Auditing corporate governance: what direction are we heading in?
Auditing corporate governance: what direction are we heading in?

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Governance

Content Type

General

20/05/21

Summary

The UK government recently published a policy paper, aimed at holding directors at large companies accountable and maximise transparency to ensure the prevention of fraud, or any other financial crime .  We welcome the recommendation to include an annual resilience statement setting out how directors are assessing the company’s prospects and addressing challenges to its business model over the short, medium and long term. As a niche technology risk consultancy, we see embedding resilience in services and products is increasingly a key focus for our clients. The loss of consumer trust that follows service outages can have a material impact on the long-term viability of an organisation. Any additional focus on this, as part of a broader approach to enhancing transparency and trust in audit and corporate governance, can only be seen as a positive change.” Rob Johnson, Senior Manager | dcr partners What are the key points from the audit and corporate governance policy paper? Public interest is at the heart of reformsThe Public Interest Entities (PIEs) are governed by the account legislation and are focused on audit, corporate reporting and governance. PIEs relates to a range of different businesses, including insurance firms, professional services firms , banks and publicly listed companies. The government wants to reform measures to make them more effective and to create a much more robust regulation, so companies have clearer guidance when carrying out audits. The new reforms will have an impact on the way organisations manage their finances and accounts.Directors’ accountabilityLarge companies must have strong internal controls. As a result of poor risk management from many large firms, the Financial Reporting Council (FRC) Review outlined recommendations to strengthen the established internal controls framework. Multiple options have now been identified to increase the effectiveness of internal controls, one of which would require a directors’ statement, which would cover all aspects of the company’s risk management procedures and internal control. All of the new reforms will be in relation to capital maintenance and dividends.Corporate reportingWhen it comes to new corporate reporting, greater transparency on payment policies and practices are needed. The Brydon Review has recommended that for companies to remain competitive and relevant over the long term, reporting needs to showcase more evidence of a director’s plans for the company. Two new reporting requirements have been proposed, which includes an Audit and Assurance Policy and a Resilience Statement. Overall, as a result of the uncertainty in recent times, there’s now an increased appetite for businesses to be more transparent about their finances, operational risks and plans.Strengthening the power of reportingThe government has set proposals to strengthen the regulator’s corporate reporting review that reflect the recommendations outlined by the Brydon Review. Some of the key measures being taken into consideration include the power for companies to direct changes to company accounts, as well as the power to publish CRR correspondence. The government intends to give more power back to the ARGA, and that there’s a more rigorous and consistent approach to discussing documentation and reporting.Company directorsThe role of a CFO , and many other company directors, is to oversee the business’ accounts. They have complete control, and regulators don’t have the authority to intervene if a director breaches any procedures related to the accounts. Therefore, the government aims to give the regulator the power to make directors of publicly listed companies accountable. This would be a major change for regulators, enabling them more authority over their relationships with company leadership. The new regime will allow regulators to take enforcement against directors for any breaches of duties relating to corporate governance.Audit reformsThe government proposes to introduce a new corporate auditioning profession, as well as new principles, duties and obligations for directors and auditors. It’s been accepted by the Brydon Review that the auditing process needs to be improved and with more focus on aspects beyond financial statements’ compliance, to help the audit practices become more transparent and secure. The Brydon review has ambitions to make the audit process more informative and useful. This may include the introduction of a professional body for corporate auditors, which would help create more structure and an established framework for auditing.Safeguarding shareholdersIn response to the Bryon Review, the government is set to give more requirements to the audit committee’s role with the aim of safeguarding shareholders and other account holders in a business. There’s also set to be new measures that will bring in a greater dialogue between a company and its shareholders, which in turn, can improve the quality of audits in this changing financial landscape . The audit committee protects the interests of the company’s shareholders. It acts as a professional liaison that can help tackle a range of issues.Changes to the audit marketAs a result of the CMA Market Study, the government intends plans to increase competition, choice and resilience of the audit market in the UK. The reforms will include a range of measures, such as greater regulatory powers and duties, an operational separation between audit and non-audit arms of different firms, as well as renewed statutory powers for the regulator. The objective of the plan is to give the regulator new powers as the audit market evolves over time and to ensure greater enforcement and security.Audit supervisionMoving forward, there will be much closer monitoring of audit quality, with regular inspections and reviews at least once every three years. This gives regulators the chance to act more effectively when quality issues are identified. In response to recommendations made by the FRC review, the government also plans to offer regulators new powers that will enable them to check auditor’s papers, giving the regulator greater freedom in how it chooses to monitor the quality of audits.The future of the regulatorIn order to strengthen the regulator, the ARGA will replace the financial reporting council, aiming to promote and protect the interests of investors, wider public interest and corporate reporting. The future of the regulator will revolve around having established roles and powers to exercise judgement on business audits. The regulator will also be funded through a statutory levy and the ARGA will be established as a company limited by guarantee. The government believes that ARGA should have broad objectives to remain relevant and flexible as the ARGA carries out its policy-making functions. Overall, there’s a range of proposed objections for the regulator, including quality objective and competition objective.The role of the regulatorThere’s a range of additional changes to the regulator’s role. For example, there are proposals for the regulator to have a more proactive role, which includes assessing any serious issues related to a company’s auditing process. The new responsibilities are all about preventing issues from happening, such as problems with corporate reporting or any concerns relating to the Public Interest Entity’s audit. The role of the regulator is set to change with the new measures being introduced. All of these new measures will help the ARGA achieve the aim of becoming an independent regulator.Speak to a member of the teamMarks Sattin is a specialist recruitment and executive search firm. We have over 30 years’ experience finding professionals their next exciting opportunity and our people are committed to keeping abreast of the latest developments in our key markets. Should you have any questions or wish to discuss further, please feel free to reach out to me.

