Requirements for internal control activities of the State Bank of Vietnam

Requirements for internal control activities of the State Bank of Vietnam (Internet image)

Regarding this issue, LawNet would like to answer as follows:

1. Requirements for internal control activities of the State Bank of Vietnam

Requirements for internal control activities of the State Bank of Vietnam according to Article 6 of Circular 06/2020/TT-NHNN are as follows:

- Internal control activities shall be established and maintained for all activities, business processes and transactions of a unit.

- Internal control activities shall be carried out regularly and continually in association with control principles for daily activities of the unit, including:

+ Assigning and authorizing persons to perform tasks in a clear, transparent and lawful manner; ensuring tasks, powers and responsibilities delegated to each individual and department of a unit are separated, avoiding conflicts of interest; making sure no single individual has the total power to manipulate the operation of the unit or conceals information or violations against laws, and relevant internal rules and regulations for personal gain or for personal purposes.

+ Ensuring the principle of dual control is adhered to: the assignment of tasks and handling of operations, especially high risk operations, must be performed by at least two persons so as to supervise and control each other to ensure regulatory compliance, protect assets and improve performance unless otherwise provided by law.

+ Stipulating and strictly complying with regulations on reporting and exchange of internal information in a timely and effective way to ensure the unit operates in accordance with regulations of law.

- Responsibilities and powers shall be delegated to each leader, department and board of a unit during internal control activities; responsibilities and roles of internal control department/division and internal controllers shall be promoted by fully and effectively implementing relevant regulations and business processes and the responsibility for task performance results to the head and the law shall be assumed.

- Units, divisions, departments and individuals must regularly review and inspect the implementation of relevant internal regulations and business processes to promptly detect possible shortcomings, inadequacies and risks, suggest appropriate amendments in order to prevent risks and improve effectiveness in internal control activities by the units.

- Heads of units affiliated to SBV shall provide instructions on analysis and assessment of risks posed to operations within their jurisdiction to proactively prevent and take appropriate measures to control and manage risks.

- The role of a full-time internal controller shall be independent of that of a department, division or individual performing professional duties at a unit. Internal auditors should not be allowed to participate in professional activities subject to the inspection, supervision and control by the unit. Internal auditors (including heads of divisions in charge of internal control) who are relatives of the unit’s head should not be deployed.

- Full-time internal controllers shall satisfy standards to be satisfied by bank controllers regarding qualifications, skills, experience and morality in accordance with SBV’s controllers.

2. Contents of internal control activities of the State Bank of Vietnam

Contents of internal control activities of the State Bank of Vietnam according to Article 8 of Circular 06/2020/TT-NHNN is as follows:

- Regularly reviewing documents to promptly promulgate and amend internal rules, business processes and regulations so as to define work contents, tasks, powers and responsibilities of the unit and its department, division and individual upon management and handling of works in a lawful, close and scientifically sound manner.

- Self-inspecting, controlling and supervising the compliance with regulations on accounting, financial and asset management, safety during treasury-related activities, information technology, compliance and operational efficiency of divisions and individuals in the unit;

Reviewing and assessing the reasonableness, effectiveness and efficiency, determining current problems and suggest necessary changes to the internal control system to ensure safety of assets and improve the effectiveness in management by the unit and its operational efficiency.

- Classifying, managing and using information and reports of units in line with regulations of SBV to ensure smooth and continuous operation.

- Establish effective mechanisms for supervising, reporting and exchanging internal information with the purpose of preventing risks and serving the management in an appropriate and effective manner.

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