Академический Документы
Профессиональный Документы
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for
Bank Directors of Indian Banks
Rahoul Chowdry
Global Banking & Capital Markets Leader
Presentation by:
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Agenda
I. Oversight responsibilities of Audit Committees
II. Relationships with:
- Management
- Internal Auditors
- External Auditors
Financial Reporting
Committees need to
- Understand financial statements through discussion with
management and external auditors
- Understand accounting policies
- Assess quality, not just reliability, of earnings
- Apply appropriate level of skepticism and ask probing questions
- Be comfortable with treatment of unusual/complex issues
Financial Reporting
Other keys
- Review significant period-to-period changes and challenge sudden
changes
- Recognize financial reporting areas most susceptible to fraud
Revenue recognition
Provisions
Expense classification
Areas of judgement
Narrative Reporting
Review disclosures and consider consistency with financial
statements
Many specific disclosures required by regulators
Leading audit committees focus on transparencywhether
all significant developments are fully disclosed
Compliance and
Ethics
Codes of Conduct
Many committees oversee compliance with code of conduct
- Review and approve code
- Ensure it is communicated to all employees and they attend
training
- Understand program for monitoring code compliance and review
reported violations and follow-up actions
Risk Management
and Internal Control
Risk Management
Audit committees increasingly oversee risk management
processes
Committees can fully embrace this role by
- Understanding how risk management processes are tailored to
companys specific needs
- Probing whether the processes are ongoingnot just at a point in
time
- Ensuring responsible individual has appropriate stature, expertise,
and time
- Meeting periodically with chief risk officer
5.
4.
3.
2.
1.
Control Environment
Sets tone of organization influencing control
consciousness of its people.
Factors include integrity, ethical values, competence,
authority, responsibility.
Foundation for all other components of control.
Control Environment
Sets tone of organization
influencing control consciousness of
its people.
Factors include integrity, ethical
values, competence, authority,
responsibility.
Foundation for all other components
of control.
Risk Assessment
Risk assessment is the identification
and analysis of relevant risks to
achieving the entitys objectives
forming the basis for determining
control activities.
Control Environment
Sets tone of organization
influencing control consciousness of
its people.
Factors include integrity, ethical
values, competence, authority,
responsibility.
Foundation for all other components
of control.
Risk Assessment
Risk assessment is the identification
and analysis of relevant risks to
achieving the entitys objectives
forming the basis for determining
control activities.
Control Activities
Policies/procedures that ensure
management directives are carried
out.
Range of activities including
approvals, authorizations,
verifications, recommendations,
performance reviews, asset security
and segregation of duties.
Monitoring
Assessment of a control systems
performance over time.
Combination of ongoing and
separate evaluation.
Management and supervisory
activities.
Internal audit activities.
Control Environment
Sets tone of organization
influencing control consciousness of
its people.
Factors include integrity, ethical
values, competence, authority,
responsibility.
Foundation for all other components
of control.
Risk Assessment
Risk assessment is the identification
and analysis of relevant risks to
achieving the entitys objectives
forming the basis for determining
control activities.
Control Activities
Policies/procedures that ensure
management directives are carried
out.
Range of activities including
approvals, authorizations,
verifications, recommendations,
performance reviews, asset security
and segregation of duties.
Risk Assessment
Risk assessment is the identification
and analysis of relevant risks to
achieving the entitys objectives
forming the basis for determining
control activities.
Control Environment
Sets tone of organization
influencing control consciousness of
its people.
Factors include integrity, ethical
values, competence, authority,
responsibility.
Foundation for all other components
of control.
Internal Control
Focus on areas of greatest potential risk, such as
Management override of controls
Poor culture
Information technology
Payment systems
II. Oversight of
Management and
Internal Audit
III.Key to Audit
Committee
Effectiveness
Members Attributes
Key is good understanding of the business including
companys products, services, and industry
Willingness to dedicate substantial time and energy
Other relevant attributes
- Extremely high level of integrity
- Healthy skepticism and courage to challenge
- Inquisitiveness and independent judgment
Participants
Both internal audit director and external auditors typically attend
every meeting
Managements participation is important
Meet privately with internal audit director, external auditors,
finance management, and others, as warranted
Guard against too many observers
Audit Committees should meet at least 4 times a year
Evaluation
Evaluate committee performance regularly by comparing
activities against
- Charter
- Leading practice
Thank You