Bank Business Audit,
Internal Control Policies
and business continuity
management
Bank Business Audit
Definitions:
Examination and verification of a bank's financial
statements, accounting records, and supporting
documents
- done by a CPA (Certified Pubic Accountant)
An IRS (Internal Revenue Service) examination of an
individual or coporation's tax return to verity its accuracy
From: http://www.investorwords.com/324/audit.html
Compliance of the Philippines with the IAS
(International Accounting Standards)
Regulations of the Bangko Sentral ng Pilipinas
Accounting Standards/ Guidelines:
External Audit/ Use of Audited Financial Statements
Circular No. 746 dated 3 February 2012
Ciruclar No. 660 dated 25 August 2009
Reforms to BSP's policy on the selection and delisting of external auditor
and/or auditing firm of covered entities
Circular No. 655 dated 12 May 2009
One Year Suspension of Requirement on the Use of AFS Audited by
Accredited External Auditors for Banks' Internal Credit Rating System
Circular No. 653 dated 5 May 2009
Guidelines in the preparation of audited financial statements for trust
institutions
Circular No. 622 dated 16 September 2008
Circular No. 554 dated 22 December 2006
Submission of Annual Audit Report
Circular No. 549 dated 9 October 2006
Circular No. 540 dated 9 August 2006
Submission of Audited Financial Statements
Circular No. 472 dated 1 February 2005
Circular No. 439 dated 5 July 2004
Other BSP Regulations regarding
bank audit
CIRCULAR NO. 499 Series of 2005 or Audit
Committee and Internal Audit Function
Manual of Regulations for Banks
Circular No. 488 Series of 2005
Other entities which has auditing
regulations
Commission on Audit
Congress of the Philippines Republic Act No.
8791 or The General Banking Act
Securities and Exchange Commission SEC
Memoradum Circular No. 13 Series of 2009 or
Revised Guidelines on Accreditation of Auditing
Firms and External Auditors
Other entities which has auditing
regulations
Commission on Audit
Congress of the Philippines Republic Act No.
8791 or The General Banking Act
Securities and Exchange Commission SEC
Memoradum Circular No. 13 Series of 2009 or
Revised Guidelines on Accreditation of Auditing
Firms and External Auditors
Report on the Observance of
Standards and Code of the
Philippines by the World Bank
(2006)
The SEC review findings show lack of complete or
adequate disclosures required under SEC Rule 68
and 68.1 (see para 10) in the financial statements of
some entities reviewed.
Discussions with preparers and users of financial
statements revealed that they are aware of the new
standards and areas that presented implementation
problems.
ROSC Recommendations
Monitoring and enforcement mechanism for
quality control review.
Many stakeholders are involved in the
enforcement of quality control measures.
With resources being scarce, there is a need to
coordinate the activities of the stakeholders
involved in enforcement of quality reviews to
avoid duplication of efforts and costs.
Education and training matters.
Internal Control Policies
Internal Control
Policies which are set by a firm or company to
maintain its financial integrity and to secure its
name from mispractices
Important so that objectives of a company will be
met
Vital tool for corporate governance
Internal Control Policies of Local
Banks in the Philippines
All employees are involved to a certain degree
of internal control process.
Clear authorities, responsibilities, and operating
procedures
Monitoring and evaluating financial statements
Monitor the weakness of internal control
policies
Avoid activities that hinder the bank officers'
functions.
