Financial Daily from THE HINDU group of publications
Monday, Dec 30, 2002

News
Features
Stocks
Port Info
Archives

Group Sites

Home Page - RBI & Other Central Banks
Money & Banking - Non-Performing Assets


Banks told to form task force for risk-based internal audits

Our Bureau

MUMBAI, Dec. 29

THE Reserve Bank of India has asked banks to form a task force to put in place risk-based internal audit systems. The central bank has, in its finalised guidelines issued on December 28, also asked banks to submit to it a quarterly audit policy implementation report for the quarter ended March 2003 after moving to the new system.

The guidelines are part of the five areas of bank-level preparation to enable a `smooth switchover' to Risk-based Supervision (RBS) of banks by the Reserve Bank, said a notice.

Banks have been asked to deliberate on the risk-based internal audit guideline at their next board of directors meetings. They have been asked to review their current internal audit systems and prepare for transition into the new system in a phased manner, keeping in view their risk management practices, business requirements, man power availability, etc.

The task force, to be formed for chalking out the action plan for switching over to a risk-based audit system, should comprise senior executives of the banks. The task force may identify and address transitional and change management issues, implement the action plan, monitor the progress in the transitional period and report periodically to the board of directors and top management.

Under risk-based internal audit, the focus should shift from current full-scale transaction testing to risk identification and prioritisation of audit areas, RBI said.

The internal audit policy should lay down the maximum time period beyond which even the low risk business activities or locations should not remain unaudited.

The internal audit department should be independent from the internal control process to avoid any conflict of interest and should be given an appropriate standing within the bank to carry out its assignments.

Send this article to Friends by E-Mail
Comment on this article to BLFeedback@thehindu.co.in

Stories in this Section
BSNL to bundle Net with basic services


Truant rains may stunt growth
Centenary illumination!
Grains output likely to fall by 30 mt
Chyawanprash market in for healthier glow
Falling yields give PFs little elbow room
Banks told to form task force for risk-based internal audits


The Hindu Group: Home | About Us | Copyright | Archives | Contacts | Subscription
Group Sites: The Hindu | Business Line | The Sportstar | Frontline | Home |

Copyright 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line