hsbc bank audit report

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INTRODUCTION:-

HSBC in India

HSBC's origins in India date back to 1853, when the Mercantile Bank of India wasestablished in Mumbai. The Bank has since, steadily grown in reach and service offerings,

keeping pace with the evolving banking and financial needs of its customers.

In India, the Bank offers a comprehensive suite of world-class products and services to its

corporate and commercial banking clients as also to a fast growing personal banking

customer base. Since our inception, we have entered new markets and launched innovative

new products to help our clients seize investment opportunities around the world.

The HSBC group was founded in Hong Kong in 1865 to finance trade between the China

coast and Europe and the United States. Since then, the HSBC Group has expanded through

both internal growth and acquisition. Members of the Group include HSBC Private Bank

(UK) Limited (formerly Samuel Montagu & Co Limited), founded in 1853, HSBC Trinkaus

& Burkhardt KG (1785), HSBC Guyerzeller Bank AG (1866), HSBC Bank USA (formerly

Republic National Bank of New York) (1966) and Crédit Commercial de France (CCF,

1894).

HSBC Private Bank (formerly HSBC (Republic) was established on 31 December 1999,

when HSBC acquired Republic New York Corporation and Safra Republic Holdings, parent

companies of Republic National Bank of New York. Founded in 1966 and built on a banking

tradition established during the Ottoman Empire, Republic National Bank of New York

specialized in private banking. Since then, our business has grown substantially, both

organically and through acquisition.

We are currently building a strong onshore business to complement our historical franchise.

The marketing name HSBC Private Bank was adopted on 1 January 2004. The use of the

label 'HSBC Private Bank' refers to HSBC's worldwide principal private banking business,

and is not indicative of any legal entity or relationship.

Our origins



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HSBC's History

The HSBC Group has an international pedigree which is unique. Many of its principal

companies opened for business over a century ago and they have a history rich in variety and

achievement.

Foundation and growth

The HSBC Group is named after its founding member, The Honking and Shanghai Banking

Corporation Limited, which was established in 1865 in Hong Kong and Shanghai to finance

the growing trade between China and Europe.

The inspiration behind the founding of the Bank was Thomas Sutherland, a Scot who was

then working as the Hong Kong Superintendent of the Peninsular and Oriental Steam

Navigation Company. He realized that there was considerable demand for local banking

facilities both in Hong Kong and along the China coast and he helped to establish the Bank in

March 1865. Then, as now, the Bank's headquarters were at 1 Queen's Road Central in Hong

Kong and a branch was opened one month later in Shanghai.

Throughout the late nineteenth and the early twentieth century‟s, the Bank established a

network of agencies and branches based mainly in China and South East Asia but also with

representation in the Indian sub-continent, Japan, Europe and North America. In many of its

branches the Bank was the pioneer of modern banking practices. From the outset, trade

finance was a strong feature of the Bank's business with bullion, exchange and merchant

banking also playing an important part. Additionally, the Bank issued notes in many

countries throughout the Far East.

During the Second World War the Bank was forced to close many branches and its head

office was temporarily moved to London. However, after the war the Bank played a key role

in the reconstruction of the Hong Kong economy and began to further diversify the

geographical spread of the Bank.

The making of the modern HSBC Group

The post-war political and economic changes in the world forced the Bank to analyse its

strategy for continued growth in the 1950s. The Bank diversified both its business and its

geographical spread through acquisitions and alliances. However, it remained committed to

its historical markets and played an important part in the reconstruction of Hong Kong where



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its branch network continued to expand.

In 1959 the bank completed two important purchases, those of The British Bank of the

Middle East (now HSBC Bank Middle East) and the Mercantile Bank. The British Bank of

the Middle East had begun life as the Imperial Bank of Persia in 1889 but throughout the

1940s and 1950s had extended its sphere of operations and pioneered banking in the Gulf

States. The history of Mercantile Bank stretched back to 1853 - the year it was founded in

Bombay (now Mumbai) - and by the 1950s it had a strong identity within Indian and other

Asian markets.

In 1965 the Bank purchased a controlling interest in Hang Seng Bank, which had been

established in Hong Kong in 1933. By the 1970s the policy of expansion by acquisition of

subsidiaries with their own identities and specializations was firmly in place.

During the 1980s the Bank concentrated on moving into those markets where it was not yet

fully represented. Hongkong Bank of Canada (now HSBC Bank Canada) was established in

1981 and Hongkong Bank of Australia (now HSBC Bank Australia Limited) in 1986. In 1987

Marine Midland Bank (now HSBC Bank USA), based in New York State, became a wholly

owned member of the Group and its principal subsidiary in the United States.

HSBC Holdings plc, the parent company of the HSBC Group, was established in 1991 with

its shares quoted on both the London and Hong Kong stock exchanges.

The acquisition in July 1992 of Midland Bank in the United Kingdom created one of the

largest banking and financial services organizations in the world. Midland was founded in

1836 in Birmingham and had grown in the nineteenth and twentieth century‟s through a

series of mergers and amalgamations. In 1974 Midland acquired the London merchant bank

of Samuel Montagu, whose own distinguished history stretches back to 1853. Samuel

Montagu has been integrated into HSBC Investment Bank, as has James Capel, a leading

London-based international securities company, which was acquired by the Group in 1986.

The 1990s have seen further expansion and consolidation of the various businesses of the

HSBC Group. In the United States, a joint venture, the Wells Fargo HSBC Trade Bank was

formed in 1995. Elsewhere in the Americas in 1997, a new subsidiary Banco HSBC

Bamerindus was established in Brazil; the acquisition of the Roberts Group (now called

HSBC Bank Argentina SA) in Argentina was completed, and a 19.9 per cent interest in

Mexico's Group Financiero Serfin was purchased. In 1999, HSBC Holdings plc signed a



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memorandum of understanding with the Government of Korea for the acquisition of a

controlling interest in Seoul Bank, one of the largest commercial banks in South Korea.

The HSBC Group now comprises a unique range of banks and financial service providers

around the globe.

Establishment and early the inspiration behind the founding of the bank was Thomas

Sutherland, a Scot who was then working for the Peninsular and Oriental Steam Navigation

Company. He realized that there was considerable demand for local banking facilities in

Hong Kong and on the China coast, and he helped to establish the bank which opened in

Hong Kong in March 1865 and in Shanghai a month later.

