Contents of the internal audit activities for foreign credit institutions in Vietnam

Contents of the internal audit activities for foreign credit institutions in Vietnam (Internet image)

1. What is internal audit?

According to Clause 2, Article 3 of Circular 44/2011/TT-NHNN, internal audit shall mean the checking, independent and objective assessment of the internal control system; assessment of the conformity and compliance with regulations, internal policies, procedures, processes which are established within the credit institutions, foreign bank's branches; giving recommendations for improving the efficiency of the systems, processes, regulations, making contribution to ensuring the credit institutions' activity to be safe, efficient and complied with laws.

2. Contents of the internal audit activities for foreign credit institutions in Vietnam

Main contents of the internal audit activity shall be to assess the adequacy, effectiveness and efficiency of the internal control system.

Specifically, in Clause 2, Article 16 of Circular 44/2011/TT-NHNN, depending on the scale, level of risks as well as specific requirements of each credit institution, the internal auditors may check, assess the following contents:

- The level of adequacy, the effectiveness and efficiency of the internal control system.

- The application, the effectiveness and efficiency of the implementation of risk management policies and processes of the credit institution, including the processes which are implemented via the information technology system.

- The adequacy, accuracy and security of the management information system and the financial information system, including the electronic information system and electronic banking service.

- The adequacy, timeliness, truthfulness, reasonableness and accuracy of the accounting system and financial statements.

- The compliance with provisions of laws, regulations on prudential ratios in activities of the credit institution, foreign bank’s branch, internal provisions, professional operation processes, rules, professional virtue rules.

- Internal regimes, policies, processes, regualtions, organizational structure of the credit institution, foreign bank’s branch.

- Measures for ensuring the assets’ security; giving recommendations in order to improve the efficiency of systems, processes, regulations, helping to ensure the operation of the credit institution, foreign bank’s branch is safe, efficient and conformable with laws;

- To assess the economicality and efficiency of the activities, the economicality and efficiency of the use of resources, through which the appropriateness level between the achieved results and proposed objectives shall be determined.

- To perform other contents relating to the functions, duties of the internal auditor upon request of the Controllers' Committee, the Board of Directors, Board of Members;

- In addition to provisions as stipulated in points a, b, c, d, dd, e, g, h and i in Paragraph 2 herein above, a foreign bank’s branch shall be required to audit in line with regulations of the parent bank in conformity with provisions of Circular 44/2011/TT-NHNN.

3. Fundamental principles of internal audit for foreign credit institutions in Vietnam

Fundamental principles of internal audit for foreign credit institutions as prescribed in Article 9 of Circular 44/2011/TT-NHNN are as follows:

- Independence: the organization and operation of internal audit shall be independent from other units, management, operational divisions of the credit institution, foreign bank's branch; the internal auditor shall not be allowed to assume works that are subjects of internal audit; the credit institution is required to ensure that the internal audit shall not be hindered by any intervention in performing the reporting and assessment.

- Objectiveness: the internal audit division, internal auditor shall be required to ensure the objectiveness, truthfulness, justice and unbias.

- Professionality: internal auditor must be a person who has essential knowledge, qualification and skill in internal audit, does not concurrently assume other specialized positions or works of the credit institution, foreign bank's branch; the internal auditor should have adequate knowledge to identify signals of fraudulence, knowledge about risk in banking activity and measures of controlling information technology to perform the assigned works.

The internal audit division shall have at least 01 auditor who is qualified and skilled to control key information technology and high-tech audits.

Thanh Rin

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