Iarm Group 5

Changing role of
internal auditors
in banks
Presented by Group 5
01 IARM | Group 5
Today's agenda
Introduction Evolution
Role of Auditors Changes through the years
Functionality Primary role of internal auditors
Other Functions Risk Based Audit Plan
Role of Auditors in banks Responsibilities
Internal Control Impact

03
Introduction
The banking sector has been facing changes at a very fast
rate in the last decade or so. There has been a change in
the rate and the volume of the businesses, which means
that businesses face a high level of risk to, due to the
expansion of their operations. The circulatory
requirements, and the intervention of technology has
created not only new opportunities but also a variety of
risks.

IARM | Group 5
04
Role of
Auditors
is to evaluate and examine
whether the internal audit of
the company is effective in
finding problems and
addressing them along with
management of different
kinds of risks and governance
as a whole.
05 Reliable, effective, integrity
Identification of risk
Functionality compliance of all activities
Protecting assets
Data protection
Other functions
RISK MANAGEMENT REGULATORY REPORTING
evaluate the risk The internal auditors need to evaluate all

management systems at regular intervals to give time
procedures of the bound reports to the management on
company to make sure whether the systems are accurate or not.
sound practices are This would also include public
being used. disclosures
1 07
Keeping an eye on the
financial reporting process&
Reviewing financial
judgements
2
Role of
auditors in
Making sure the accounting
policies of the bank are up to
date as well looking at the
qualitative aspect of it banks
3
Monitoring the correctness of
bank’s financial statements
and their financial
performance
Internal Control
Make certain that the management maintains proper financial control
of the system and processes.
INTERNAL AUDIT ETHICAL REQUIREMENTS REMEDIAL ACTIONS

Reviewing the effectiveness of the bank’s Keeping in check the Make sure the upper
internal financial controls independent state of auditors management takes proper
Giving approval for the budget and audit Reviewing the effectiveness of actions when any irregularity is
plan the audit process found and reaches an
Reviewing any cases of fraud or improper Approving the fees charged for appropriate conclusion.
usage of funds the audit process Looking into weak controls as
Assessing the performance of the heads well as non-compliance issues.
of departments including the audit Ensuring action based on issues
department. found are taken action on by the
Approving the appointment/re- management in a time-bound
appointment of the head of the audit manner.
committee
09
Evolved In ways which not only enhance operational

efficiency of the form and the financial institution but also
is compliant with the internal controls present which
enables value preservation and creation of the banks
Magerial support became essential, lack of which caused

auditors to be out of the loop in strategic initiatives.
Skill set required changed and grew to it being more than

just accounting and finance but also focused on
relationship building, having in depth industry knowledge,
exellent communicators and critical thinkers
The internal auditors now identify opportunities and

requirements along with threats and risk, they also
understand the performance compliance and the impact
that they would have on the banking and financial
Evolution
institution along with the other elements
IARM| Group 5 10
Changes through the years

11 Increased focus on risk based
supervision
Advantages of a risk based approach
• Appropriately defining the audit

universe and auditable units Certain principles pronounced by
Basel Committee on Banking
• Management in identification of
Supervision are also required to
appropriate risk factors
followed by the internal audit
department
• It develops a format for evaluating risk
factors
• It helps in developing an appropriate

International Capital Adequacy
audit coverage plan
Framework proposed a risk
• It conveys the result in a process- management perspective of the
oriented audit for effective risk operations wherein the banks which
management on a bank-wide basis have a better and increased risk
mitigation strategies which get a
reward with lower capital requirement
against the high risk bank which will
have a stringent capital requirement
12
Simple illustration for

the primary role of
internal auditors
AUDIT UNIVERSE
PRIORITY
TYPE OF THE INTERNAL AUDIT ASSIGNMENT
Risk based audit plan FREQUENCY
EXTENT OF TEXTING
RESOURCE REQUIREMENTS
SUBMISSION OF THE INTERNAL AUDIT PLAN

14
RISK CULTURE
RISK APETITE
FINANCIAL CRIME CHALLENGE
Additional TECHNOLOGY
Responsibilites RECOVERY AND RESOLUTION PLAN
(RRP)
CONDUCT RISK
IARM | Group 5
CONFLICTS OF INTEREST
Impact
Value Moving More skills Reduced Overall
Creation beyond and risk frauds performance
monitoring resources
role
Thank you
Presented by

Aakash Bhardwaj - 200102001

Aditi Chhikara - 200102005
Aditya Kumar - 200102006
Akshit Agrawal - 200102009
Bishal Bagaria - 200102018

Iarm Group 5

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Changing role of

Functionality compliance of all activities

evaluate the risk The internal auditors need to evaluate all

INTERNAL AUDIT ETHICAL REQUIREMENTS REMEDIAL ACTIONS

Evolved In ways which not only enhance operational

Magerial support became essential, lack of which caused

Skill set required changed and grew to it being more than

The internal auditors now identify opportunities and

Changes through the years

• Appropriately defining the audit

• It helps in developing an appropriate

Simple illustration for

TYPE OF THE INTERNAL AUDIT ASSIGNMENT

Risk based audit plan FREQUENCY

SUBMISSION OF THE INTERNAL AUDIT PLAN

FINANCIAL CRIME CHALLENGE

Aakash Bhardwaj - 200102001

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