corporate governance in banca d'italia and the role of internal audit
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Corporate Governance in Banca d’Italia and the role
of Internal Audit
L. Micio Director de la Auditoria Interna
Banca d’Italia
Agenda
Corporate Governance (CG)
Definition
Role of Internal Audit
CG in Central Banks
CG in Banca d’Italia
Players, objectives, …
Internal Audit in Banca d’Italia
A Definition of Corporate Governance
The combination of processes and structures
implemented by the Board to inform, direct, manage, and
monitor the activities of the organization towards the
achievement of its objectives (IIA standards - Glossary)
The internal audit is a key player in the corporate governance:
– independent evaluator of the adequacy of governance structure, in terms of design and effectiveness
– assurance & consultancy services (double role)
Role of Internal Audit
• The main asset of a Central Bank: reputation
• Credibility of Central Banks with supervisory task: do what you preach
• Transparency in Central Banks’ action (e.g., IMF Good Practices for monetary policy decisions)
CG in Central Banks: distinguishing features
Corporate governance in Banca d’Italia
The Key Players
• Directorate
• Board of Directors
• Board of Statutory Auditors
• External Auditors
• Shareholders
• Audit Committee
•Internal Auditors
Banca d’Italia operates in a cooperative / competitive
environment* posing constant challenges requiring
• promptness
• flexibility
• high quality
*e.g., the financial crisis, the Eurosystem …
Objectives and Challenges for Banca d’Italia
Banca d’Italia: lines of development
• Strategic planning: from the Board vision to result measurement
• Organizational design inspired to flexibilty and differentiation
• Structural streamlining
• Process optimization
• Availability of information (“what needed, when needed”)
• Social responsibility
• Effective internal and external communication
Being a trustworthy “dashboard” for the Board and a
point of reference for the Audit Committee
The Internal Audit in the Banca d’Italia: CHALLENGES
- consultancy role of IA, as risk and control expert - added value: from risk identification to process
improvement
Internal Audit in Banca d’Italia:
Internal Audit as information hub on risk and controls
– Audit Committee – Secretary functions
– The Statutory Board of Auditors
– Bank’s Committees (strategic, risk, procurement, IT, HR, real estate …)
The way IA plays its role
• Attribute:
• combine specialization and holistic vision
• team working, certification
• Performance (thanks to its methods)
• internal auditors are professional and influential counsellors
• a rigorous common organizational language
Disclosure and
Accountability
Internal Audit
Off-site
Audit Resources
What levers IA uses
Transparent information flow
within the Bank
Entailing?
• Sharing IA’s horizontal vision • Building awareness
DISCLOSURE
Meaning?
• Transparent planning process
• Full and open communication of audit results
Added value: process information provide assurance
Being accountable for your own activity means that facts are
your starting points, and your analyses are logical and rigorous.
“ACCOUNTABILITY is the acknowledgment and assumption of responsibility for
actions, products, decisions, and policies including the administration, governance,
and implementation within the scope of the role or employment position and
encompassing the obligation to report, explain and be answerable for resulting
consequences” [Wikipedia]
ACCOUNTABILITY
Facts, proofs and rigorous analyses are our shields
OFF SITE AUDIT, WHY?
Available resources
Wideness and complexity of the Audit Universe
Audits focused on selected risk areas
Off-site activities to concentrate resources where needed
Being always up-to-date means being capable of changing
your own instruments often to make them more effective and advanced
OFF SITE AUDIT TOOLS
• Control Risk Self-Assessment: spreads awareness
of the relevance of risk management and promotes
the sharing of best practices
• FOLLOW-UP: continuous monitoring of management
action plans to ensure prompt and effective risk
responses
• BUSINESS INTELLIGENCE: processing of data
from multiple sources to extract useful information
• OFF-SITE ANALYSIS: further developments of desk-
review tools
OFF SITE AUDIT, WHY?
Off-site audit implies full synergy between off-site and
on-site analysts
+ Cross fertilization
- Silos approach
+ Synergy
- Static roles
HR DEVELOPMENT
Added value
Great commitment
Rigour and professionalism
Common Values
Think-tank laboratory
20
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