Circular dated July 29, 2018 regarding conducting external evaluations of internal audit

Cairo on: 29 July 2018

Mr. Chairman of the Board of Directors
Bank

In the context of the Central Bank's efforts to improve the quality and efficiency of the internal audit activity in banks, and its commitment to applying best practices and international standards in the field of internal audit.

And in accordance with Standard No. (1312) of the International Standards for the Professional Practice of Internal Auditing issued by the (IIA), each bank must conduct external evaluations of the internal audit (External Quality Assurance) at least once every five years by qualified and independent review teams from outside the bank. The Central Bank of Egypt must be notified prior to conducting the evaluation of the name of the entity that will conduct it and the scope of the work. A copy of the evaluation report must also be submitted to the Central Bank of Egypt after presentation to the Board of Directors and the Audit Committee, accompanied by the corrective action plans and the recommendations contained in the report. The evaluation report must include at least the following:

• An assessment of the degree of compliance of the internal audit with the International Standards for the Professional Practice of Internal Auditing.

• Identification of the internal audit's needs to meet the expectations of stakeholders.

• An assessment of the efficiency and effectiveness of internal audit activities in achieving the bank's goals.

• Identification of areas requiring improvement to enhance the performance of the internal audit.

Please be advised to take the necessary actions to implement the above, and the Central Bank of Egypt must be approved by the required report by no later than October 31, 2018.

This is also in the event that any of the banks have previously conducted this evaluation during the last two years, the Central Bank must be notified with the evaluation report and the status of implementing the corrective action plan.

Please accept our highest respect,

Gamal Naguib