The internal audit function in banks, final document issued by the Basel Committee

The Basel Committee on Banking Supervision today issued its final document The internal audit function in banks.

This supervisory guidance is built around 20 principles that seek to promote a strong internal audit function within banks. Drawing on lessons learned from the financial crisis, the principles revise and update the Committee's supervisory guidance issued in 2001, also taking account of developments in supervisory practices and in banking organisations. For that purpose, the guidance addresses supervisory expectations for the internal audit function and the supervisory assessment of that function. It also encourages bank internal auditors to comply with national and international professional standards on internal auditing. Finally, it promotes due consideration of prudential issues by internal auditors. An annex to the consultative document details responsibilities of a bank's audit committee.

Mr Stefan Ingves, Chairman of the Basel Committee on Banking Supervision and Governor of Sveriges Riksbank, Sweden's central bank, noted that "an internal audit function, independent from management and composed of competent auditors, is a key component of a bank's sound governance framework. The Committee's document lays out expectations that should help banks and their supervisors strengthen professional practices in this area."

An earlier version of today's guidance was issued for consultation in December 2011. The Committee wishes to thank those who provided feedback and comments.