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The UK government recently published a policy paper, aimed at holding directors at large companies accountable and maximise transparency to ensure the prevention of fraud

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David Clamp

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David Clamp

David Clamp

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David Clamp

Operational Resilience Whitepaper
Operational Resilience Whitepaper

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Governance

Content Type

General

13/05/21

Summary

We recently co-hosted a virtual roundtable on Operational Resilience, in partnership with DCR Partners. The session was attended by business leaders from various industries, and we were able to benefit from a diverse range of perspectives and experiences, both within and outside of financial services.The aim was to discuss approaches organisations are taking to become operationally resilient, sharing lessons learned and how obstacles have been overcome. We have summarised this conversation in an easy to read whitepaper, covering the following:What does Operational Resilience mean to your organisation? Defining important business servicesControlling the scope of business servicesImpact tolerances Download the whitepaper  Should you have any questions or wish to discuss further, please feel free to reach out to me.

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We recently co-hosted a virtual roundtable on Operational Resilience, in partnership with DCR Partners.

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David Clamp

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David Clamp

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David Clamp

Internal Audit Roundtable | H1 2019
Internal Audit Roundtable | H1 2019

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Governance

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General

16/10/19

Summary

We hosted an internal audit roundtable in Leeds, attended by a group of senior professionals in internal audit, risk and compliance, from a wide range of organisations. The aim was to discuss topics that are currently impacting their profession, and share experiences and insights. We have summarised this conversation in an easy to read whitepaper, covering the following: Sustainability - climate change and environmental issues – what’s the reality?Governance - the new Corporate Governance code, internal audit’s role in risk management and auditing cultureIs internal audit creating the right impact? We talk about report writing and responding to new technologiesThe challenges of IT security, cyber risk and GDPR Download our whitepaper to read more on the topics disrupting the internal audit sphere   For more information on specialists markets or if you're looking for a new challenge or an organisation seeking additional expertise please email david.clamp@markssattin.com or call +44 (0)113 242 8177.