Soon after its formation, the bank began opening branches to expand the services it could

offer customers. Although that network reached as far as Europe and North America, the

emphasis was on building up representation in China and the rest of the Asia-Pacific region.

HSBC was a pioneer of modern banking practices in a number of countries – for instance, in

1888 it was the first bank to be established in Thailand, where it printed the country's first

banknotes.

From the outset trade finance was a strong feature of the local and international business of

the bank, an expertise that has been recognized throughout its history. Bullion, exchange,

merchant banking and note issuing also played an important part. In 1874, the bank handled

China's first public loan and thereafter issued most of China's public loans.

By the end of the century, after a strong period of growth and success under the leadership of

Thomas Jackson (chief manager for most of that period from 1876 to 1902), the bank was the

foremost financial institution in Asia.

Challenges and changes

The 20th century saw challenges and change for HSBC. In the early years of the 20th

century, HSBC widened the scope of its activities in the East. It became increasingly

involved in the issuing of loans to national governments, especially in China, to finance

modernization and internal infrastructure projects such as railway building. The First World

War brought disruption and dislocation to many businesses, but the 1920s saw a return to prosperity in the East as new industries were developed and trade in commodities such as



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rubber and tin soared. The bank's new head office in Hong Kong (1935) and the new

buildings at major branches such as Bangkok (1921), Manila (1922) and Shanghai (1923)

reflected this confidence.

The 1930s ushered in an era of uncertainty with economic recession and political turmoil in

many of the bank's markets. In the Second World War, the majority of the bank's staff in the

East became prisoners of war as the enemy advanced through Asia. The bank survived under

the new leadership of Arthur Morse, and through its prudent policy of building up large

reserves in peace time. At the end of the war, HSBC took on a key role in the reconstruction

of the Hong Kong economy. Its support for the skills of newcomers to Hong Kong was

especially vital to the upsurge in manufacturing in this period.

In other markets, however, HSBC needed to make major readjustments. Most of the mainland

offices in China were closed between 1949 and 1955, leaving only the Shanghai office to

continue its long and eventful service. These changes carried the risk that the bank was over-

concentrating its interests in Hong Kong.

The bank addressed this concern by diversifying through a series of alliances and

acquisitions. The purchases of the Mercantile Bank and the British Bank of the Middle East

in 1959 took HSBC into new pastures, and the formation of a merchant banking arm in 1972extended its range of services. By the 1970s the bank had firmly developed a policy of

expansion by acquisition or formation of subsidiaries with their own identities and expertise.

Making of the modern HSBC

In the later years of the 20th century HSBC moved from an important regional bank to one of

the world's leading financial services organizations. This transition was achieved by a number

of steps.

By the late 1970s HSBC's management had conceived the strategy of the 'three-legged stool'

with the legs of the stool representing the three markets of the Asia-Pacific region, the USA

and the UK. In the 1980s, the purchase of Marine Midland Bank in the USA represented the

acquisition of the second leg of the stool. HSBC then sought a similar purchase in the UK.

The initial target was the Royal Bank of Scotland but after this acquisition failed, attention

turned to Midland Bank and a 14.9 per cent stake was taken in 1987. After creating a new



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holding company, HSBC Holdings plc in 1991, HSBC then made a recommended offer for

full ownership of Midland in July 1992. The third leg was in place. As a result of the

formation of the new holding company and the acquisition of Midland Bank, HSBC became

headquartered in London.

HSBC continued to grow through a number of acquisitions across the globe. In November

1998, HSBC announced the adoption of a unified brand, using HSBC and the hexagon

symbol everywhere it operated, with the aim of enhancing recognition of HSBC by

customers, shareholders and staff throughout the world.

In the 21st century, HSBC has renewed its focus on its birthplace, growing its business in

China both organically and through a series of strategic partnerships. HSBC's diversification

and its core values of financial strength and stability have stood it in good stead in the recent

global turbulence in economies and markets, and it remains well placed to deal with an

uncertain world.

HSBC Group entities in India

The Hong Kong and Shanghai Banking Corporation Limited (HSBC)

HSBC Asset Management (India) Private Limited

HSBC Global Resourcing / HSBC Electronic Data Processing (India) Private Limited

HSBC Insurance Brokers (India) Private Limited

HSBC Operations and Processing Enterprise (India) Private Limited

HSBC Private Equity Management (Mauritius) Limited

HSBC Professional Services (India) Private Limited

HSBC Securities and Capital Markets (India) Private Limited

HSBC Software Development (India) Private Limited

HSBC Invest Direct (India) Limited

HSBC Group Entities in India

1. Commercial Banking

The Hong Kong and Shanghai Banking Corporation Limited (HSBC)

(i) Personal Banking:-

http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc#commercial

http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc#asset

http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc#global

http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc#insurance

http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc#data

http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc#private

http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc#audit

http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc#investment

http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc#software

http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc#hidl

http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc#hidl

http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc#software

http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc#investment

http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc#audit

http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc#private

http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc#data

http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc#insurance

http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc#global

http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc#asset

http://www.hsbc.co.in/1/2/miscellaneous/about-hsbc#commercial



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HSBC offers a wide range of retail banking and wealth management services, including

personal lending and deposit products, through its branch network in Ahmadabad, Bangalore,

Chennai, Chandigarh, Coimbatore, Gurgaon, Hyderabad, Jaipur, Kochi, Kolkata, Ludhiana,

Mumbai, New Delhi, Noida, Pune, Thane, Trivandrum and Visakhapatnam. Also offered

branch-wide are international Gold and Classic credit cards from VISA and MasterCard and

debit cards from Visa. Customers have access to 24-hour banking services through an

extensive network of automated teller machines (ATMs), an integrated Call Centre, and

internet banking -online@hsbc .

(ii) Non Resident Indian Banking

HSBC's Non Resident Indian Banking (NRI) centres located in Asia-Pacific, the Middle East,

Europe and North America, together with HSBC's offices worldwide, provide the

international Indian Diaspora access to a range of products and services. These include NRI

related investment (both international and domestic), transactional and deposit products,

together with a full range of personal and private banking products in India and overseas.

Internet banking also provides easy access to HSBC's services.

(iii) Financial Planning Services

Services include investment and custodian management and access to stock broking and

insurance services, which are offered to resident as well as non-resident Indians.

