IIA offers internal audit advice

The Chartered Institute of Internal Auditors (IIA) has issued a new report offering advice to financial services professionals who need to meet the industry guidelines drafted by the organisation and a series of further groups such as the Prudential Regulation Authority and the Bank of England.

According to the IIA, "the guidance gives a clear direction to internal audit functions to focus upon governance and risk management".

Internal audit has been highlighted as an important part of reform in the financial sector, which has endured a great deal of reputation damage and criticism over the last few years following a string of scandals and misdemeanours.

Assessing the efficacy and seriousness of risk management within banks and other financial companies will help ensure that problems of this kind do not occur as regularly in the future, the IIA claimed.

"Internal audit planning should therefore be risk-based enabling internal audit to at least annually provide an assessment of the overall effectiveness of the governance, risk and control framework of the organisation," it added.

The new code produced by the IIA and others also stresses the importance of interacting with other internal assurance providers to ensure risk management, compliance and finance are also being dealt with effectively - however, internal auditors should be independent from these areas and not become responsible for them.

Banks are likely to be especially engaged with internal audit provision over the coming years, given the way it moves beyond external audit's aims to look at wider issues such as reputation, expansion, employee retention and environmental impact.

Given the flack they have taken from the media and many sectors of the public recently, it is crucial financial services organisations put measures in place to help them regain the trust of their customers over the coming years.

If the IIA is correct, following its new guidelines will help auditors identify the most important areas to focus on when it comes to improving best practice across the sector as a whole.