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We hosted an internal audit roundtable in Leeds, attended by a group of senior professionals in internal audit, risk and compliance, from a wide range of organisations.

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David Clamp

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David Clamp

David Clamp

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David Clamp

Internal Audit Roundtable | Leeds July 2018
Internal Audit Roundtable | Leeds July 2018

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Governance

Content Type

General

16/10/18

Summary

In July 2018, we hosted an Internal Audit Roundtable at the DoubleTree Hotel in Leeds with senior internal audit, assurance and compliance professionals from a wide range of organisations including Skybet, Portakabin, PwC, Yorkshire Housing and Royal Mail. The attendees discussed the trends that are affecting their profession and shared views, experiences and insights. Topics such as robotics, big data/data analytics, auditing culture and Brexit were areas of interest, with guests noting key questions like: How do you evidence what’s been done when dealing with GDPR?If you were doing random testing, asking if a specific transaction was handled by a human or a bot. Was the output the same?How do you do assurance over robotics and automated processes?Do they really know how to use Excell or just think they do? Download our white paper that expands on this conversation. For more information on specialists markets or if you're looking for a new challenge or an organisation seeking additional expertise please email:David.Clamp@markssattin.com or call +44 (0)113 242 8177.

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In July 2018, we hosted an Internal Audit Roundtable at the DoubleTree Hotel in Leeds with senior internal audit, assurance and compliance professionals from a wide range of organisations including Skybet, Portakabin, PwC, Yorkshire Housing and Royal Mail.

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David Clamp

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David Clamp

David Clamp

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David Clamp

Summary: Senior Managers and Certification Regime Rules 2018/19
Summary: Senior Managers and Certification Regime Rules 2018/19

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Governance

Content Type

General

23/07/18

Summary

Marks Sattin's Compliance and Financial Crime Recruitment Manager, recently put together a summary of the FCA near final Senior Managers & Certification Regime rules published on the 4th July 2018. This extensive document is over 400 pages long and describes the key areas of change to be implemented over the next year and a half, with the deadline being 9 December 2019.  The key areas of change: Senior Managers Regime The Senior Managers functions remain the same for the FCA only (not PRA), with the exception of: • SMF18 (Other Overall Responsibility) • SMF7 (Group Entity Senior Manager) • SMF27 (Partner) The functions have been further clarified in their handbook. Certification Regime The FCA have not made any further amendments to the Significant Harm Functions for the FCA, only authorised firms. “Opt up” to an Enhanced Firm Because of the large number of holding groups who have multiple legal entities and companies, the FCA have introduced a process for them to “opt up” on a voluntary basis to become an Enhanced Firm. Even though individually they do not meet the criteria for being an Enhanced Firm, this change will give them the opportunity to be recognised as one. A new FCA Register Currently the register only contains information on Senior Managers and no information on Certified Persons under the Certification Regime. Download the full summary here.

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A summary of the FCA near final Senior Managers & Certification Regime rules published on the 4th July 2018.

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Nicholas Georgiou

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Nicholas Georgiou

Nicholas Georgiou

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Nicholas Georgiou

What does technology mean for risk and compliance?
What does technology mean for risk and compliance?

