficient authority, length, independence,
resources and access to the board of directors. Independent, competent and qualified
internal auditors are essential to good business management.

Strong internal control system, including independent and effective internal controls
audit work, is part of sound business governance. Bank managers need to be satisfied
on the effectiveness of the bank’s internal audit function, policies and procedures
it is followed by management taking appropriate and timely action in responding
weaknesses in internal control identified by internal auditors. Internal audit function provides
an important guarantee on the board of directors of the bank and senior management (and the bank
managers) regarding the quality of the bank’s internal control system. In doing so, the work
helps to reduce the risk of loss and damage to the reputation of the bank.

This document addresses the expectations of management of the internal audit function
banking associations, chief executive officer relationships and internal audit
job and direct evaluation of that job. This document aims to promote a
solid work of internal audit within banking institutions and providing guidance
directional assessment of this work.

This document also encourages internal banking auditors to adhere to compliance
contribute to the development of national and international professional standards, such as
those issued by the Institute of Internal Auditors, and promotes appropriate consideration
and strategic issues in the development of standards and procedures for internal audit.

This document refers to a management framework composed of a board of directors2
and senior executives. The Committee recognizes that significant differences exist
international legal and regulatory frameworks. These national structures form
the role and function of governance and governance structures. In some countries i
the board of directors has the primary function, if not special, of overseeing the executive council,
commonly referred to as senior management, and to ensure that it fulfills its responsibilities. For this
the reason is sometimes referred to as a governing body with no administrative functions. Ku
In contrast, in some lands the board has a broader view of its overall presentation
bank management framework. Because of these differences, the concepts of
the board of directors and senior management are used in this document to avoid being identified by law
builds but instead labels two decision-making functions within the bank.

Internal Audit Of Bank

rinciples set out in this document must be applied in accordance with the law
national legislation and co-operative governance structures operating in each country.

In central banks and international banks, the audit committee (or its own)
equivalent) is responsible for providing guidance to the internal auditors of the bank.
Such a committee is established within the board of directors. Appendix 2 of this article
provides additional information on the responsibilities of audit committees. In this text,
reference to the board of directors indicates the appropriate involvement of its audit committee,
if a person is present. In accordance with the Principles of the Business Development Committee
Rule, section 50, this document considers it to be extensive and international
banks have an audit committee or similar. Some banks are strongly encouraged to
to establish such a committee.

This guide applies to all banks, including those within a group of banks, as well
companies that own companies that are mostly bankers and those who own them
companies under careful management which are subordinate companies that are mostly banks. Everything
of these bodies are called banks or banking associations in this document. I
the level of application of this guide should be consistent with the importance,
complexity and international presence of the bank (balancing system).
Overview of principles
Principles relating to management expectations related to internal audit
Principle 1: An effective internal audit function provides independent assurance to the board
of directors and senior management regarding the internal quality and efficiency of the bank
control, risk management and management systems and processes, thus helpful
the board and senior management protect their organization and its dignity.
Principle 2: The internal audit function of the bank must be independent of the audited functions,
which requires the internal audit function to have sufficient internal authority and authority
of the bank, thus allowing the internal auditors to perform their duties diligently.
Principle 3: Professional skills, which include individual knowledge and experience
Internal Auditor and Internal Auditors together, are essential to the effective functioning of
internal banking audit function.
Principle 4: Internal auditors must act with integrity.
Principle 5: Each bank must have an internal audit charter that sets out the purpose,
the position and authority of the internal banking audit function properly
promotes effective internal audit work as defined in Regulation 1.
Rule 6: Every employee (including foreign employees) and all banking companies must
they fall within the scope of the internal audit function.
Rule 7: The scope of internal audit activities should be sufficiently convincing
consideration of issues of interest to control within the audit system.
Rule 8: Each bank should have a permanent internal audit function, which you must have
is designed in accordance with Rule 14 where the bank is in a group of banks or in charge

Principle The board of directors of a bank has a great responsibility to ensure that
senior managers establish and maintain an adequate, efficient and effective interior
control system and, accordingly, the board should support the work of internal audit
to perform its functions effectively.
Rule The Audit Committee, or its equivalent, must conduct an internal audit of the bank.
Goal The head of the internal audit department must be responsible for verification
that the department complies with reasonable internal audit standards and applicable code
Goal The internal audit function must be accountable to the board, or to its audit
committee, in all matters relating to the exercise of its powers as described in
internal book volume.
Principle The internal audit function should independently evaluate its effectiveness
efficiency of internal control, risk management and management systems and processes
created by business units and support services and provided assurance in this regard
systems and processes.
Principle Facilitate the implementation of a consistent internal audit system in all banks within a
banking association, board of directors of each bank within a banking group or holding
the company structure should ensure that:
(i) The bank has its own internal audit function, to which it is accountable
to the bank board and must report to the banking team or the head of the holding company
internal inspection; or
(ii) a group of banks or an internal audit function of a holding company performs internally
banking accounting activities sufficient for the bank to satisfy its board
trustworthy and legal obligations.
Goal Whether internal audit activities are outsourced, this board
The directors are still responsible for the internal audit function.
Principle related to the relationship between the chief executive officer and the internal audit
Rule Managers should have regular communication with the insider
auditors to (i) discuss risk areas identified by both parties, (ii) understand the risks
mitigation measures taken by the bank, and (iii) understand the weaknesses identified once
monitor bank responses to these weaknesses.
Principles relating to the direct evaluation of the internal audit function
Rule Bank managers should regularly evaluate the effectiveness of the internal audit function
has sufficient standing and authority within the bank and operates soundly
Rule Managers should officially report any weaknesses they see internally
audit work on the board of directors and requires timely corrective action

Expectative expectations related to internal audit work
Principle 1: An effective internal audit function provides independent assurance on
board of directors and senior management on quality and efficiency a
internal banking, risk management and management systems and processes,
thus helping the board and senior management to protect their organization as well
reputation.Internal audit function

The internal audit function plays an important role in continuous accounting
internal banking controls, risk management and management systems as well
procedures – areas in which the executive authorities have a vested interest. Moreover, both
Internal auditors and managers use risk-based methods to determine their disparities
apps and actions. Although internal auditors and managers each have their differences
authority and are responsible for their own judgment and evaluation, which they may point to
similar or similar / related risks.

The internal audit function should develop an independent and informed view of
risks facing the bank based on access to all bank records and data, its queries,
and their technical ability. The internal audit function should be able to discuss it
comments, findings and conclusions directly by the audit committee and board of directors,
thus assisting the board in overseeing senior management.

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