CEO discusses role of internal auditors at Nigerian banks | China tightens risk controls for policy-lending banks | Treasury calls for limited use of SIFI label
November 21, 2017
IIA Financial Services SmartBrief
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Internal Audit Watch
Fed proposes guidance for effective boards at large financial firms
The Federal Reserve has outlined its expectations for an effective board of directors under five categories, including the independence of the internal audit and risk-management functions. The Fed is inviting comment on its proposed guidance, which is intended to supplant the supervision letters the Fed has been using with regard to large financial institutions.
Promontory Financial Group (11/2),  The Wall Street Journal (tiered subscription model) (11/20) 
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CEO discusses role of internal auditors at Nigerian banks
Coronation Merchant Bank CEO Abubakar Jimoh quoted The IIA at an event in Nigeria while exploring the role of financial institutions' internal auditors. Internal auditors must be professionally objective to the greatest extent possible in collecting, assessing and communicating information and must make balanced assessments free of undue influence by others, he said.
The Punch (Nigeria) (10/23) 
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FSAC 2017 Exchange Recap
The Financial Services Exchange welcomed a record number of attendees at their annual program in September. Over 520 attendees including chief audit executives, audit directors and managers, regulators, and other internal audit experts, discussed the future of regulatory reform. Read the recap. Mark your calendar for next year's Exchange: Oct. 1-2, 2018, in Washington, D.C.
Risk Management
China tightens risk controls for policy-lending banks
China is strengthening risk-management procedures and oversight for the China Development Bank, the Export-Import Bank of China and the Agricultural Development Bank of China. Safeguards taking effect at the start of the year include mandatory reviews of internal capital adequacy at least once a year.
Caixin online (China) (11/15),  MLex (subscription required) (11/16) 
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Interested in advancing in the competitive niche of financial services auditing and communicating your breadth of knowledge? Earning your CFSA designation can be your key to demonstrating your competence and distinguishing yourself as an expert.
Regulation & Compliance
Treasury calls for limited use of SIFI label
Treasury calls for limited use of SIFI label
Mnuchin (Frederic J. Brown/AFP/Getty Images)
The Treasury Department has called on the Financial Stability Oversight Council to limit use of the systemically important financial institution designation and to target firms based on financial practices, rather than size. "Our recommendations include enhancing FSOC's analytic process, implementing cost-benefit analysis and increasing transparency," said Treasury Secretary Steven Mnuchin.
The Hill (11/17) 
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Expert: FASB's credit-loss standard may spur more conservative lending
Banks will have to make significant changes to comply with the Financial Accounting Standards Board's new standard for credit-loss accounting, which will apply to fiscal years starting after mid-December 2020. The standard, for which many banks are unprepared, could lead to more conservative lending, said James Gellert of RapidRatings, which is assisting banks in complying with the standard.
Accounting Today (11/7) 
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Quarles aims to shift Fed from rule-making to oversight
Federal Reserve Governor Randal Quarles said that as the central bank's vice chairman of supervision, he wants to emphasize overseeing banks and give less attention to issuing rules. And when it is time to change rules, he wants industry input early, rather than asking for comments after a rule has been drafted, Quarles said.
Banking Exchange (11/8),  The Hill (11/8),  MLex (subscription required) (11/7) 
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Make sure your team is on the right track.
The Audit Intelligence Suite (AIS) lets you benchmark your audit activity, assess your team's skills, and survey your key stakeholders. Until March 31, 2018, participants who complete all three components of the AIS bundle will receive it for free, AND get a $500 discount on On-Site Training.
Fraud & Ethics
Bank accounts worth billions frozen in Saudi crackdown
Saudi Arabia has frozen bank accounts containing billions of dollars as part of a crackdown on corruption. The kingdom says it has frozen accounts of individuals but not accounts of companies those individuals manage or own.
Bloomberg (free registration) (11/7),  Reuters (11/7) 
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FSAC Knowledge Brief: Risk Reporting Practices
Internal auditors at banks of all sizes should be aware of the Basel Committee on Banking Supervision's regulation 239 principles and prepare to provide assurance over their ongoing monitoring. Consider these engagement objectives and procedures in customizing an audit program to provide assurance regarding risk reporting practices. Read more.
Machine learning in finance still requires human touch
Machine learning and artificial intelligence are enabling new, powerful forecasting techniques. These technologies, however, can struggle under certain conditions, making it important for users and policymakers to understand their limitations.
Bank Underground (Bank of England) (11/10) 
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Audit: Inadequate security makes FDIC computers vulnerable
An internal audit has concluded the Federal Deposit Insurance Corp.'s lax security measures expose its computer system to lengthy outages and malicious attacks by cybercriminals. The FDIC Office of Inspector General said weak controls have "placed the confidentiality, integrity and availability of the FDIC's information systems and data at risk."
MLex (subscription required) (11/3) 
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IIA News
Infographic: Fraud investigations governance
​Many financial services organizations have principles for investigations, but fewer say they have processes for discipline and evaluating evidence. Differences exist between large and small internal audit functions. View the details.
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Video: Playing in the Gray -- Maintaining Independence
Danny Goldberg, founder of GoldSRD, discusses this delicate balance and how internal audit can stay effective as the third line of defense while assisting as a trusted adviser. Watch now.
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It's lack that gives us inspiration.
Ray Bradbury,
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About the IIA Financial Services Audit Center (FSAC)
FSAC is an IIA specialty center for audit professionals in the banking, asset management, and insurance sectors. FSAC advances the professional practice of auditing in the financial services industry through thought leadership, education and training events, professional guidance, and advocacy. Learn more about FSAC and how you can add the center to your IIA membership.
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