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HRDA&ID
Monito-ring
Division
Co !li-ance
Division
"#$ "%$ " $ "'$ "($ ")$ "*$ "+$ ",$ "# $ "##$ "# $
1 17 - 3.2
Audit risk arises when the auditor gives an inappropriateaudit opinion and the financial statements are materiallymisstated. Audit risk has three components: (a !ontrolrisk" (# $etection risk % (c &nherent risk.
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2 1' - 3.3
ffective risk assessment must identify and consider #othinternal and e)ternal factors. &nternal factors include thecomple)ity of the organi*ation structure" the nature ofthe +ank,s activities" the uality of personnel"
organi*ational changes" and employee turnover. )ternalfactors include fluctuating economic conditions" changesin the industry" socio-political realities and technologicaladvances.
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3 1' - 3.3
he risk assessment #y &nternal Audit focuses on all riskareas specially on compliance with regulatoryre uirements" social" ethical and environmental risksthose affect the #anking industry.
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/ 1' - 3./
&ndividual items in the $epartmental !ontrol 0unction!hecklist($!0! need to #e assigned a risk rating interms of the following dimensions: a I !act +eforetaking into account any mitigation (such as insurance "what is the impact of the lapse omission
# Pro/a/ilit0 After taking into account the mitigation"what is the likelihood of the event occurring
4onito-ring
$ivision
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HRD28 - 3./
Annual audit plan will #e drawn up. +ased on the riskassessment matri)" the audit plan will #e as 9isk 9ating(i igh; (ii medium; (iii ow and 1re2uenc0 (i
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HRD3. Audit Division- o carry out speciali*ed(& &= andvigilance audit.
11 21 - /.1
!ompliance division may #e further divided in to thefollowing divisions units-#. E3ternal Audit Co !liance Division o monitorcompliance activities of #ranch and officeunder internal audit.%. Internal Audit Co !liance Division o monitorcompliance activities of #ranch" Effice and su#-divisionsunder e)ternal audit (+angladesh +ank Audit &nspection"!ommercial Audit" )ternal Audit statutory audit andother regulatory authorities .
!ompli-ance
$ivision
12 22 - /.1
Monitoring Division : (i o verify the internal controlsystem % Eperational activities #y &mplementing of$!0! "
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HRD1/ 21 - /.1
he scope of work of the $epartment is to determinewhether the +ankFs network of risk management" controland governance processes" as designed and represented
#y management" is ade uate and functioning in a manner to ensure:
Ade uacy and effectiveness of risk managementsystem
Ceed-#ased interaction with the various governancegroups
=ignificant financial" managerial and operationalinformation in accurate" relia#le and timely manner.
mployeesF actions in compliance with policies"standards" procedures" laws and regulations.
se of ac uired resources economically" efficientlyand ade uately.
Achievement of programs" plans and o#?ectives. 0ostering the uality and continuous improvement in
the #ankFs control process. Appropriate recognition and addressing of legislative
and regulatory issues impacting the #ank.
&!%!@
1 22 - /.2 he scope of work of the $epartment is to determinewhether the +ankFs network of risk management" controland governance processes" as designed and represented
#y management" is ade uate and functioning in a manner to ensure: Ade uacy and effectiveness of risk managementsystem
Ceed-#ased interaction with the various governancegroups
=ignificant financial" managerial and operational
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HRDinformation in accurate" relia#le and timely manner.
mployeesF actions in compliance with policies"standards" procedures" laws and regulations.
se of ac uired resources economically" efficientlyand ade uately.
Achievement of programs" plans and o#?ectives. 0ostering the uality and continuous improvement in
the #ankFs control process. Appropriate recognition and addressing of legislative
and regulatory issues impacting the #ank.
16 22 - /.2
Efficers of &!!$ are authori*ed to: ave unrestricted access to all functions" records"
property and personnel.
he ead of &!!$ has full and free access to theAudit !ommittee. =et fre uencies" select su#?ects" determine scopes of
work and apply the techni ues re uired to accomplishaudit o#?ectives.
