FSC amends Point 3 and Point 4 of "Directions for Assessing the Effectiveness of the Internal Audit Function in Banks"
2021-04-29
In order to adequately assess the actual implementation effectiveness of risk-based internal auditing adopted by banks, and enhance the effectiveness of the internal audit function in banks' foreign branches, and subsidiary banks, the Financial Supervisory Commission (FSC) has proposed to amend the "Directions for Assessing the Effectiveness of the Internal Audit Function in Banks." The major changes introduced are summarized as follows:
1. The framework, content and key points of the assessment components have been revised: (Amended Point 3)
(1) To enhance the effectiveness of the FSC's financial examinations, the degree to which banks cooperate with the FSC's financial examinations has been newly added to the sub-paragraphs of assessment components under the Directions.
(2) To ensure the use of different methods for assessment of banks' internal audit function depending on whether they have adopted risk-based internal auditing, different key points and mark up standards of assessment components in the addendum have been amended accordingly. The newly added key points for assessing bank's risk-based internal auditing are: the annual audit plan, the scope and the focal points of audit tasks align with the risk assessment results and a quality assurance mechanism has been established.
(3) In order to strengthen the effectiveness of the internal audit function in banks' foreign branches, subsidiary banks and subsidiaries, the assessment components and related assessment key points subject to "The head office's supervisory management of its foreign branches' internal audit function," "The head office's management of its foreign branches' outsourced internal audit function," and "The parent bank's supervisory management of its foreign subsidiary banks' internal audit function" have been newly added.
2. To highlight internal audit priorities, the mark up and mark down standards of all sub-paragraphs that set out assessment components have been revised. The upper limit of the original marking standard was 1 and has been amended up to 3. (Amended Point 4)
The FSC expects that the effectiveness of the internal audit function in banks will be elevated through the amendment of the Directions. The amendments will be issued and published on the FSC website shortly.
Contact: Domestic Banks Division, Financial Examination Bureau
Telephone: (02) 8968-0360
Please direct all correspondence and inquiries to FSC mail.
1. The framework, content and key points of the assessment components have been revised: (Amended Point 3)
(1) To enhance the effectiveness of the FSC's financial examinations, the degree to which banks cooperate with the FSC's financial examinations has been newly added to the sub-paragraphs of assessment components under the Directions.
(2) To ensure the use of different methods for assessment of banks' internal audit function depending on whether they have adopted risk-based internal auditing, different key points and mark up standards of assessment components in the addendum have been amended accordingly. The newly added key points for assessing bank's risk-based internal auditing are: the annual audit plan, the scope and the focal points of audit tasks align with the risk assessment results and a quality assurance mechanism has been established.
(3) In order to strengthen the effectiveness of the internal audit function in banks' foreign branches, subsidiary banks and subsidiaries, the assessment components and related assessment key points subject to "The head office's supervisory management of its foreign branches' internal audit function," "The head office's management of its foreign branches' outsourced internal audit function," and "The parent bank's supervisory management of its foreign subsidiary banks' internal audit function" have been newly added.
2. To highlight internal audit priorities, the mark up and mark down standards of all sub-paragraphs that set out assessment components have been revised. The upper limit of the original marking standard was 1 and has been amended up to 3. (Amended Point 4)
The FSC expects that the effectiveness of the internal audit function in banks will be elevated through the amendment of the Directions. The amendments will be issued and published on the FSC website shortly.
Contact: Domestic Banks Division, Financial Examination Bureau
Telephone: (02) 8968-0360
Please direct all correspondence and inquiries to FSC mail.
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Update：
2021-04-29