(iv) Corporate Banking

HSBC has well-established, long-term corporate banking relationships with large domestic

Indian corporations and foreign multinationals operating in India. Services include term and

working capital finance, trade facilities, corporate deposits, syndications, payments and cash

management services and factoring.

(v) Business Banking

HSBC's Extra Mile Business Banking offers two types of account to small and medium-sized

businesses - The Business Account and the Business Vantage Account. Services include

Business Phone Banking, Business Doorstep Banking and Multi Branch Business Banking.



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(vi) Payments and Cash Management

HSBC provides integrated domestic and regional transaction support to corporate clients

through a sophisticated range of cash management solutions, including collection and

payment services and integration with customer back-end systems. Operations and client

services are ISO 9001 certified. Hexagon, the HSBC Group's dedicated electronic banking

service allows users to perform financial transactions, obtain international financial markets

information, and review details of their domestic and international accounts, from anywhere

in the world, 24 hours a day.

(vii) Trade (international and domestic) and Factoring Services

A wide range of solutions tailored to meet customer's requirements for both domestic and

international businesses is offered. HSBC is also one of the leading banks involved in the

bullion business through its offices in Ahmadabad, Bangalore, Chennai, Hyderabad, Kolkata,

New Delhi and is supported by the Group's global expertise in the precious metal business.

HSBC is the leading provider of trade services in India and its trade centres are ISO 9002

certified.

(viii) Institutional Banking

Working closely with Group offices in India and overseas, trade services, payments and cash

management, treasury and capital markets, custody and clearing, and correspondent and

electronic banking activities are offered to banks, financial institutions, securities houses,

insurance companies, asset management companies and other non-banking companies, non-

government and development organizations operating in India.

(viii)Treasury and Capital Markets

Clients consistently rate HSBC's Treasury business as one of the best in India. Its dealingroom in Mumbai is one of the largest in the country, serving clients in Mumbai and in the

major metropolitan centers across the country. It provides a comprehensive range of products

which include - foreign exchange, money market and fixed income products and derivatives

in both rupees and major currencies.

(xi) Custody and Clearing

The leading custodian in Asia, HSBC's custody and clearing services are available in 28

markets in Asia-Pacific and the Middle East. With experienced staff and the latest



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technology, HSBC is the premier provider of sub-custodian and clearing services to foreign

institutional investors (FIIs) in India. HSBC clients include the domestic fund management

sector in both the retail and institutional segments. Institutional Fund Services launched by

the bank offers a comprehensive suite of products to domestic mutual funds and insurance

companies ranging from custody, fund administration services, unit distribution and Cash

Management Services.

2. Technology

The HSBC Group develops and applies advanced technology to the efficient and convenient

delivery of banking and related financial services. In India, the Group provides:

Self-Service Banking with over 150 in-branch and off-branch ATMs and 24-hour

Phone Banking.

Trade and Corporate Banking services with real-time access to a centralised

information database

Instantaneous inter-city transactions through online connections between all branches

A state-of-the-art treasury dealing system

A sophisticated card system supporting debit and credit cards, domestic and

international VISA, MasterCard, and co-branded cards

A dedicated acquiring system for both MasterCard and Visa transactions

online@hsbc, HSBC's internet banking service, provides customers with an integrated

and secure platform to access their accounts.

Internet Payment Gateway handles credit card transactions on the internet

3. Asset Management

HSBC Asset Management (India) Private Limited provides a comprehensive range of

investment management solutions to a diverse client base and is committed for aiming to

deliver consistent investment performance, world-class service and a broad range of solutions

for all types of investors. Our range of offerings in India comes under two broad

categories Mutual Fund and Portfolio Management Services.



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4. HSBC Global Resourcing

HSBC Global Resourcing is the largest, captive, banking and financial services off shoring

organization in the world. A vital part of the HSBC Group's global strategy, Global

Resourcing plays a key role in delivering shareholder value and seamlessly integrates and

helps the Group remain competitive in the ever changing world of banking and finance.

Global Resourcing is present in India as HSBC Electronic Data Processing India Pvt. Ltd.,

and operates out of 7 Group Service Centres (GSC) in Hyderabad, Bangalore, Kolkata, and

Vishakhapatnam.

5. Insurance

HSBC Insurance Brokers (India) Private Limited is licensed by the Insurance Regulatory

Development Authority (IRDA) to operate as a composite insurance broking company, which

will function as a direct and a reinsurance broker.

6. Data Processing

HSBC Operations and Processing Enterprise (India) Private Limited, through two

centres in Mumbai and Chennai, provides operational processing services for HSBC offices

in India.

7. Private Equity

HSBC Private Equity Management (Mauritius) Limited a subsidiary of HSBC Private

Equity (Asia) Limited in Hong Kong, has a Liaison Office in Mumbai. The company

specializes in the provision of equity capital to unlisted growth companies in India and Sri

Lanka.

8. Audit Service

HSBC Professional Services (India) Private Limited provides internal audit services to the

HSBC Group's internal audit units worldwide, with particular emphasis on the IT, Treasury,

Asset Management, Private Banking and Insurance functions.



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Investment Banking

HSBC Securities and Capital Markets (India) Private Limited has two main business

lines. It‟s Institutional and proprietary broking business is based in Mumbai and, has seats

on two of India's premier stock exchanges, the Bombay Stock Exchange and the National

Stock Exchange. It deals in Indian securities for both Indian and international institutions

and for select retail clients and is backed by an extensive research team. The Corporate

Finance and Advisory business, with offices in Mumbai and New Delhi, offers a full

range of integrated investment banking services in India and internationally.

Software Development

HSBC Software Development (India) Private Limited has established a software centre in

Pune to develop solutions for HSBC's Group offices worldwide.

HSBC Invest Direct (India) Limited

HSBC Invest Direct (India) Limited (HIDL) with its headquarters in Mumbai, has a pan-

India presence and through its subsidiaries, offers a range of products & web based services

that include Stock Broking Services, Investment Advisory, Distribution of Financial productsand Securities related financing (NBFC), to individuals and corporate.

WHAT IS AN AUDIT?

An audit is the process of checking that the way an organization presents information about

its financial position (its „Financial Statement of Accounts‟) is true and fair. In essence, „true

and fair‟ means that, in the auditor‟s opinion, the company‟s financial statements offer a true

and fair view of its actual financial position, and that any assumptions they include are

reasonable.