E#tain the necessary assistance of personnel in alldepartments of the #ank where they performaudits inspection as well as other speciali*ed servicesfrom within or outside the #ank.
&!%!@
17 23 - /.2 Efficers of the &!!$ are not authori*ed to- 5erform any operational duties for the +ank or its
affiliates. &nitiate or approve accounting transactions other than
those of the &nternal Audit $epartment. $irect the activities of any +ank officer not employed
in the &nternal Audit $epartment e)cept to the e)tentsuch officers have #een appropriately assigned to
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HRDauditing inspecting teams or to otherwise assist theofficers of the $epartment.
Audit their own works performed in their previous$epartments Effices.
1' 23 - /.3
&n line with !ommittee of =ponsoring Ergani*ation ofthe readway !ommission (!E=E and +ank for&nternational =ettlement(+&= " the following" #ut notlimited to" standards should #e followed:• he internal audit function,s control risk assessment"audit plans" and audit programs areappropriate for the #ank,s activities.• he internal audit activities have #een ad?usted forsignificant changes in the #ank,s environment" structure"
activities" risk e)posures" or systems.• he internal audit activities are consistent with thelong-range goals and strategic direction of the #ank andare responsive to its internal control needs.
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1> 23 - /.3
• he Audit !ommittee of the +oard promotes the !hiefAudit )ecutive,s (!A Fs impartiality andindependence #y having the !A directly report auditfindings to it.
A!+
28 23 - /.3• he !A is placed in the management structure in sucha way that the independence of the function is notimpaired.
4!
21 23 - /.3• he #ank has promptly responded to significantidentified internal control weaknesses. 4!
22 23 - /.3 • he internal audit function is ade uately managed to A%&$
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HRDensure that audit plans are met" programs are carried out"and results of audits are promptly communicated tosenior management and mem#ers of the Audit
!ommittee and full +oard.• @orkpapers ade uately document the internal auditwork performed and support the audit reports.
23 23 - /.3• he Audit !ommittee periodically assesses the
performance of internal audit.A!+
2/ 23 - /.3
• he internal audit function provides high- ualityadvice and counsel to management and the +oard oncurrent developments in the #ank,s internal control
policies and procedure" and in the performance of theother control functions of the #ank (9isk 4anagementand !ompliance
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2 2/ - /.3
he =tandards consist of (i Attri#ute =tandards" (ii5erformance =tandards" and (iii &mplementation=tandards.(i he Attri#ute =tandards address the characteristics oforgani*ations and individuals
performing internal audit activities and provide ualitycriteria against which the performance of these services can #e measured.(ii he Attri#ute and 5erformance =tandards apply tointernal audit services in general.(iii he &mplementation =tandards apply the Attri#uteand 5erformance standards to specific types ofengagements (for e)ample" a compliance audit" a fraudinvestigation" or a self-assessment pro?ect .
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26 2/ - /./ ead of &!! will #e responsi#le for total administration &!%!@ 9$
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HRDof &nternal !ontrol and !ompliance (&!! of the #ank.
27 2/ - /./ he rank of the ead of &!! must not #e lower than onestep immediate #elow the ! E.+oard 9$
2' 2/ - /./he appointment" posting" transfer % termination
dismissal of &!! ead must #e approved #y +angladesh+ank.
+oard 9$
2> 2/ - /./
he ead of &!! will always report his activities andfindings to the A!+ and will #e responsi#le to the A!+.
e =he will #e appraised #y the !hairman of the Audit!ommittee solely.
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38 2 - /.
he purpose" authority and responsi#ility of the internalaudit activity should #e formally defined in a charter
consistent with the =tandards #y the head of &!! and to #e approved #y the A!+ and the +oard.
+oard A!+ A%&$
31 2 - /.6.1
&nternal auditors should have to #e #old" honest andtruthful. hese ualifications will #ethe #asis for trust on the internal auditorFs professional
?udgment. &nternal auditors should keepstrict confidentiality of information found during audit.
hey should not use such information for personal gain or malicious action and should #eresponsi#le for protection of such information.
he ead of the internal audit and all internal auditorsshould avoid conflicts of interest. &nternalauditors should a#ide #y the #ank,s code of ethics. Acode of ethics should address the principlesof o#?ectivity" competence" confidentiality and integrity.
