Financial Crime World

Ugandan Banks Required to Appoint Internal Auditor and External Auditor

The Bank of Uganda (BOU) has emphasized the importance of appointing an internal auditor and external auditor for all commercial banks in the country. This move aims to enhance transparency, accountability, and good corporate governance practices among financial institutions.

Internal Auditor’s Responsibilities

  • Evaluate the reliability of information produced by accounting and computer systems.
  • Provide an independent appraisal function.
  • Assess the effectiveness, efficiency, and economy of operations within the bank.
  • All internal auditors are required to be members of the Institute of Certified Public Accountants of Uganda.

External Auditor’s Responsibilities

  • Perform an audit of the financial statements of the financial institution.
  • Provide an opinion in accordance with the Financial Institutions Act and International Standards on Auditing.
  • External Audit firms must be periodically assessed and pre-qualified by BOU to ensure they meet the required standards.

Code of Conduct

Ugandan banks are also required to develop a code of conduct that focuses on areas such as:

  • Ethical risk
  • Honesty
  • Accountability
  • Conflicts of interest
  • Fair dealing
  • Anti-discrimination
  • Gifts
  • Relationships with customers

The code is intended to guide directors in complying with applicable laws, rules, and regulations.

Remuneration Requirements

There are no specific remuneration requirements prescribed by law or BOU that apply to banks. Remuneration of employees is determined solely by the bank, with guidance provided by the compensation committee.

Anti-Money Laundering and Combating the Financing of Terrorism (AML/CFT)

The primary legislation regulating money laundering and combating terrorism financing is the Anti-Money Laundering Act (AMLA) as amended. Banks are required to:

  • Register with the Financial Intelligence Authority (FIA).
  • Identify customers.
  • Verify identification information.
  • Implement risk assessment measures.
  • Maintain records.
  • Report suspicious transactions.
  • Conduct periodic anti-money laundering audits.

Depositor Protection

The BOU has emphasized the importance of protecting depositors’ interests in commercial banks. The regulator requires banks to:

  • Maintain adequate capital and liquidity ratios.
  • Ensure their stability and ability to meet depositor obligations.

Conclusion

In conclusion, the appointment of internal auditors and external auditors is crucial for enhancing transparency, accountability, and good corporate governance practices among Ugandan banks. This move aims to promote confidence in the banking sector and protect depositors’ interests.