That is not to say that an audit is designed to spot deliberate dishonesty, though it has been

known. Carrying out an audit is a complex and involved process which is most likely to

reveal oversights, accounting errors and over-optimistic predictions. Few unearth serious

issues such as fraud.



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A good way to visualize what an audit is all about is to imagine it as a far longer, more

complex, more challenging and more skeptical version of a cross-examination of „the

numbers‟ on Dragon‟s Den. An audit is also about gathering the evidence required to work

out whether an organization‟s claims about profit, for instance, are true and fair.

Once the audit process is complete, an organization can publish a set of „audited accounts‟ –

essentially a detailed description of its financial position which has been verified by its

auditors.

The auditor will write an Auditor‟s Report, which essentially sets out an opinion on the truth

and fairness of the audited organization‟s financial statement of accounts, based on the

evidence gathered during the audit process.

THE AUDIT PROCESS

ICAEW .Finally, the government‟s accounts are also audited annually, with this work carried

out by the National Audit Office.

Who carries out an audit?

Audits must be carried out by a person or, more commonly, a team of people deemed to be

competent, independent and unbiased. In most cases, the organization undergoing an audit

will pay a public accounting firm to carry out the audit process. However, the accounting

firm must possess a Licence to Audit and be registered with one of the UK‟s „Recognized

Supervisory Bodies‟.

How is an audit carried out?

Exactly how an audit is carried out will depend on the nature of the organization being

audited. However, most auditors follow a broadly similar process, working closely with their

clients‟ senior management and guided by a set of „International Standards‟ – essentially

these are designed to ensure that audits are carried out in the same way the world over, whilst

allowing auditors to follow rules and regulations set out by individual countries.

http://www.icaew.com/index.cfm/route/167097/icaew_ga/Members/Support/Helpsheets_and_FAQs/Practice_helpsheets/Accountants_and_auditors_reports_When_do_they_require_a_registered_auditor_PAS1_HS21/pdf

http://www.icaew.com/index.cfm/route/167097/icaew_ga/Members/Support/Helpsheets_and_FAQs/Practice_helpsheets/Accountants_and_auditors_reports_When_do_they_require_a_registered_auditor_PAS1_HS21/pdf



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In general terms, an audit will cover:

Planning and risk assessment: This is a process of getting to know the organization being

audited as well as any issues that commonly affect similar organizations when it comes to

financial reporting. The auditor will also use this process to identify any areas that may need

special attention.

Internal controls testing: This aspect of audit has become a lot more important in recent

years. It is about working out whether the control systems in use are sufficiently robust and

reliable, and whether they comply with any regulations the organization is subject to. The

results of this work will determine how the rest of the audit process is carried out

Substantive procedures: This is the process of gathering the evidence needed in order to

assess whether an organization‟s claims about its financial position are fair and accurate. The

strength of the organization‟s internal controls will go a long way to determining how

detailed this process is. Broadly, there are two substantive procedures:

Substantive Analytical Procedures: This process is used if internal controls are deemed to be

reliable and robust and is essentially the comparison of sets of financial information to see if

the accounts 'make sense' when viewed from different perspectives

Substantive Tests of Detail: If internal controls are deemed to be weak, absent, or have not

been tested, then a „test of detail‟ approach will be taken. In essence, this is a process

of selecting a sample of items from the organization‟s accounts, then finding hard evidence

(e.g. invoices, bank statements) to check that they have been properly accounted for.

Finalization: With all this assessment work carried out, the auditor will use the information

gathered to write a final report – which is an independent opinion of the organization‟s

financial position. The auditor will also prepare a letter or report for the organization‟s

management, setting out any important issues that came to light whilst the audit was being

carried out

What powers do auditors have?

It is important to understand that auditors are not the „finance police‟. They are not in a

position to dictate how an organization should go about its business or directly punish

organizations that engage in risky, underhand or deceitful activities.



pg. 14

In essence, the auditor‟s power lies in the fact that their opinion on a organization‟s financial

position is seen as important by the organization itself and by anyone with an interest in the

health of the organization – shareholders, suppliers, customers, tax authorities to name just a

few. This opinion is trusted enough to affect the decisions these groups make about their

own dealings with the organization.

In addition, the fact that audited accounts and an auditor‟s report are important tools for these

groups encourages organizations to „self -regulate‟ – shying away from dubious accounting

practices because “We‟d never get it past the auditor.”

HOW IS AUDITED REGULATED?

The audit profession is very closely monitored and tightly regulated according to stringent

professional standards and legislation. Any breach of these rules can have severe

consequences for the individual or firm involved.

Three main groups are responsible for regulating and overseeing the way audits are carried

out:

The government, through legislation such as the Companies (Audit, Inspection and

Community Enterprise) Act 2004, Companies Act 2006 and the Statutory Auditors and ThirdCountry Auditors Regulations 2007, sets out the law and decides who should oversee the

work of auditors

The Financial Reporting Council (an independent body given powers to watch over the audit

profession by the government) works closely with accountancy organizations such as the

ICAEW to oversee their regulation of auditors, and independently assesses the quality of

audits carried out on behalf particularly large or important organizations

Professional bodies such as the ICAEW are responsible for supervising the activities and

performance of their members and ensuring that the professional qualifications they operate

cover all the latest rules, regulations, approaches and techniques.



pg. 15

The internal audit function in banks - final document

June 2012

The Basel Committee on Banking Supervision is issuing this revised supervisory guidance

for assessing the effectiveness of the internal audit function in banks, which forms part of the

Committee's ongoing efforts to address bank supervisory issues and enhance supervision

through guidance that encourages sound practices within banks. The document replaces the

2001 document internal audit in banks and the supervisor's relationship with auditors. It takes

into account developments in supervisory practices and in banking organizations and

incorporates lessons drawn from the recent financial crisis.

The document builds on the Committee's Principles for Enhancing Corporate

Governance which require banks to have an internal audit function with sufficient authority,

stature, independence, resources and access to the board of directors. Independent, competent

and qualified internal auditors are central to sound corporate governance.