Internal Control Past Issues
Inaccurate Financial Reports
Lack of Written Procedures
Missing Documents
Customer Complaints
Frameworks of Internal Control
COSO (Committee of Sponsoring
Organizations)
CoCo (Criteria of Control)
Bassel Committee on Banking Supervision's
Framework for Internal Control Systems
Committee of Sponsoring
Organizations
Introduced in 1992
Its framework consists of more than 20 basic
principles of fundamental concept with five
components
Control environment
Risk assessment
Control activities
Information and communication
Monitoring
CoCo (Criteria of Control)
Also introduced in 1992
Was organized for better organizational
performance, decision making, risk
management, and corporate governance
Framework called Guidance on Control was
released
20 critera for effective control in four areas of an
organization
Purpose
Commitment
CoCo (Criteria of Control)
Also introduced in 1992
Was organized for better organizational
performance, decision making, risk
management, and corporate governance
Framework called Guidance on Control was
released
20 critera for effective control in four areas of an
organization
Purpose
Commitment
Capability
Monitoring and learning
Bassel Committee on Banking
Supervision's Framework for Internal
Control Systems
Supervisory authorities from
Belgium
- Sweden
Canada
- Switzerland
France
- United Kingdom
Germany
- United States
Italy
Japan
Luxembourg
Netherlands
Pioneered the Framework for Internal Control
Systems in 1998
Five elements of control include
Management oversight and control culture
Risk recognition and assessment
Control activities and segregation of duties
Information and communication
Monitoring activities and correcting deficiencies
Business Continuity Management
An organizatin wide discipline and a complete
set of process that identifies potential impacts
which threaten an organization
Provides a capability for an effective response
that safeguards the interests of its major
stakeholder and reputation
Based on the articles of ISO 22301
Strategic plan for worst case scenario
References
Bangko Sentral ng Pilipinas (2005, November 25). Audit
committee and internal audit function. Circular No. 499
Series of 2005. Retrieved March 4, 2015 from
http://www.bsp.gov.ph/regulations/regulations.asp?typ
e=1&id=621
Bangko Sentral ng Pilipinas (n.d.). Compliance with
IAS. Retrieved March 4, 2015 from
http://www.bsp.gov.ph/regulations/compliance_regulati
ons.asp
Bangko Sentral ng Pilipinas (2008). Manual of
Bank of the Philippine Islands. (2012, October 24). BPI
corporate governance manual. Retrieved March 4,
2015 from
https://www.mybpimag.com/images/pdf/Corporate%2
0Governance/BPI%20Corp%20Governance%20Manual
f
BDO Unibank Inc. (2012, May 25). Corporate
governance manual. Retrieved March 4, 2015 from
https://www.bdo.com.ph/sites/default/files/pdf/corpor
ate_governance/corgovman_0.pdf
Business Continuity Management (n.d). Retrieved
March 4, 2015 from BCMpedia,
http://www.bcmpedia.org/wiki/Business_Continuity_M
China Bank Internal Control and Risk Management.
(n.d.). Retrieved March 4, 2015 from
http://www.chinabank.ph/about_china_bank.aspx?titl
e=Internal+Control+and+Risk+Management
Common Internal Control Frameworks. Retrieved
March 4, 2015 from
http://www.theiia.org/intAuditor/media/images/Burch_de
c'08_artok_cx.pdf
Goh, M.H. (2011, August 9). BCM concepts: business
continuity management. Retrieved March 4, 2015 from
http://www.goh-moh-heng.com/business-continuity-ma
nagement/
ISO 22301 Business Continuity Management
Awareness Training. (n.d.). Retrieved March 4, 2015
from
http://www.sgs.ph/en/Oil-Gas/Quality-Health-Safety-a
nd-Environment/Sustainability/Economic-Sustainabilit
y/ISO-22301-Awareness-Training-Business-Continuity-M
anagement.aspx
Metrobank Audit Committee. (n.d.). March 4, 2015 from
https://www.metrobank.com.ph/images/Board%20Co
mmittees/AUDITCOM_Membership%20and%20Charter.
df
Philippine Depository Insurance Corporation. (n.d.).
General banking act. Retrieved March 4, 2015 from
http://www.pdic.gov.ph/index.php?nid1=10&nid2=4
Report on the Observance of Standards and Codes
(2006, March 15). Accounting and Auditing Update.
Retrieved March 4, 2015 from
http://www.worldbank.org/ifa/rosc_aa_phl_2006.pdf
Securities and Exchange Commission (n.d). Revised
guidelines on accreditation of auditing firms and
external auditors. SEC Memorandum Circular No. 13.
Retrieved March 4, 2015 from
http://www.sec.gov.ph/laws/memorandumcircular/C
Y%202009/sec%20memo%20no.%2013,s2009.pdf