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32 2 - /.6.2 a 5ersons punished for ma?or offence and persons under 9$
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HRDdisciplinary proceedings must not #e posted in &!!$.rack record of officers to #e checked and maintained
#efore posting them in &!!$.
# &!!$ people should have thorough professionalknowledge and #anking e)perience with good academic
#ackground.
33 2 - /.7
he ead of three units (immediate #elow to head of&!! to #e appraised #y the head of &!! primarily and
#y !hairman of the Audit !ommittee finally. &n case ofother &!! officials first appraiser should #e concernedunit ead and 2nd appraiser should #e the ead of &!!and finally appraisal report to #e countersigned #y the!hairman of the Audit !ommittee with necessary
review.
A!+ &!%!@ A%&$4onito-
ring$ivision
!ompli-ance
$ivision
3/ 2 - /.'
&n compliance with the essence of Anti 4oneyaundering and 0raud forgery prevention" unit heads
under &!! should prepare a confidential mandatoryannual (1 days per year leave plan for employeesworking under her him with the consent of the ead of&!! and it should #e implemented accordingly.
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3 26 - /.>
he instructions contained in the etter Co-4alapro#i(#ishesh 267 288/-3>1'-3>66 dated 1> 18 288/ of Anti4oney aundering $epartment will #e applica#le for
&!! officials including the ead of &!!$. he ead ofthe &!! will effect rotation among the employees of thethree units (Audit and &nspection nit" 4onitoring nitand !ompliance nit .
&!%!@
36 26 - /.18 All mem#ers staff of the &!! should #e provided withappropriate and advance training.&!%!@ 9$
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HRD37 26 - / .18.1
9 raining" 9esearch % $evelopment $ivision of the #ank should conduct various training programs for the
)ecutives Efficers =taff to develop their efficiency so
that they can apply their knowledge and e)perience inthe #ank regularly.
9$
3' 26 - / .18.2
4utreac5 6raining on1. &nternal Audit !ompliance2. &nternal !ontrol Audit in +ank 3. Agri 0inancing % 9ecovery/. !redit 9isk Grading
. !ompliance of +angladesh +ank &nspection6. !ompliance of !ommercial Audit o#?ections7. Accounting % Auditing =tandards
'. & Auditing
9$
3> 27 - / .18.3
o keep pace with the changes taking place all aroundthe glo#e and ever developing technology" )ecutivesand Efficers should #e sent a#road to attend varioustraining courses" workshops" seminars" conferences andsymposia to ac uire updated knowledge of modern
#anking.
9$
/8 2' - .1 (a ach Hear the ead of &!! will set out an Audit plan forthe year.&!%!@
/1 2' - .1 (a Audit plan will #e approved #y the Audit !ommittee ofthe +oard (A!+ .A!+
/2 2' - .1 (che deficiencies identified during the audits should #e
notified to the appropriate level and significant auditfindings should #e reported to the A!+.
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HRD/3 2' - .2 9isk assessments also need to include input frommanagement and the +oard.
+oard 4!
// 2' - .2&!! will evaluate" at least annually every departmentoffice #ranch su#sidiary foundation within theorgani*ation to analy*e the degree of risk.
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/ 2' - .2An internal auditor is to assist in determining priorities ofinternal audit activity consistent with the organi*ationFsgoals.
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/6 2> - .2
Assessing control risk focuses on the followingincidents:I &ncome recognition #y accounting ?ugglery in violationof +95$ !ircular-1 2812I $eclaring dividend #y de#iting retained earningsI =howing presence in office #y punching &$ for two
persons or more #y one person or representing one person #y other personsI =ingle person using operating two password (forchecker % maker for illegal purpose.I 0und shown as #orrowed and reported as other asset( #ut practically was in placement .
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/7 2> - .2
he ead of &!!$ should communicate the internalaudit plans and resource re uirements" includingsignificant interim changes" to the Audit !ommittee ofthe +oard for review and approval.
