Strengthening Internal Audit and the Role of Audit Committees in Central Banks

September 18 – 20, 2017ILjubljana, SloveniaIRegistration deadline: August 18, 2017ICentral Banking

Since the global financial crisis, central banks were called upon to take a more active role in crisis resolution and attributed broader mandates and accountabilities, including on financial stability. As a result of their greater involvement in policy areas beyond their primary objective of price stability, their operations are also under greater scrutiny.

Since the global financial crisis, central banks were called upon to take a more active role in crisis resolution and attributed broader mandates and accountabilities, including on financial stability. As a result of their greater involvement in policy areas beyond their primary objective of price stability, their operations are also under greater scrutiny.

Entrusted with a public responsibility and being given political, operational, and financial independence, central banks strive to act and communicate transparently on their activities to different stakeholders. A cornerstone of this approach is their investment into strengthening internal and external governance.

Governance, as commonly understood as arrangements between boards, management, and other external and internal stakeholders, sets a structure through which objectives are agreed. In principle, it should also define the ways to achieve them, support their pursuit, as well as facilitate effective monitoring. With an effective governance system in place, central banks are able to reassure different stakeholders, i.e. the government, general public, and the economy and financial markets, on the conduct of policies and achieving objectives.

At this learning initiative we will discuss how different functions of the central banks contribute to effective governance. Among various functions, we will look into roles and work of internal audit, role of external audit, and discuss a specific role and set up of audit committees.

Emphasizing on functions mentioned, we will explore connections of these functions with other typical governance functions in central banks: Board, other committes and advisory bodies, management.

About the Event

This workshop will provide an overview of organizational aspects supporting good governance within an institution. We will focus our attention on internal and external audit, as well as audit committees and their complementary role in strengthening the institutional governance and how the different functions contribute to transparency and accountability. Furthermore, during the event, we will examine audit function as a cooperative and constructive partner to management.

A well-functioning internal audit function at the central bank can provide assurance and advice (to the Board) on the governance, risk management, and control processes. To fulfill its function, the internal audit provides value through thorough and methodical evaluations. To achieve this, internal auditors have to be empowered with knowledge on how, where and when to make an impact.  Being part of the central bank, internal audit units cooperates with other departments and reports to management, and acts as active consultant on sound administration and processes.  

External audit of financial statements of the central bank strengthens its financial accountability. Coming from a reputable third party organization, external auditors issue an independent opinion on financial statements and accounting system.

Where they have been established, audit committees have served as key for good governance and oversight. As a tool of oversight of different governance aspects, management practices, risk management, and internal control, they provide support to the board members. Besides examining the role, mandate, and composition, we will discuss the process of setting up effective audit committees and look into how they can strengthen the governance of institutions. We will focus further on on the relationship and the communication with the management and the board during the entire process.

Topics Addressed

This workshop provides an overview of function in support of good governance and its role in the wider context of central bank governance:

  • meaning of good governance;
  • role of audit functions within the institution;
  • review of control and oversight practices;
  • how to contribute to better controls;
  • specific internal auditing activities within central banks;
  • stakeholder overview;
  • general governance model (by Institute of Internal Auditors, IIA)  & case of the Bank of Slovenia and other regional CBs;
  • role of audit committees (and other internal and external oversight bodies), their mandate and composition;
  • communication with management;
  • steps for enhancing internal audit’s role.

Who should attend

The workshop is primarily designed for staff involved in corporate governance facilitation and design. Members of Audit Committees, or other oversight bodies, are welcomed. The internal audit function is one of those whose primary task is to give assurance on governance, therefore their participation is expected. Those engaged in corporate governance like Governor's Cabinet Heads, Board Secretariats, and Heads of Legal Services are highly appreciated. The workshop is also relevant for employees working on financial reports. It is advisable to assure participation of two representatives per central bank, preferably with different scope of responsibilities.

The workshop will be delivered in English, and highly interactive, providing practical and workable solutions elaborated through a mix of expert-based learning, hands-on operational experience, and interventions of systematic exchange of knowledge and regional experience in a form of shorter participant presentations and discussions of cases from participating institutions. Therefore, participants are expected to come prepared to discuss on selected topics.

Partners

This learning initiative is supported by:

Bank of Slovenia
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