CBB Volume 2: Contents

Central Bank of Bahrain Volume 2—Islamic Banks
Part A
High Level Standards
HC High-Level Controls
HC-6 Management Structure
HC-6.5 Internal Audit
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Location: Central Bank of Bahrain Volume 2—Islamic Banks > Part A > High Level Standards > HC High-Level Controls > HC-6 Management Structure > HC-6.5 Internal Audit > Independence and Objectivity > HC-6.5.8
  • Independence and Objectivity

    • HC-6.5.8

      Islamic bank licenseesG internal audit function must be independent of the audited activities. This means that the internal audit is independent of all functions including compliance, risk management and financial control functions. The internal audit function must also have sufficient standing and authority within the bank and must operate according to sound principles.

      Added: April 2018

    • HC-6.5.9

      The internal audit function must report directly to the audit committee and administratively to the CEO, thereby providing a framework for internal auditors to carry out their assignments with objectivity.

      Added: April 2018

    • HC-6.5.10

      The internal audit function must be able to perform its assignments on its own initiative in all areas and functions of the bank based on the audit plan established by the head of the internal audit function and approved by the board of directors or audit committee. It must be free to report its findings and assessments internally through clear reporting lines. The head of internal audit must demonstrate appropriate leadership and have the necessary personal characteristics and professional skills to fulfill his or her responsibility for maintaining the function's independence and objectivity.

      Added: April 2018

    • HC-6.5.11

      The internal audit function must not be involved in designing, selecting, implementing or operating specific internal control measures. However, the independence of the internal audit function must not prevent senior managementG from requesting input from internal audit on matters related to risk and internal controls. Nevertheless, the development and implementation of internal controls must remain the responsibility of management.

      Added: April 2018

    • HC-6.5.12

      Islamic bank licenseesG should, whenever practicable and without jeopardising competence and expertise, periodically rotate internal audit staff within the internal audit function.

      Added: April 2018

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