Internal Audit Effectiveness & Oversight Central Banks Perspective

Transcription

1 Internal Audit Effectiveness & Oversight Central Banks Perspective The views expressed herein are those of the author and should not be attributed to the IMF, its Executive Board, or its management.

2 Overview 2

3 IMF Safeguards Policy Safeguards assessments are diagnostic reviews of a central bank conducted in conjunction with IMF lending arrangements Covering five key areas denoted by the acronym ELRIC Anchored in international standards and promotes leading practices Governance is an overarching principle transcending all areas of the framework Safeguards assessments assign a risk rating to each ELRIC category 3

4 Internal Audit Effectiveness Attributes O V E R S I G H T Mandate Risk-based methodology Capacity Reporting & Monitoring Organizational independence and authority Audit approach Staffing level and competencies (including IT audits and Data Analytics) Reporting & Monitoring (including audit management solutions and automation) Quality assurance and improvement program 4

5 Audit Committee Effectiveness Attributes Composition Oversight of Internal & External Audit Expertise Effective Audit Committee 5

6 Effectiveness of Internal Audit and Oversight at Central Banks Safeguards Experience Safeguards experience (April December 2017) Central banks continue to have vulnerabilities in the areas of internal audit and oversight. 6

7 The State of Internal Audit Safeguards Findings 51% Inadequate mandate 71% of assessments had an ineffective Internal Audit Function 57% 65% No risk-based methodology Capacity constraints 58% Deficient reporting & monitoring 7

8 The State of Internal Audit Safeguards Findings Regional Perspective Mandate 32% 30% 68% 70% 82% 18% 60% 40% 33% 67% A F R I C A A S I A A N D P A C I F I C E U R O P E M I D D L E E A S T & C E N T R A L A S I A W E S T E R N H E M I S P H E R E Weak Strong Risk-based methodology 27% 30% 73% 70% 77% 23% 40% 60% 50% 50% A F R I C A A S I A A N D P A C I F I C E U R O P E M I D D L E E A S T & C E N T R A L A S I A W E S T E R N H E M I S P H E R E No Yes 8

9 The State of Internal Audit Safeguards Findings Regional Perspective Capacity 19% 81% 10% 90% 73% 27% 32% 68% 42% 58% A F R I C A A S I A A N D P A C I F I C E U R O P E M I D D L E E A S T & C E N T R A L A S I A W E S T E R N H E M I S P H E R E Insufficient Sufficient Reporting& Monitoring 35% 65% 20% 80% 45% 55% 56% 44% 42% 58% A F R I C A A S I A A N D P A C I F I C E U R O P E M I D D L E E A S T & C E N T R A L A S I A W E S T E R N H E M I S P H E R E Inadequate Adequate 9

10 Strong Oversight Impact on Risk Profiles Safeguards Risk Ratings Ineffective AC Safeguards Risk Ratings Effective AC 6% 13% 4% 18% 19% 8% 29% 35% 36% 58% 45% 54% 50% 73% 55% 62% 40% 32% 32% 4% 10% 12% 28% 3% 24% 31% 19% E X T E R N A L A U D I T F I N A N C I A L R E P O R T I N G I N T E R N A L A U D I T I N T E R N A L C O N T R O L S E X T E R N A L A U D I T F I N A N C I A L R E P O R T I N G I N T E R N A L A U D I T I N T E R N A L C O N T R O L S High Medium-High Medium-Low Low Medium-High Medium-Low Low 10

11 Outlook & Key Messages Assurance expectations on Internal Audit functions are increasing, but many have areas for improvement and challenges prevail Collective action on possible solutions is needed: (i) peer central bank dialogue and reviews; (ii) stronger ownership; (iii) priority recruitment, training, and professional development efforts; and (iv) greater advocacy and support by the standard-setter Standing within the organization promotes independence and authority Oversight by the Board is paramount to the effectiveness of the function Adherence to international standards promotes quality and consistency 11

12 Questions 12

13 Contact Details & Reference Material Elie Chamoun Safeguards Assessments Division International Monetary Fund th St, NW, Washington DC ': : *: echamoun@imf.org Safeguards Factsheet Safeguards Assessment Policy IMF Working Paper 18/125 13