Internal Audit in a Bank
A function with heightened independence requirements
Go to the Voluntary Audit serviceChecked against the official source:
In a credit institution, internal audit is not an optional add-on: the quality of its work determines whether risks are identified before they turn into losses.
Legal requirements and the external audit
- banks undergo a mandatory annual external audit (Article 35 of Law ZRU-677 "On Auditing Activity");
- a bank's external auditor must be a firm with at least two auditors holding a certificate to audit banks;
- banks that are joint-stock companies set up an internal audit service if their assets exceed 100,000 BCV (Article 108 of the Law on Joint-Stock Companies).
Key areas reviewed
- The lending process: from reviewing an application to managing problem loans
- Asset classification and provisioning
- Compliance with limits and prudential requirements
- Related-party transactions
- Anti-money laundering procedures
- Information security and access to banking systems
Reporting lines
A bank's internal audit service reports to the board, not to executive management. This is fundamental: a large share of the decisions under review are made by the management board, and reporting to it would make the function decorative.
Link with the external audit
The external auditor reviews the work of internal audit when planning the audit. A strong internal function with documented results reduces the scope of external procedures in the relevant areas.
Strengthen your internal audit
We will carry out individual audits or help build the methodology for the function.
Go to the Voluntary Audit serviceFrequently asked questions
Can a bank's internal audit be fully outsourced?
Individual audits are often performed by external specialists, but responsibility for the function remains with the bank's governing bodies. Fully outsourcing the function usually does not meet supervisory expectations.
Who can carry out a bank's external audit?
An audit firm in which at least two auditors hold a certificate entitling them to audit banks (Article 35 of ZRU-677).
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