Financial Crime World

Internal Audit Guidelines for Supervised Financial Institutions (SFIs) in The Bahamas

Introduction

The Central Bank of The Bahamas has established guidelines for internal audit practices specifically for Supervised Financial Institutions (SFIs). These guidelines aim to promote effective and efficient internal auditing, ensuring compliance with regulatory requirements and maintaining the integrity of SFIs.

Key Aspects of Internal Auditing

Audit Planning

  • The Head of Internal Audit should prepare an audit plan that outlines areas to be audited within the SFI.
  • Establishes priorities and sets objectives for audit activities.
  • Ensures efficient use of audit resources.

Risk Assessment

  • Areas to be audited are determined by a risk assessment of internal control systems, guiding the internal audit planning process.

Compliance Reviews

  • Comprehensive review program assesses an SFI’s compliance with relevant Central Bank guidelines and legislation.
  • Covers corporate governance, money laundering, terrorist financing, or any risk area in scope.

Independence and Objectivity

  • Independence: Internal auditors are independent when they render impartial and unbiased judgments, free from managerial or other interference.
  • Objectivity: Presumed impaired if an internal auditor provides assurance services for an activity they had responsibility for within the previous audit year.
  • Staff assignment of internal auditors should be periodically rotated to maintain objectivity.

Reporting

  • The Head of Internal Audit reports to the Audit Committee on planning, execution, and results of audit activities.
  • Periodically reviews the Internal Audit Charter.
  • Reports to the Board annually on organizational independence.

Staff Rotation and Impartiality

  • Situations that might affect impartiality should be disclosed by the Head of Internal Audit.

Group or Holding Company Structure

  • Emphasizes the importance of internal auditing within a group or holding company structure.
  • Ensures consistency across all SFIs through either having an SFI’s own internal audit function or the group’s internal audit unit performing sufficient scope.