Internal Audit

The internal audit process requires

the coming together of managers
and employees throughout the firm
to discuss and understand the
strengths and weaknesses
Internal strength and weaknesses,
coupled with external opportunities
and threats and a clear statement of
mission, provide the basis for
establishing objectives and
 publish unaudited financial
statements every quarter for the
stakeholders
quarterly unaudited financial
statements help to analyze the
financial strength and weakness of
the bank
have audit committee for internal
control and monitoring
 Resource Based View(RBV)
When external environment is in a
state of flux, the firms own
resources and capabilities may be a
much more stable basis to define its
identity
 Elementary assets and resources, tangible
and intangibles: ie: Plant, equipments,
products, software andBrands
Cognitive competencies, Individual and
collective, explicit and tactic: Knowledge,
know-how, Technologies, Patent
Organizational processes and routines:
coordination mechanisms in the organizations
to combine the actions of individuals into
collective tasks and achievements.
 Organizational structure: Structure
including internal and external
dimensions( links with suppliers and
customers)
Organizational culture/ identity:
Corporate culture and behavior in the
organization , its shared values, its
rites and taboos are manifestations of
the firms identity
 Organizational Culture

pattern of behavior in the

organization that had been
developed to cope with the external
and internal factors
pleasant working culture
change in organization culture due to
merger
Employee participation and
motivation
 Value business deals or
relationships?
Material Value or Position?
Do you value working in a strong or
large firm?
You like to work in group or prefer
working alone?
Is deadline important or quality of
work?
Management factors
Functional relationship influencing new products
or services
 Strengths
Diverse workforce
Management control in the hand of BOD .
Succession Planning
Joint venture with FMO Dutch Development Bank,(AAA rated
company )global exposure
Skills enhancement due to foreign joint venture
Value Based Banking
Stable board
Rural Banking
Strong customer Base
Organization structure
Skilled technical employees
Promoting energy, agriculture sectors of the economy
Ethical Banking Framework
Consistent performance

 Weaknesses

IT software is not updated due to

resource constraints.
Not effective Brand Building
Not able to provide extra customer
care
Lack of effective communication with
customers
 Matching stage
Strengths(S) Weakness(W)

Opportunities(O) SO Strategies WO Strategies

Overcome
Use internal weaknesses by taking
Strengths to take advantage of
advantage of opportunities,
external acquiring a firm or
opportunities or creating skilled
avoid threats to manpower
concentrate on
opportunities

Threats(T) ST Strategies WT
Use strengths to Strategies( defensi
avoid threats ve)
Minimize weaknesses
 SPACE ( Strategic Position and Action Evaluation)
Matrix

Financial Strengths(FS) Environmental

Stability(ES)
Lower NPA Technological
ROA changes
Y-axis EPS Competition
Lesser employee Inflation
turnover Interest rate

Competitive Industry Strength(IS)

Advantage(CA)
Growth potential
X-axis. Management skills Capital
Customer loyalty Profit potential
Market share
 Aggressive Quadrant Use of internal strengths to take
advantage of external opportunities, overcome internal
weaknesses or avoid external threats. Intensive Strategies,
Integration Strategies, Diversification Strategies or
combination may be used
Conservative Quadrant Staying close to the firms basic
competencies and not taking excessive risks Market
penetration, market development, product development and
concentric diversification
Defensive Quadrant Focus on rectifying internal
weaknesses and avoiding external threats Retrenchment,
divesture, liquidation and concentric diversification.
Competitive Quadrant application of competitive strategies
Integration strategies, intensive strategies and joint ventures
 Role of BOD
Control and Oversight Over
Management
Adherence to Legal Prescriptions
Consideration of Stakeholders
Interests
Advancement of Stakeholders Rights