Bank Audit - Bank Management - Lecture Slides, Slides of Banking and Finance

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Bank Audit

Internal Audit

•^

Internal audit is an independent, objective assuranceactivity

and

can

give

valuable

insight

in

providing

assurance

that

major

business

risks

are

being

managed appropriately and the risk management andinternal control framework is operating effectively

Internal Audit Functions

•^

Critical evaluation of internal controls, performing GAPanalysis and suggesting areas for strengthening

-^

Constructive review of business operations by keepingthe organisation's business needs in focus

-^

Identification

and

recommendation

of

areas

for

cost

reduction,

revenue

optimisation

and

improvement

in

operational efficiency

Internal Audit Functions

•Critical

evaluation

of

systems

and

procedures

and

adherence to Standard Operating Procedures•Review

of

Information

Technology

(IT)

controls

and

Business Continuity Plan•Identification, assessments and control of risks•Review

of

compliances

with

the

various

regulatory

provisions and operations manuals•Review

of

adherence

to

the

corporate

governance

requirements

Internal Audit In Practice

•^

Developing a strategic role for internal audit

-^

Defining the work

-^

Establishing arrangements (co-sourcing, out-sourcing)

-^

Transforming the function

-^

Creating the conditions for use of audit committees

-^

Helping in transforming ideas into operation

-^

Improving audit quality, efficiency and cost-effectiveness

Scope of Internal Audit Work

•^

Matching expectations and resources

-^

Range of banking activities

-^

Strategic and annual audit plans

-^

Internal audit development plans

-^

Audit risk assessment

-^

Resource implications and the skills needed

-^

Auditing bank performance

Non Involvement of Internal Audit

•^

Setting risk appetite

-^

Taking decision on risk response

-^

Implementing risk response

-^

Taking accountability of risk management

Traditional Approach to Internal Audit

•^

Accounts oriented

-^

Transaction focused

-^

Passive detection

-^

Compliance oriented

-^

Routine areas of audit

-^

Manual checking

-^

Time consuming

Risk Assessment through Internal Audit

•^

Enterprise-wide

Risk

Management

(ERM)

is

a

structured, consistent and continuous process across thewhole organisation for identifying, assessing, deciding onresponses to and reporting on opportunities and threatsthat affect the achievement of its objectives.

-^

Responsibility of ERM is with the Board of Directors.

Role of Enterprise Resource Planning

•^

Facilitating and identification of key risks

-^

Evaluating and reporting of key risks

-^

Consolidating risks across the organisation

-^

Developing and maintaining the ERM framework

-^

Providing assurance to management

-^

Providing assurance to the Board on the effectiveness ofrisk management

Contemporary Approach to Internal Audit

•^

Business orientation

-^

Process orientation

-^

Value creation

-^

Real time detection

-^

Prevention orientation

-^

Risk based audit

-^

Technology orientation

-^

Time and cost efficient

Risk Based Audit

Risk Assessment

•^

Identify risk likely to have an impact

-^

Likelihood of risk

-^

Measure the impact of risk

Risk Evaluation

•^

Responses to risk

-^

Evaluate risk to be avoided

-^

Evaluate risk to be accepted

-^

Risk reducing procedures

-^

Risk sharing procedures