NewOther

Risk-Based Internal Audit (Directive No. 308/2020)

National Bank Of Ethiopia308/2020

Summary

This directive establishes a risk-based internal audit framework for financial institutions.

Who's affected

Financial institutions operating in Ethiopia.

Action required

Financial institutions should implement a risk-based internal audit approach in accordance with this directive.

Key points

4
  • Shift from compliance-based to risk-based internal audit.
  • Emphasis on proactive risk identification and mitigation.
  • Strengthened role of the audit committee and board oversight.
    • Show 1 more
    • Requirement for regular updates on risk assessment and audit plans.

Requirements

5
  • Develop and implement a risk-based internal audit plan.
  • Conduct risk assessments to identify key risks.
  • Allocate audit resources based on risk priorities.
    • Show 2 more
    • Report audit findings and recommendations to senior management and the board.
    • Establish a process for follow-up on audit recommendations.

Rights and permissions

2
  • Internal audit function shall have unrestricted access to all records, personnel, and physical properties relevant to the performance of audits.
  • Internal audit function shall have the authority to communicate its findings and recommendations directly to the Board of Directors or its Audit Committee.

Restrictions

2
  • Internal audit activities should not interfere with the day-to-day operations of the institution.
  • Auditors should maintain objectivity and independence in their work.

Penalties

1
  • Non-compliance with this directive may result in supervisory actions by the National Bank of Ethiopia, including but not limited to, warnings, fines, or suspension of activities.

Objectives

3
  • To enhance the effectiveness and efficiency of internal audit functions.
  • To ensure that internal audit activities are aligned with the risk profile of financial institutions.
  • To strengthen corporate governance and risk management practices within financial institutions.

Organizations

1
  • National Bank of Ethiopia

Legal references

2
  • Banking Business Proclamation No. 592/2008
  • Financial Institutions (Supervision) Regulation No. 17/1994
Original sourcehttps://justice.gov.et/en/directives/risk-based-internal-audit-directive-no-308-2020/
View source