The document is based on 20 principles, organized in three sections: A) Supervisory

expectations relevant to the internal audit function, B) The relationship of the supervisory

authority with the internal audit function, and C) Supervisory assessment of the internal audit

function. This approach seeks to promote a strong internal audit function within banking

organizations. It also encourages bank internal auditors to comply with and to contribute to

the development of national and international professional standards and it promotes due

consideration of prudential issues in the development of internal audit standards and

practices. An annex to the consultative document details responsibilities of a bank's audit

committee.

What is bank audit and its process for statutory auditors?

He Reserve Bank of India has tightened the norms for selection of central statutory auditors

for the public sector banks and financial institutions.

The selection process has been linked to appraisal system to be made on the basis of selected

parameters such as longer association of members with the firm, qualification of overall

employees and experience of bank audit.

On the other hand, the allotment of auditors to the banks is pegged to the asset size of the

banks. In the process, the total number of auditors to be selected for PSU banks and FIs has been trimmed to 146 from 181 earlier.

http://www.bis.org/publ/bcbs84.htm








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This has resulted in discontentment among the auditors, who feel that the norms are far too

stringent for new firms to compete.

As per the new norms, banks with an asset size of Rs 50,000 crore (Rs 500 billion) will have

four auditors, followed by five auditors for banks with an asset base of Rs 50,000-1 lakh

crore and six for an asset size exceeding Rs 1 lakh crore.

Earlier, State Bank of India had 14 auditors, RBI had four auditors, and IDBI Bank and UTI

Bank had two auditors each. Every PSU bank had six auditors.

In a bid to encourage new firms, the RBI has decided to fill in 20 per cent of the total

vacancies with new firms as against 10 per cent earlier.

Independent Auditor’s Report to the Member of HSBC Bank

94 We have audited the group and parent company financial statements of HSBC Bank plc

(„the bank‟) for the year ended 31

December 2012 set out on pages 95 to 208. The financial reporting framework that has been

applied in their preparation is applicable law and International Financial Reporting Standards

(IFRSs) as adopted by the EU and, as regards the parent company financial statements, as

applied in accordance with the provisions of the Companies Act 2006.

This report is made solely to the bank's member, as a body, in accordance with Chapter 3 of

Part 16 of the Companies Act 2006. Our audit work has been undertaken so that we might

state to the bank's member those matters we are required to state to them in an auditors' report

and for no other purpose. To the fullest extent permitted by law, we do not accept or assume

responsibility to anyone other than the bank and the bank's member, as a body, for our audit

work, for this report, or for the opinions we have formed.

Respective responsibilities of directors and auditor

As explained more fully in the Directors' Responsibilities Statement set out on page 93, the

directors are responsible for the preparation of the financial statements and for being satisfied

that they give a true and fair view. Our responsibility is to audit, and express an opinion on,

the financial statements in accordance with applicable law and International Standards on

Auditing (UK and Ireland). Those standards require us to comply with the Auditing Practices

Board's (APB's) Ethical Standards for Auditors.



pg. 17

Scope of the audit of the financial statements

A description of the scope of an audit of financial statements is provided on the Financial

Reporting Council‟s website at www.frc.org.uk/auditscopeukprivate.

Opinion on financial statements In our opinion:

parent company's affairs as at 31 December 2012 and of the group's profit for the year then

ended;

adopted by the EU;

IFRSs as adopted by the EU And as applied in accordance with the provisions of the

Companies Act 2006; and

Companies Act 2006 and, as Regards the group financial statements, Article 4 of the IAS

Regulation. Opinion on other matter prescribed by the Companies Act 2006 In our opinion

the information given in the Directors' Report for the financial year for which the financial

statements are Prepared is consistent with the financial statements. Matters on which we are

required to report by exception we have nothing to report in respect of the following matters

where the Companies Act 2006 requires us to report to you

If, in Auditor opinion:

adequate for our audit have not been received from branches not visited by us; or the parent

company financial statements are not in agreement with the accounting records and returns;

or Certain disclosures of directors' remuneration specified by law are not made; or we have

not received all the information and explanations we require for our audit.

The following statement, which should be read in conjunction with the Auditor ‟s statement of

their responsibilities set out in their report on the next page, is made with a view to

distinguishing for shareholders the respective responsibilities of the Directors and of the

Auditor in relation to the financial statements.



pg. 18

The Directors are responsible for preparing the Annual Report, the consolidated financial

statements of HSBC Bank plc and its subsidiaries (the „group‟) and parent company financial

statements for HSBC Bank plc (the „bank‟) in accordance with applicable laws and

regulations.

Company law requires the Directors to prepare group and parent company financial

statements for each financial year. The Directors are required to prepare the group financial

statements in accordance with IFRSs as adopted by the EU and have elected to prepare the

bank financial statements on the same basis.

Under company law the Directors must not approve the financial statements unless they are

satisfied that they give a true and fair view of the state of affairs of the group and parent

company and of their profit or loss for that period. In preparing each of the group and parent

company financial statements, the Directors are required to:

that are reasonable and prudent; and

The Directors are required to prepare the financial statements on the going concern basis

unless it is not appropriate. Since the Directors are satisfied that the group has the resources

to continue in business for the foreseeable future, the

Financial statements continue to be prepared on a going concern basis.

The Directors have responsibility for ensuring that sufficient accounting records are kept that

disclose with reasonable accuracy at any time the financial position of the bank and enable

them to ensure that its financial statements

Comply with the Companies Act 2006.

The Directors have general responsibility for taking such steps as are reasonably open to

them to safeguard the assets of the group and to prevent and detect fraud and other

irregularities.

The Directors have responsibility for the maintenance and integrity of the Annual Report and

Accounts as they appear on the bank‟s website. Legislation in the UK governing the



pg. 19

preparation and dissemination of financial statements may differ from legislation in other

jurisdictions.

The Directors, the names of whom are set out in the „Report of Directors: Governance‟

section on page 85 of this Annual Report, confirm to the best of their knowledge:

consolidated financial statements, which have been prepared in accordance with IFRSs as

issued by the IASB and as adopted by the EU, have been prepared in accordance with the

applicable set of accounting standards and give a true and fair view of the assets, liabilities,

financial position and profit or loss of the bank and the undertakings included in the

consolidation taken as a whole; and that the group faces.

he management report represented by the Report of the Directors has been prepared in

accordance with rule 4.1.12(3) (b) of the Disclosure and Transparency Rules, and includes a

fair review of the development and performance of the business and the position of the bank

and the undertakings included in the consolidation as a whole, together with a description of

the principal risks and uncertainties.

