Business Bank Audit, Internal Control Policies and Business Continuity Management

Bank Business Audit, Internal Control Policies and business continuity management

Bank Business Audit

Definitions:Examination and verification of a bank's financial statements, accounting records, and supporting documents - done by a CPA (Certified Pubic Accountant)

An IRS (Internal Revenue Service) examination of an individual or coporation's tax return to verity its accuracy

From: http://www.investorwords.com/324/audit.html

Compliance of the Philippines with the IAS (International Accounting Standards)

Regulations of the Bangko Sentral ng PilipinasAccounting Standards/ Guidelines:External Audit/ Use of Audited Financial StatementsCircular No. 746 dated 3 February 2012

Ciruclar No. 660 dated 25 August 2009Reforms to BSP's policy on the selection and delisting of external auditor and/or auditing firm of covered entities

Circular No. 655 dated 12 May 2009One Year Suspension of Requirement on the Use of AFS Audited by Accredited External Auditors for Banks' Internal Credit Rating System

Circular No. 653 dated 5 May 2009Guidelines in the preparation of audited financial statements for trust institutions

Circular No. 622 dated 16 September 2008

Circular No. 554 dated 22 December 2006Submission of Annual Audit Report

Circular No. 549 dated 9 October 2006

Circular No. 540 dated 9 August 2006Submission of Audited Financial Statements

Circular No. 472 dated 1 February 2005

Circular No. 439 dated 5 July 2004

Other BSP Regulations regarding bank audit

CIRCULAR NO. 499 Series of 2005 or Audit Committee and Internal Audit Function

Manual of Regulations for Banks

Circular No. 488 Series of 2005

Other entities which has auditing regulations

Commission on Audit

Congress of the Philippines Republic Act No. 8791 or The General Banking Act

Securities and Exchange Commission SEC Memoradum Circular No. 13 Series of 2009 or Revised Guidelines on Accreditation of Auditing Firms and External Auditors

Other entities which has auditing regulations

Commission on Audit

Congress of the Philippines Republic Act No. 8791 or The General Banking Act

Securities and Exchange Commission SEC Memoradum Circular No. 13 Series of 2009 or Revised Guidelines on Accreditation of Auditing Firms and External Auditors

Report on the Observance of Standards and Code of the Philippines by the World Bank (2006)

The SEC review findings show lack of complete or adequate disclosures required under SEC Rule 68 and 68.1 (see para 10) in the financial statements of some entities reviewed.

Discussions with preparers and users of financial statements revealed that they are aware of the new standards and areas that presented implementation problems.

ROSC Recommendations

Monitoring and enforcement mechanism for quality control review.

Many stakeholders are involved in the enforcement of quality control measures.

With resources being scarce, there is a need to coordinate the activities of the stakeholders involved in enforcement of quality reviews to avoid duplication of efforts and costs.

Education and training matters.

Internal ControlPolicies which are set by a firm or company to maintain its financial integrity and to secure its name from mispractices

Important so that objectives of a company will be met

Vital tool for corporate governance

Internal Control Policies

Internal Control Policies of Local Banks in the Philippines

All employees are involved to a certain degree of internal control process.

Clear authorities, responsibilities, and operating procedures

Monitoring and evaluating financial statements

Monitor the weakness of internal control policies

Avoid activities that hinder the bank officers' functions.

Internal Control Past Issues

Inaccurate Financial Reports

Lack of Written Procedures

Missing Documents

Customer Complaints

Frameworks of Internal Control

COSO (Committee of Sponsoring Organizations)

CoCo (Criteria of Control)

Bassel Committee on Banking Supervision's Framework for Internal Control Systems

Committee of Sponsoring Organizations

Introduced in 1992

Its framework consists of more than 20 basic principles of fundamental concept with five componentsControl environment

Risk assessment

Control activities

Information and communication

Monitoring


Also introduced in 1992

Was organized for better organizational performance, decision making, risk management, and corporate governance

Framework called Guidance on Control was released 20 critera for effective control in four areas of an organizationPurpose

Commitment


Also introduced in 1992

Was organized for better organizational performance, decision making, risk management, and corporate governance