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Governance

Content Type

General

30/05/18

Summary

As a sizeable, and growing, portion of the financial services sector - risk and compliance plays a vital role in ensuring that firms conduct business safely, sensibly and in a way that complies with the slew of financial regulations in the market. As one of the top financial sectors in the world, the UK contributed £119bn to the British economy last year (50% of which came from London), and growth shows no sign of stopping anytime soon. British financial firms handle huge amounts of money and sensitive information every day, and having a strong risk and compliance team is essential for those who want to navigate pitfalls smoothly, grow their business and of course avoid sparking another financial crisis. However, the changing market is also ushering in a new wave of regulations, challenges and opportunities for the sector. With huge advances in technology changing the way in which we work, live and do business, more and more organisations are making the switch to the digital economy, employing new platforms, new software and new methods of making and exchanging money faster and more efficiently than ever before. As a result, the industry is having to adapt to doing business with tools that still aren’t fully regulated, but this represents opportunity as much as danger. With new technologies springing to the forefront that could actually make risk and compliance safer than ever before, the industry is in a state of flux. Here are some of the biggest changes on the way: Blockchain Since first being developed in 2008, blockchain has become a hugely popular way for the heavily-regulated banks to transfer currency in a transparent, efficient and reliable way. Currently, each firm keeps its own records of financial transactions on a ledger that it then reports to regulatory authorities; inevitably, this leads to complications and a lack of transparency. Blockchain is revolutionising this, through the very way in which it is constructed. It is an automatic, online ledger where the industry and regulators can both access transaction records, and where all transactions are locked into a ‘link’ which is impossible to tamper with. As a result, regulatory authorities can easily access all of the information they need, creating an inter-operable environment where risk is reduced, as well as the threat of fraud. Though it would require financial institutions to accept a decentralised method of control, blockchain holds great promise as a form of technology that can offer a safer, smarter way of financial innovation, which is also automatically compliant. RegTech The UK is currently somewhat of a RegTech hotbed, thanks to generous investment from the government, and RegTech is helping to pioneer a simpler way for financial companies to remain compliant and low risk. With new changes like MiFID II and GDPR, around 250 regulatory changes take place every day: RegTech companies aim to solve this by creating a simplified system that’s optimised to help firms and institutions comply with all the new regulations being ushered into law. With numerous RegTech firms specialising in different areas of the market, from Tax Management to Financial Services, the software that they create uses machine learning and AI to extensively map the relevant data and offer both banks and FinTech companies solutions that are tailored to them, which will, in turn, enable them to conduct business in a more compliant way. Though it’s currently in the starting blocks, there’s been a surge in demand for talented programmers and developers in this area, and a recent survey by Thomson Reuters Regulatory Intelligence stated that 75% of respondents had a positive view of RegTech, so it will likely become much more popular over the coming years. Making payments The payment revolution has well and truly landed. With apps like ApplePay and Google Wallet making it easy for people to pay with a wave of their smartphone, new developments like fingerprint scanners and voice and facial recognition is paving the way for an upheaval in consumer authentication. It will even make transactions more secure, thanks to the fact that the vendor never receives a customer’s credit card details. Might we soon be able to pay for things with just our fingerprints? These developments are going a long way to tackling credit card fraud, but also raise a whole host of new issues. Cryptocurrencies, mobile payment services and B2B, are all subject to domestic rules and regulations, but due to their rapid spread, many still remain unregulated. Though efforts are being made to tackle this, keeping up with this will likely be a major concern for risk and compliance companies over the coming years. Cybercrime What bigger risk is there to financial firms than cybercrime? 86% of financial services companies across the UK, US and Europe plan to spend more money on it, which is unsurprising, especially given that the financial sector is one of the most affected by it in the economy. With new ways to process money and data have come new ways to steal it, and tackling this surge in online crime is becoming an increasingly important component of any Risk and Compliance team. However, AI and machine learning are already taking steps to tackling this: by using algorithms to detect anomalous patterns and predict outcomes, AI’s self-learning abilities make it a great tool for detecting threats, and businesses across the UK are being encouraged to adopt it to reduce risk to their business. There’s no doubt that technology will become an important part of any risk and compliance team’s arsenal in the next few years: now, the emphasis will be on these teams to update their software to keep pace with the changing market. Get ready for the future with Marks Sattin At Marks Sattin, we take pride in connecting the brightest minds in the financial services industry to the best jobs. Find out more about what we do; or browse our blog for more insights. Alternately, if you feel inspired, why not take the next step in your career with our selection of vacancies in Risk and Compliance?