Auditor's Report (HSBC Invest Direct (India))

Auditor have audited the attached balance sheet of HSBC Invest Direct (India) Limited (formerly IL&FS

Invest mart Limited) (the Company) as at 31March 2010, and the profit and loss account and the cash

flow statement for the year ended on that date annexed thereto. These financial statements are the

responsibility of the Companies management Our responsibility is to express an opinion on these

financial statements based on our audit.

We conducted our audit in accordance with auditing standards generally accepted in India. Thosestandards require that we plan and perform the audit to obtain reasonable assurance about whether the

financial statements are free of material misstatement. An audit includes examining, on a test basis,

evidence supporting the amounts and disclosures in the financial statements. An audit also includes

assessing the accounting principles used and significant estimates made by management, as well as

evaluating the overall financial statement presentation. We believe that our audit provides a reasonable

basis for our opinion.

As required by the Companies (Auditors Report) Order, 2003 and amendments thereto (together referred



pg. 20

to as the Order) issued by the Central Government of India in terms of sub-section (4A) of section 227 of

the Companies Act, 1956, (the Act) we enclose in the Annexure, a statement on the matters specified in

paragraphs 4 and 5 of the said Order.

Without qualifying our opinion, we draw attention to Note I of Schedule L to the financial statements.

Reserve Bank of India (RBI) has conveyed to the Company that it is carrying on Non Banking Financial

Institution business without obtaining Certificate of Registration (CoR) under section 45-IA of Reserve

Bank of India Act, 1934. The Company has made an application for registration as Non Banking

Financial Company (NBFC) to RBI and approval is yet to be received. Pending receipt of CoR, RBI

guidelines applicable to NBFCs including prudential norms, disclosures in financial statements etc. are

presently not fully considered.

Further to our comments in the Annexure referred to above, Auditor report that:

(l) Auditor have obtained all the information and explanations, which to the best of our knowledge and

belief were necessary for the purposes of the audit

(ii) in Auditor opinion, proper books of account as required by law have been kept by the Company so

far as appears from our examination of those books

(iii) the balance sheet, profit and loss account and cash flow statement dealt with by this report are magreement with the books of account

(iv) in Auditor opinion, the balance sheet, profit and loss account and cash flow statement dealt with by

this report comply with the accounting standards referred to in sub-section (3C) of section 211 of the Act

(v) on the basis of written representations received from the Directors, as on 31 March 2010, and taken

on record by the Board of Directors, we report that none of the Directors are disqualified as on 31 March

2010 from being appointed as a Director in terms of clause (g)of sub-section (1) of section 274 of Act;

(vi) in Auditor opinion and to the best of our information and according to the explanations given to us,

they said financial statements together with the notes thereon, give the information required by the Act, in

the manner so required and give a true and fair view in conformity with the accounting principles

generally accepted in India

(a) in the case of the balance sheet, of the state of affairs of the Company as at 31 March 2010

(b) in the case of the profit and loss account, of the loss for the year ended on that date and



pg. 21

(c) In the case of the cash flow statement, of the cash flows for the year ended on that date. Annexure to

Auditors Report - 31 March 2010 (Referred to in our report of even date)

(i) (A) The Company has maintained proper records showing full particulars, including quantitative

details and situation of fixed assets.

(b) The Company has a regular programme of physical verification of its fixed assets by which all fixed

assets are verified in a phased manner over a period of two years. In our opinion, this periodicity of

physical verification is reasonable having regard to the size of the Company and the nature of its assets.

No material discrepancies were noticed on such verification.

(c) Fixed assets disposed of during the year were not substantial, and therefore, do not affect the going

concern assumption.

(ii) (a) The Company has, on a periodic basis, conducted a verification of equity shares, mutual funds,

treasury bills and other securities held as stock in trade on the basis of actual verification or statement

received from its Depository Participant unit. In our opinion, the frequency of this verification is

reasonable.

(b) The procedures for the physical verification of stock in trade followed by the management are

reasonable and adequate in relation to the size of the Company and the nature of its business.

(c) The Company is maintaining proper records of stock in trade. There were no material discrepancies

noticed on verification between the dematerialized inventory records and the book records.

(iii) (a) The Company has granted loans to two companies covered in the register maintained under

section 301 of the Companies Act, 1956. The maximum amount outstanding during the year was Rs.

1,470.50 million and the yearend balance of such loans was Rs. 1,422.40 million.

(b) In Auditor opinion, the rate of interest and other terms and conditions on which loans have been

granted to companies, firms or other parties listed in the register maintained under section 301 of the

Companies Act, 1956 are not, prima facie, prejudicial to the interest of the Company.

(c) The borrowers have been regular in repaying the principal amounts as stipulated and m the payment

of interest.

(d) There is no overdue amount of more than rupees one lakh in respect of loans granted to any of the

companies listed in the register maintained under section 301.



pg. 22

(e) The Company has not taken any loans, secured or unsecured, from companies, firms or other parties

covered in the register maintained under section 301 of the Companies Act, 1956. Accordingly,

paragraphs 4(iii)(f) and 4(iii)(g) of the Order are not applicable to the Company.

(iv) In Auditor opinion and according to the information and explanations given to us, there is an

adequate internal control system commensurate with the size of the Company and the nature of its

business with regard to purchase of stock in trade and fixed assets and with regard to the sale of services.

We have not observed any major weakness in the internal control system dunng the course of the audit.

(v) (a) In Auditor opinion and according to the information and explanations given to us, the particulars

of contracts or arrangements referred to in section 301 of the Companies Act, 1956 have been entered in

the register required to be maintained under that section.

(b) In Auditor opinion, and according to the information and explanations given to us, the transactions

made in pursuance of contracts and arrangements referred to in (a) above and exceeding the value of Rs 5

lakh with any party during the year have been made at prices which are reasonable having regard to the

prevailing market prices at the relevant time.

(vi) The Company has not accepted any deposits from the public under the provisions of Section 58A

and 58AA of the Companies Act, 1956 and the rules framed there under.

(vii) In Auditor opinion, the Company has an internal audit system commensurate with the size and

nature of its business.

(viii) The Central Government has not prescribed the maintenance of cost records under section 209(l)(d)

of the Companies Act, 1956 for any of the services rendered by the Company.