A!+ &!%!@
/' 2> - .2 he ead of &!!$ should also communicate the impactof resource limitations to the A!+.A!+ &!%!@
/> 2> - .3 0or auditing corporate authori*ed dealer #ranchesdedicated team should #e formed consisting of mem#ers
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HRDhaving professional knowledge on international trade" &e)pert" financial reporting e)pert" credit e)pert ande)perienced general #ankers.
8 2> - .3&n case of other #ranches team should #e formed with
persons considering risk e)posure and growth rate ofrisky e)posures.
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1 2> - .3
Ceeded num#er of e)tra staff strength to #e arranged for concurrent audit to look into whether the #ank isfollowing the guidelines of regulatory #odies"institutional policies and procedures set #y approved #ythe +o$ and aws of land.
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2 2> - .3A surprise check of audit work procedure can #e made
#y the high officials during audit program of large units. A%&$
3 38 J . / (ii
apses arise out of any kind of irregularities"misstatements" non-compliance with e)isting policiesand procedures of the #ank" or failure to o#serve laws ofthe land" #y which the #ank may incur financial losses.
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/ 38 - . / (ii
=ometimes non-compliance of e)isting policies and procedures may not cause any financial loss with animmediate effect" #ut they can result in an erosion ofreputation. At the same time" any malpractice in #anking"misuse misappropriation of the #ankFs funds can #edefined as lapses.
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38 J ./(iii 5unishment is an action to #e taken #y the managementof the #ank against employees for committing lapsesoffences. 5unisha#le offences are activities" for which
9$
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HRDhigher management thinks administrative action must #etaken.
6 38- ./ (ii iAuditors should detect the level or uantum of lapsesoffence and report to higher management. A%&$
7 38- ./(iv
ngagement letter" which is sent to management of theaudit area up to two weeks #efore the commencement ofthe audit and includes details of su#?ect" o#?ectives"scope" staffing and timing of the audit.
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' 31- ./ (vhe auditor should ensure that they have gathered
sufficient evidence to meet the audit o#?ectives and tocomplete the audit program.
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> 31- ./ (v
&f the auditor is investigating a fraud" then the level of
detail and evidence will need to #e sufficient to ensurethat the case can proven.A%&$
68 32- ./(viiAll findings should #e reviewed #y the eam eader and!hief Audit )ecutive prior to the final audit report
#eing issued.A%&$
61 32 - .
I he &!!$ will prepare report on individual inspection programs within 1 days (e)cept for items that needs to #e escalated immediately and su#mit the same to the #ranch #usiness unit for rectification with a copy to linemanagement.
I 0or low and medium risk items findings will #ereported to the 4$ ! E.I 0or high-risk items findings will #e reported to the4$ ! E and the Audit !ommittee of the +oard.
A!+ 4$ &!%!@
62 32 - . &!!$ will prepare an annual integrated report on thehealth of the +ank to #e su#mitted to the +oard of
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HRD$irectors for onward su#mission to +angladesh +ank.
63 32 - .
At the end of the year there should #e a summary reporton the audit findings and corrective actions taken whichshould #e forwarded to the Audit !ommittee of the #oardand the 4anaging $irector simultaneously.
A!+ 4$ A%&$
6/ 32 - .+ased on the review of monitoring reports the audit teamshould also conduct surprise check on the #rancheswhere regular gaps are identified.
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6 33 - .6.1&!! will collect 0inancial ealth =core" &!! ealth=core" and &mage % 9eputation ealth =core from the
!+" the A!+" and )ternal Auditor ( A respectively.A%&$
66 33 - .6.3
$epending on the nature of #usiness" the +oard of
$irectors will decide on the weight of the sectors" andinform the same to +angladesh +ank #efore preparingreport.
+oard A%&$
67 3/ - .6./
he health analysis of the #ank to #e done on yearly #asis as a regulatory compliance" andanalysis should #e made immediately after completing anaccounting year.
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6' 3/ - .6.he yearly integrated health report of the #ank is to #e
su#mitted to the +oard of $irectors for
approval and review.
+oard A%&$
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