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As a sizeable, and growing, portion of the financial services sector - risk and compliance plays a vital role in ensuring that firms conduct business safely, sensibly and in a way that complies with the slew of financial regulations in the market.

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Nicholas Georgiou

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Nicholas Georgiou

Nicholas Georgiou

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Nicholas Georgiou

Summary: FCA Business Plan 2018/19
Summary: FCA Business Plan 2018/19

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Governance

Content Type

General

25/04/18

Summary

Marks Sattin's Compliance and Financial Crime Recruitment Manager, David Phan, recently put together a summary of the FCA's Business Plan 2018/19, which identifies the sector priorities and key cross-sector priorities that will be put in place over the next 12 months. This year the FCA have placed an understandable focus on the EU withdrawal, with its progress being watched closely as the industry seeks to advance its own Brexit plans.  This summary covers the following areas set out by the FCA: • EU Withdrawal • Business Plan • Cross Sector Priorities Agendas • Sector Priorities • Key activities at a glance • High-cost credit • Wholesale financial markets • Investment Management • Retail Lending • Retail Banking Please click here to download the full report. For more information on the compliance market - if you're looking for a new challenge or an organisation seeking additional expertise, please email  David.Phan@markssattin.com or call +44 (0)20 7747 9653.

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Nicholas Georgiou

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Nicholas Georgiou

Nicholas Georgiou

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Nicholas Georgiou

Gender Pay Gap - A Financial Services Summary
Gender Pay Gap - A Financial Services Summary

