The Chartered Institute of Internal Auditors (CIIA) has launched a consultation as part of an independent review of its code for effective internal audit in the financial services sector, in a move to address governance concerns which has been welcomed by Ed Balls, former shadow Chancellor, as a ‘vital part of improving the City’s risk management’
Balls was the keynote speaker at the CIIA's annual conference, where he said: ‘The mistakes in the handling of risk pre-2007 were primarily caused by a lack of understanding on the part of regulators, the government and senior executive and non-executive board members over what the real risks to the sector and within individual firms looked like. That kind of knowledge can only come from better regulation, cultural change, effective internal audit and closer co-operation between all stakeholders in financial services.’
Describing the financial service sector’s efforts to improve the approach as ‘a work in progress’, Balls said reviewing the code for effective internal audit in the financial services sector is a vital part of that work.
The consultation will gather views and evidence on the impact of the code; the state of internal audit across the sector; and what more needs to be done to improve standards of performance.
‘By involving a broad range of key stakeholders in the sector in examining the City’s risk management, we can ensure that internal audit is playing as central a role as it can in improving governance,’ Balls said.
The CIIA has set up a review committee, chaired by Mike Ashley, chair of the audit committee of Barclays. Other members are Tom Deane, audit director, TescoBank; Pam Kaur, group managing director and group head of audit, HSBC holdings; Brendan Nelson, chair of the audit committee, RBS; James Turner, director of group finance, Prudential; and Julia Wilson, chair of the audit committee, Legal and General and group finance director, 3i.
The Bank of England/Prudential Regulation Authority (PRA), the Financial Conduct Authority (FCA) and the Financial Reporting Council (FRC) will also participate in the work of the committee.
Dr Ian Peters, chief executive of the CIIA, said: ‘The code has already made a positive impact on the position of internal audit in financial services. But it is time to take stock, and consider what more needs to be done to improve standards across the sector. We are delighted to have a senior group of industry figures to take on that challenge; and to have the support of the Bank of England, the FCA, the PRA and the FRC in taking the code forward.’
Further details about the review of the internal audit code can be found here.
The CIIA consultation questionnaire can be found here.