Framework called Guidance on Control was released 20 critera for effective control in four areas of an organizationPurpose

Commitment

Capability

Monitoring and learning

Bassel Committee on Banking Supervision's Framework for Internal Control Systems

Supervisory authorities from Belgium- Sweden

Canada- Switzerland

France- United Kingdom

Germany- United States

Italy

Japan

Luxembourg

Netherlands

Pioneered the Framework for Internal Control Systems in 1998

Five elements of control includeManagement oversight and control culture

Risk recognition and assessment

Control activities and segregation of duties

Information and communication

Monitoring activities and correcting deficiencies

Business Continuity Management

An organizatin wide discipline and a complete set of process that identifies potential impacts which threaten an organization

Provides a capability for an effective response that safeguards the interests of its major stakeholder and reputation

Based on the articles of ISO 22301

Strategic plan for worst case scenario

References

Bangko Sentral ng Pilipinas (2005, November 25). Audit committee and internal audit function. Circular No. 499 Series of 2005. Retrieved March 4, 2015 from http://www.bsp.gov.ph/regulations/regulations.asp?type=1&id=621

Bangko Sentral ng Pilipinas (n.d.). Compliance with IAS. Retrieved March 4, 2015 from http://www.bsp.gov.ph/regulations/compliance_regulations.asp

Bangko Sentral ng Pilipinas (2008). Manual of regulations for banks. Retrieved March 4, 2015 from http://www.bu.edu/bucflp/files/2012/01/Manual-of-Regulations-for-Banks-consumer-protection-related.pdf

Bank of the Philippine Islands. (2012, October 24). BPI corporate governance manual. Retrieved March 4, 2015 from https://www.mybpimag.com/images/pdf/Corporate%20Governance/BPI%20Corp%20Governance%20Manual.pdf

BDO Unibank Inc. (2012, May 25). Corporate governance manual. Retrieved March 4, 2015 from https://www.bdo.com.ph/sites/default/files/pdf/corporate_governance/corgovman_0.pdf

Business Continuity Management (n.d). Retrieved March 4, 2015 from BCMpedia, http://www.bcmpedia.org/wiki/Business_Continuity_Management_(BCM)

China Bank Internal Control and Risk Management. (n.d.). Retrieved March 4, 2015 from http://www.chinabank.ph/about_china_bank.aspx?title=Internal+Control+and+Risk+Management

Common Internal Control Frameworks. Retrieved March 4, 2015 from http://www.theiia.org/intAuditor/media/images/Burch_dec'08_artok_cx.pdf

Goh, M.H. (2011, August 9). BCM concepts: business continuity management. Retrieved March 4, 2015 from http://www.goh-moh-heng.com/business-continuity-management/

Internal Controls. (n.d.). Retrieved March 4, 2015 from Investopedia website, http://www.investopedia.com/terms/i/internalcontrols.asp

ISO 22301 Business Continuity Management Awareness Training. (n.d.). Retrieved March 4, 2015 from http://www.sgs.ph/en/Oil-Gas/Quality-Health-Safety-and-Environment/Sustainability/Economic-Sustainability/ISO-22301-Awareness-Training-Business-Continuity-Management.aspx

Metrobank Audit Committee. (n.d.). March 4, 2015 from https://www.metrobank.com.ph/images/Board%20Committees/AUDITCOM_Membership%20and%20Charter.pdf

Philippine Depository Insurance Corporation. (n.d.). General banking act. Retrieved March 4, 2015 from http://www.pdic.gov.ph/index.php?nid1=10&nid2=4

Report on the Observance of Standards and Codes (2006, March 15). Accounting and Auditing Update. Retrieved March 4, 2015 from http://www.worldbank.org/ifa/rosc_aa_phl_2006.pdf

Securities and Exchange Commission (n.d). Revised guidelines on accreditation of auditing firms and external auditors. SEC Memorandum Circular No. 13. Retrieved March 4, 2015 from http://www.sec.gov.ph/laws/memorandumcircular/CY%202009/sec%20memo%20no.%2013,s2009.pdf