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 > Introduction > HC-6.5.1
  • Introduction

    Added: April 2018

    • HC-6.5.1

      Islamic bank licensee'sG must establish and implement an effective internal audit function which provides an independent and objective assurance to the board of directors and senior managementG on the quality and effectiveness of a bank's internal control, risk management and governance systems and processes, to protect the bank and its reputation.

      Added: April 2018

    • HC-6.5.2

      The internal audit function must develop an independent and informed view of the risks faced by the bank based on its access to all bank records and data, its enquiries, and its professional competence. The internal audit function must discuss its views, findings and conclusions directly with the audit committee and, if necessary with the board of directors at their routine quarterly meetings, thereby helping the board to oversee senior managementG .

      Added: April 2018

    • HC-6.5.3

      In this Section, all references to the board of directors may also be taken as referring to the bank's audit committee where the audit committee is mandated to carry out such functions on the board's behalf.

      Added: April 2018

    • HC-6.5.4

      For branches of foreign bank licensee'sG , and where no local board of directors exists, all references in this Module to the board of directors should be interpreted as the Head Office/ Regional Office.

      Added: April 2018

    • HC-6.5.5

      This Section applies in its entirety to all locally incorporated banks, including those within a banking group, and to holding companies whose subsidiaries are predominantly banks. While Module LR requires that all banks including branches must have an internal auditor as a controlled function in the Kingdom, only Paragraphs HC-6.5.7 to HC-6.5.23, HC-6.5.28 to HC-6.5.42 and HC-6.5.69 to HC-6.5.70 would be directly applicable to branches of foreign bank licensee'sG in Bahrain in terms of the internal audit function located here. Branches should ensure that equivalent arrangements are in place at the parent level for other requirements in this Section and these arrangements provide for an effective internal audit function over activities conducted under the Bahrain license.

      Added: April 2018

    • HC-6.5.6

      The extent of application of this Section must be commensurate with the significance, complexity and international presence of the bank (principle of proportionality).

      Added: April 2018

    • HC-6.5.7

      The key features for the effective operation of an internal audit function are:

      (a) Independence and objectivity;
      (b) Professional competence and due professional care; and
      (c) Professional ethics
      Added: April 2018

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