The dynamic economic, financial and sometimes even the regulatory environment present a changing nature of risk management in banking sector.It continuously throws upnew challenges for bankers, and supervisors. With evolving risk management initiatives such as Basel II/III, Stress Testing and ICAAP, it is paramount to ensure the efficacy of the implementation of the same.
The Basel Committee on Banking Supervision issued revised supervisory guidance for assessing the effectiveness of the internal audit function in banks in June 2012. It requires banks to have an internal audit function with sufficient authority, stature, independence, resources and access to the board of directors. Independent, competent and qualified internal auditors are central to sound corporate governance. The guidance is based on 20 principles, organized in three sections: A) Supervisory expectations relevant to the internal audit function, B) The relationship of the supervisory authority with the internal audit function, and C) Supervisory assessment of the internal audit function