Internal audit in banks and the supervisor's relationship with auditors (Basel Committee publcations

CIRCULAR BM_- 919 October 17, 2001 To: All Licensed Banks in Oman Sub: Internal Audit Function in Banks 1. As banks are already aware, the Basel Committee on Banking Supervision has recently issued a paper on Internal Audit in Banks and the Supervisor’s Relationship with Auditors, with the objective of enhancing the internal audit function and harmonising and improving internal audit standards internationally. The paper contains 20 Principles, which are intended for general application, even though they could be applied within a specific supervisory framework. The Central Bank of Oman also subscribes to the view that strong internal control including audit function is an essential component of sound corporate governance practices in banks. 2. Accordingly, a copy of the paper is enclosed for necessary action. Banks are directed to review their existing internal audit function vis-à-vis the Principles, particularly Principles 1-12, 16, 19 and 20 and chart a definite timeframe for addressing gaps, in the context of the size, complexity of operations, etc. Banks are also directed to carry out a review and prepare an action plan for improving the existing internal audit function, duly approved by the Board of Directors, as soon as possible and in any case not later than December 31, 2001. A copy of the review together with the action plan should be forwarded to the Central Bank of Oman. 1 3. Banks are required ...