Framework for Internal Control Systems in Banking Organisations

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Risk Management Sub-group of the Basle Committee on Banking Supervision Co-Chairs: Mr. Roger Cole – Federal Reserve Board, Washington, D.C. Ms. Christine Cumming – Federal Reserve Bank of New York Banque Nationale de Belgique, Brussels Commission Bancaire et Financière, Brussels Office of the Superintendent of Financial Institutions, Ottawa Commission Bancaire, Paris Deutsche Bundesbank, Franfurt am Main Bundesaufsichtsamt für das Kreditwesen, Berlin Banca d’Italia, Rome Bank of Japan, Tokyo Financial Supervisory Agency, Tokyo Banque Centrale du Luxembourg De Nederlandsche Bank, Amsterdam De Nederlandsche Bank, Amsterdam Finansinspektionen, Stockholm Eidgenössiche Bankenkommission, Bern Financial Services Authority, London Federal Deposit Insurance Corporation, Washington, D.C. Office of the Comptroller of the Currency, Washington, D.C. European Commission, Brussels Secretariat of the Basle Committee on Banking Supervision, Bank for International Settlements Mr. Philip Lefèvre Mr. Jos Meuleman Ms. Aina Liepins Ms. Brigitte Declercy Ms. Magdalene Heid Mr. Uwe Neumann Mr. Paolo Pasca Mr. Noriyuki Tomioka Mr. Kozo Ishimura Ms. Isabelle Goubin Mr. Job Swank Mr. Paul Benschop Mr. Jan Hedquist Ms. Renate Lischer Mr. Stan Bereza Mr. Mark Schmidt Mr. Kurt Wilhelm Mr. Nicholas Cook Ms. Betsy Roberts
Table of contents Page Introduction 1 I. Background 6 II. The objectives and role of the internal controls framework 8 III. The major elements of an internal control process A. Management oversight and the control culture 10 1. Board of directors 10 2. Senior management 11 3. Control culture 12 B. Risk recognition and assessment 14 C. Control activities and segregation of duties 15 D. Information and communication 17 E. Monitoring activities and correcting deficiencies 19 IV. Evaluation of internal control systems by supervisory 23 authorities V. Role and responsibilities of external auditors 26 Appendix I 27 Reference materials Appendix II 28 Supervisory lessons learned from internal control failures
Page 1: FRAMEWORK FOR INTERNAL CONTROL SYST
Page 5 and 6: - 2 - and off-site supervisory tech
Page 7 and 8: - 4 - Principle 6: An effective int
Page 9 and 10: - 6 - I. Background 1. The Basle Co
Page 11 and 12: - 8 - II. The Objectives and Role o
Page 13 and 14: - 10 - III. The Major Elements of a
Page 15 and 16: - 12 - delegated these responsibili
Page 17 and 18: - 14 - B. Risk Recognition and Asse
Page 19 and 20: - 16 - result of reviewing the repo
Page 21 and 22: - 18 - information to be useful, it
Page 23 and 24: - 20 - external conditions, and mus
Page 25 and 26: - 22 - IV. Evaluation of Internal C
Page 27 and 28: - 24 - engagement arrangements. In
Page 29 and 30: - 26 - Appendix I Reference Materia
Page 31 and 32: - 28 - high yields associated with
Page 33 and 34: - 30 - E. Monitoring Activities and

Framework for Internal Control Systems in Banking Organisations

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