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Location: Central Bank of Bahrain Volume 2—Islamic Banks > Part A > High Level Standards > HC High-Level Controls > HC-3 Audit Committee and Financial Statements Certification > HC-3.2 Audit Committee > HC-3.2.3
  • HC-3.2 Audit Committee

    • HC-3.2.1

      The Board must establish an audit committee of at least three directors of which the majority must be independent including the Chairman. The committee must:

      (a) Review the Islamic bank licensee'sG accounting and financial practices;
      (b) Review the integrity of the Islamic bank licensee'sG financial and internal controls and financial statements (particularly with reference to information passed to the Board — see HC-1.2.10). The information needs of the Board to perform its monitoring responsibilities must be defined in writing, and regularly monitored by the Audit Committee;
      (c) Review the Islamic bank licensee'sG compliance with legal requirements;
      (d) Recommend the appointment, compensation and oversight of the Islamic bank licensee'sG external auditor; and
      (e) Recommend the appointment of the internal auditor.
      Amended: January 2012
      Amended: January 2011
      October 2010

    • HC-3.2.2

      In its review of the systems and controls framework in Paragraph HC-3.2.1, the audit committee must:

      (a) Make effective use of the work of external and internal auditors. The audit committee must ensure the integrity of the bank's accounting and financial reporting systems through regular independent review (by internal and external audit). Audit findings must be used as an independent check on the information received from management about the bank's operations and performance and the effectiveness of internal controls; and
      (b) Make use of self-assessments, stress/scenario tests, and/or independent judgements made by external advisors. The Board should appoint supporting committees, and engage senior management to assist the audit committee in the oversight of risk management; and
      (c) Ensure that senior management have put in place appropriate systems of control for the business of the bank and the information needs of the Board; in particular, there must be appropriate systems and functions for identifying as well as for monitoring risk, the financial position of the bank, and compliance with applicable laws, regulations and best practice standards. The systems must produce information on a timely basis.
      October 2010

    • HC-3.2.3

      The Islamic bank licenseeG must set up an internal audit function, which reports directly to the Audit Committee and administratively to the CEOG .

      October 2010

    • HC-3.2.4

      The CEOG must not be a member of the audit committee.

      October 2010

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