(ix) (a) According to the information and explanations given to us and on the basis of our examination of

the records of the Company, amounts deducted/accrued in the books of account in respect of undisputed

statutory dues including Provident Fund, Employees State Insurance, Income-tax, Service tax, Cess and

other material statutory dues have been regularly deposited during the year by the Company with the

appropriate authorities. As explained to us, the Company did not have any dues on account of Investor

Education and Protection Fund.

There were no dues on account of Cess under section 441A of the Act since the date from which the

aforesaid section comes into force has not yet been notified by the Central Government.

According to the information and explanations given to us, no undisputed amounts payable in respect of



pg. 23

IMPORTANT ASPECTS

Financial considerations following bereavement

Assessing your own financial affairs after the death of a loved one

Turning to the future

When someone close to you dies, it can focus your mind on your own financial affairs, or

change your situation so significantly that you need to update your plans. As you begin to

come to terms with bereavement and start to think about the future, you may wish to consider

the following issues.

Making a will

Dealing with the affairs of a loved one who has died emphasizes how important it is for

family and friends that there is a valid will. If you have not already made your own will, you

may decide now is the time to do so. Or you may need to update an existing will, particularly

if you have lost a partner or child. For more guidance, you can contact your solicitor or a

special will writing service.

Dealing with the affairs of a loved one who has died emphasizes how important it is for

family and friends that there is a valid will

Reducing the effect of inheritance tax

Inheritance tax means the tax authorities can take a big slice of your estate when you die,

unless you have planned carefully. Inheritance tax is due on estates valued above £325,000,

at a rate of 40% on the amount over this threshold. To find out more about Inheritance tax,

visit HM Revenue and Customs.

Will your pension be enough?

If you have lost your partner, you may wish to review your personal pension arrangements to

check whether your retirement plans are still viable, or whether you need to increase your

contributions. You can do this by consulting your pension provider.

Provident Fund, Employees State Insurance, Income tax, Service tax, Cess and other material statutory

dues were in arrears as at March 31, 2010 for a period of more than six months from the date they became

payable.

Year End : Mar '12

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pg. 24

Protecting what's important

It's a good idea to check your insurance policies to make sure they are right for your new

circumstances. If you had life cover jointly with your deceased spouse or civil partner, talk to

your provider about adjusting the cover, or shop around for a new policy.

If the death has left you as the main breadwinner, you may also decide to take out extra

insurance such as critical illness cover or income protection cover. These products help

provide financial peace of mind if you are unable to work due to illness or injury.

You may be entitled to bereavement benefits

If the death of a partner means you have lost your main household income, you may be

entitled to financial help from the state. In England and Wales, bereavement benefits are paid

by the Department for Work and Pensions to widows and widowers or to a surviving civil

partner.

Bereavement benefits that you may be entitled to include:

Bereavement Payment – a one-off lump sum you claim when your spouse or civil partner

dies

Widowed Parent's Allowance – if you have dependent children

Bereavement Allowance – if you don't have dependent children

Find out more at the Government website or read the Department for Work and Pensions

guide Support after a death, practical help when someone dies. You can download this

at www.dwp.gov.uk or get a copy from your local register office or Job centre Plus.

Coping with debt

When someone dies with debts, it can create enormous pressure on those left behind.

Any outstanding debts, such as loans, will have to be paid off using the money in the estate.

Unless the person who died had credit card repayment protection insurance, any outstanding

balance on credit cards must also be paid.

If paying off the debts of a deceased relative has left you with money worries, talk to your

bank for advice and support. You can also get help from a Citizens Advice Bureau - search

for your local branch.

Where to get more information Check if you qualify for advice

If you have £50,000 or more in savings and investments, you may be eligible for HSBC

Premier Financial Advice.

If you don't qualify for HSBC Premier Financial Advice or if you'd rather not pay for advice,

see other ways.

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pg. 25

Eligibility requirements

HSBC Premier Financial Advice is available to UK residents who have £50,000 or more in

Savings and Investments and who are at least 18 years old at the time of the initial

consultation.

You'll also need to have an HSBC Current Account or Savings Account for us to be able to

deduct your fee. We can accept payment from a first direct Current or Savings Account too.

To find out more:

See our HSBC Premier Financial Advice

Call us on 0800 328 1298 to book an initial no-obligation consultation with an adviser. Lines

are open Monday to Friday 8am to 9pm and 9:30am to 7pm on Saturday. (Text

phone: 18001 0800 028 0126).

If you don‟t qualify for HSBC Premier Financial Advice, or if you‟d prefer not to pay for

advice, see other ways we can help.

If you are not a UK resident, see our HSBC Expat service.

HSBC will writing service – our experienced team of advisers can help you write your will.

We also provide professional and impartial executorships services.

The value of your pension can fall as well as rise and you may not get back the amount you

invested. Pension‟s contributions are normally tied up until you take your retirement benefits.

Special Audit

A special review entails a comprehensive and objective examination of the business

underlying the numbers. It assists management to identify and focus on key areas and issues

and provides insights and comfort to them as well as to outside interests. We provide services

on specific audit assignments like cost audits, fraud investigations, investment audits,

compliance audits, salary audits, certification of sales and other special assignments

necessary to provide assurance to management and interested parties.

RBI to conduct special audit

The Reserve Bank of India (RBI) has appointed two audit firms for conducting a special audit

of Bank of Rajasthan following detection of some irregularities. Deloitte & Touché

Consulting India will conduct a special IS audit of the bank while Deloitte, Haskins & Sells

will conduct a special audit of the books and accounts of the bank under section 30(1B) of the

Banking Regulation Act, 1949, BoR said on Monday.

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http://financialplanning.hsbc.co.uk/events/ways-we-can-help



http://www.expat.hsbc.com/1/2/hsbc-expat/wealth-management/investment-options



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pg. 26

On February 25, the Reserve Bank of India had imposed a monetary penalty of Rs 25 lakh on

Bank of Rajasthan private sector bank for major lapses. The penalty was levied for violation

of the RBI's directions issued under Section 35A of the Banking Regulation Act, 1949 in the

area of acquisition of immovable properties, deletion of records in the bank's IT systems,

non-adherence to know your customer/anti money laundering guidelines in the opening and

conduct of certain accounts, irregularities in the conduct of accounts of a corporate group and

failure to provide certain documents sought by the RBI and misrepresenting that such

documents were not available, the RBI had said earlier.