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Governance

Content Type

General

29/03/18

Summary

The UK Government introduced legislation in 2017 as part of their Equality Act 2010 (Specific Duties and Public Authorities) Regulations that any company with more than 250 employees needs to report their gender pay gap by 30 March 2018. Here are some of the results they have reported as a mean average (mean average is taken by adding up all the salaries across the business and dividing this by the number of employees). Barclays Barclays across Barclays International, Barclays UK and Barclays Group have a gender pay gap reporting at 48.5%, 26% and 25.8% respectively. They have been addressing cultural change by implementing programmes such as their Women on Boards Programme and Women in IT Programme. They are also introducing and implementing unconscious bias training which will help address cultural change. Gender diversity targets for female representation: • Female representation on the board of directors to be at 33% by 2020 with 2017 reporting at 21% • Female representation among the group executive committee and their direct reports to be at 33% by 2020 with 2017 reporting at 25% • Female representation among directors and managing directors to reach 26% in 2018 with 2017 reporting at 23% Santander Santander reports a 35.3% mean gender pay gap and are driving new initiatives in response to this. They are introducing the following to bridge the gender pay gap: • 50% target for women in senior roles • Employee based networks such as Women in Business • 50/50 gender split shortlists for middle management and senior positions • Unbiased training • Implementing leadership development programmes for women Deutsche Bank Deutsche Bank report a mean pay gap of 36.1%. To address this they are setting a target of 25% women to be in senior positions by the end of 2018 with their current run rate at 22.5%. They are introducing the following to bridge the gender pay gap: • Accomplished Top Leaders Advanced Strategy (ATLAS) which is a global sponsorship programme helping women progress into senior roles • Acceleration programmes for high-potential female employees at vice president and director levels to develop further skill sets • They currently offer enhanced maternity leave and enhanced shared parental leave. Managers are being trained to deal with these requests PWC PWC report a mean pay gap of 43.8% across all staff. They have piloted and plan to implement the following: • STEM programme which reaches out to the female students in schools and those from deprived backgrounds • Recruitment practices promoting equal take up of graduates • Introducing flexible working and part-time hires • Encouraging male workers to take parental leave - this is currently only at 2% RBS RBS have a 37% mean gender pay gap. They were one of the first to sign the HM Treasury Women in Finance Charter which is a commitment to work with the Treasury to ensure there is equal and fair remuneration across all sexes.  RBS plan to have: • 30% women in senior roles by 2020 • 50% women in senior roles by 2030 In 2017 RBS created a RBS Women Network which incorporated all of their groups: Focused Women, Women in Technology, Coutts Women’s Network, Compass and Business Women Can. This network aims to attract the best female talent to RBS. Deloitte Deloitte currently have a 43% female workforce and report a 18.2% mean gender pay gap across all staff. They explain their pay gap as being a reflection of male dominated director and partner roles with only 18% of partners being female. Deloitte have introduced the following to bridge the gender pay gap: • Ensuring recruitment processes are without bias • A industry leading return to work programme • Sponsorship programmes for senior women • Female manager development programmes • A working parents transition programme KPMG KPMG has a 22.3% mean gender pay gap across all staff.However, 47% of their staff are female. What KPMG are doing to bridge the gap: • Leading from the top with 31% of their ExCo being female and 43% of their board members being female • From January 2018 all senior hires require a 50% female shortlist • Supporting a diverse and inclusive work place such as flexible working and introducing their Empowering Parents Programme EY EY reports a mean gender pay gap of 19.7% across all staff. Similar to their Big Four peer this gap is explained by less females taking up senior positions from director level upwards. EY have introduced the following to bridge the gender pay gap: • Implementing policies making working parents gender neutral • Flexible working practices • Implementing 20 initiative programmes which include CareerWatch and BME leadership programmes HSBC HSBC report a 59% mean gender pay gap across all staff. This figure is relatively high and as a result they are currently addressing the issue with their Group CEO John Flint taking the following actions: • They have signed up to 30% Club Campaign – 30% of women in senior roles • HSBC to request 50% gender diverse shortlists for external hires • Developing female talent to ensure strong female leadership sits in the pipeline • Supporting families, flexibility and retaining female talent by promoting shared parental leave as well as coaching managers HSBC Current statistics: • 54% to 46% male/female ratio across all staff • 77% to 23% male/female ratio across staff between GCB 0-3 (Global Career Band) GCB3 is director level equivalent at other banks with GCB0 being the highest • 33% to 67% male to female ratio for less senior positions from GCB6-GCB8 Lloyds Banking Group Lloyds Banking Group report a 42.7% mean gender pay gap which goes down to 32.8% for Lloyds Bank (when HBOS and C&G are taken out of the equation). LBG have been recognised as a FTSE 100 company that promotes inclusion with dynamic working practices and have set a target of 40% senior roles to be filled by women. The bank has implemented programmes for agile hiring to ensure all shortlists are diverse. The percentage of women in senior positions has risen from 29% in 2013 to 34% in 2017. Download the full PDF here.

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Nicholas Georgiou

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Nicholas Georgiou

Nicholas Georgiou

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Nicholas Georgiou

Financial Services – Internal Audit Roundtable 2017/18
Financial Services – Internal Audit Roundtable 2017/18

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Governance

Content Type

General

09/01/18

Summary

Marks Sattin hosted a roundtable event in 2017 which examined the major issues that will be affecting the internal audit function going into 2018.  The panel included Heads of Internal Audit and senior managers in risk and internal audit from a wide range of financial services organisations. These included the Skipton Building Society, Computershare, Call Credit, Equifax, Provident, Yorkshire Building Society, Mazars and Aviva, as well as representatives from EY.  Attendees talked about GDPR, cyber security, resilience and disaster recovery, recruitment and skills and the status of internal audit across the region. Download our white paper that summarises the conversation. For more information on specialists markets or if you're looking for a new challenge or an organisation seeking additional expertise please email David.Clamp@markssattin.com or call +44 (0)113 242 8177.

Teaser

The panel included Heads of Internal Audit and senior managers in risk and internal audit from a wide range of financial services organisations. These included the Skipton Building Society, Computershare, Call Credit, Equifax, Provident, Yorkshire Building Society, Mazars and Aviva, as well as representatives from EY.

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David Clamp

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