The penalty was imposed on the bank in exercise of powers vested in it under the provisions

of Section 47A (1)(b) of the Banking Regulation Act, 1949, the RBI said. The RBI had issued

a show-cause notice to the bank, in response to which the bank submitted a written reply.

"Based on the reply, the Reserve Bank came to the conclusion that the violation was

substantiated and warranted imposition of penalty. Accordingly, it penalized the bank," the

central bank said.

Promoted by Praveen Kumar Tayal, Bank of Rajasthan has been reducing the private stake in

a phased manner. Tayal's stake was lowered from 44 per cent to 28.6 per cent in the last two

years.

The bank was taken over by the Tayals after a bitter battle with the Calcutta-based Bangurs.

BoR made a loss of Rs 44.70 crore during the quarter ended December 2009 as against a

profit of Rs 49.21 crore in the same period of last year.

TYPE OF INSTRUMENT

1] Financial Instruments

Equities

Equities are a type of security that represents the ownership in a company. Equities are traded

(bought and sold) in stock markets. Alternatively, they can be purchased via the Initial Public

Offering (IPO) route, i.e. directly from the company. Investing in equities is a good long-term

investment option as the returns on equities over a long time horizon are generally higher

than most other investment avenues. However, along with the possibility of greater returns

comes greater risk.



pg. 27

Mutual funds

A mutual fund allows a group of people to pool their money together and have it

professionally managed, in keeping with a predetermined investment objective. This

investment avenue is popular because of its cost-efficiency, risk-diversification, professional

management and sound regulation. You can invest as little as Rs. 1,000 per month in a

mutual fund. There are various general and thematic mutual funds to choose from and the risk

and return possibilities vary accordingly.

Bonds

Bonds are fixed income instruments which are issued for the purpose of raising capital. Both

private entities, such as companies, financial institutions, and the central or state government

and other government institutions use this instrument as a means of garnering funds. Bonds

issued by the Government carry the lowest level of risk but could deliver fair returns.

Deposits

Investing in bank or post-office deposits is a very common way of securing surplus funds.

These instruments are at the low end of the risk-return spectrum.

Cash equivalents

These are relatively safe and highly liquid investment options. Treasury bills and money

market funds are cash equivalents.

2] Non-financial Instruments

Real estate

With the ever-increasing cost of land, real estate has come up as a profitable investment

proposition.

Gold

The 'yellow metal' is a preferred investment option, particularly when markets are volatile.

Today, beyond physical gold, a number of products which derive their value from the price of

gold are available for investment. These include gold futures and gold exchange traded funds.

Mutual Funds are subject to market risk. Please read the offer document carefully before

investing. Terms and Conditions apply.



pg. 28

Bank Guarantee / Standby Letter of Credit Bank Instruments

Business Relationship (BG/SBLC)

Why Bank Guarantee or SBLC? Click on this link www.bgsblc.wordpress.com

Enhance your international transactions for smooth and fast business.

For: BANK GUARANTEE (BG)/STANDBY LETTER OF CREDIT (SBLC)- Cash

Back/Loan/Credit

Our provider is ready, willing and able to provide to your company any amount of face value

of Bank Guarantee or Standby letter of credit fresh cut backed by funds delivered direct to

your bank if you are willing, ready and able to LEASE or BUY bank instruments from us.

(HSBC Bank instruments or AA Rated European/American Banks instruments)

Description of instrument

Instrument: Bank Guarantee (BG)/ Standby Letter of Credit (SBLC).

Total Face Value: Minimum of 1M EUR/USD (One Million EUR/USD) to Maximum of 50B

EUR/USD (Fifty Billion EUR/USD).

Issuing Bank: HSBC Bank Holding Plc (Group)/AA Rated European / American BanksAge: One Year, One Day

Buy/Leasing Price: 48%/6% of Face Value plus 2% commission fees to brokers

Delivery: Bank to Bank SWIFT.

Payment: MT-760.

Hard Copy: Bonded Courier within 7 banking days.

Internal Control system

The Board is ultimately responsible for the bank‟s system of internal control and for

reviewing its effectiveness. Such procedures are designed to manage rather than to eliminate

the risk of failure, to achieve business objectives and can only provide reasonable and not

absolute assurance against material error, losses or fraud.

The bank has delegated specific, clear and unequivocal authority to the Chief Executive

Officer to manage the activities of the bank within the limits set by it. Functional, operating

and financial reporting standards are applicable within all entities of the HSBC Group. Theseare supplemented by operating standards set by the bank‟s management, as required.



pg. 29

Systems and procedures are in place in the bank to identify, control and to report on the major

risks including credit, market, liquidity, operational error and fraud. Exposure to these risks is

monitored by the Executive Committee, the Asset and Liability Management Committee and

the Risk Management Committee.

Comprehensive annual financial plans are prepared, reviewed and approved by the Board.

Results are monitored and reports on progress compared with plan are prepared monthly.

Financial accounting and reporting and certain management reporting standards have been

established. Centralized functional control is exercised over all computer system

developments and operations.

Common systems are employed where possible for similar business processes.

Responsibilities for financial performance against plans and for capital expenditure, credit

exposures and market risk exposures are delegated with limits to line management. In

addition, functional management in the bank has been given the responsibility to implement

HSBC policies, procedures and standards in the areas of finance; legal and regulatory

compliance; internal audit; human resources; credit risk; market risk; operational risk;

computer systems and operations; property management; and for certain HSBC Group

business and product lines.

The Chief Risk Officer is responsible for the management of specific risks within the bank

including credit risk in the wholesale and retail portfolios, markets risk and operational risk.

Risks are monitored via regular Risk Management Committee meetings and through

reporting to the Executive Committee and to the Board.

The internal audit function monitors compliance with policies and standards and the

effectiveness of internal control structures within the bank and its subsidiaries. The work of

the internal audit function focuses on areas of greatest risk as determined by a risk

management approach.

The bank‟s Compliance Department ensures that HSBC Bank Malta Group and its employees

maintain the highest standards of corporate conduct including compliance with all the local

and international regulatory obligations and HSBC Group ethical standards and regulations.

Through the Audit and Risk Committee, the Board reviews the processes and procedures to

ensure the effectiveness of the system of internal control of the bank and its subsidiaries,which are monitored by internal audit.

hsbc bank audit report

Documents