Regulatory Alerts2018-07-30
Circular dated July 29, 2018 regarding conducting external evaluations of internal audit
In July 2018, the Central Bank of Egypt commenced a process to enhance the quality and effectiveness of its internal audit functions and focused on implementing best international practices in internal auditing. This initiative was based on the Basel Committee's (BCBS) supervisory framework number 131, which requires each bank to undertake an external assessment of their internal audit function at least once every five years and have this assessed by an external auditor or an internationally recognized firm. The Central Bank of Egypt then underwent the Basel Committee's (BCBS) supervisory framework number 131 implementation process, which assesses internal audit quality, effectiveness, and alignment with international best practices over a period of five years, and requires the identification of improvement areas to improve internal audit activities. Finally, the Central Bank of Egypt has asked banks to take necessary actions to implement this assessment and has committed to issuing a report and implementing an action plan for improvements by October 31, 2018. This is because none of the banks have yet implemented this evaluation within the past two years, and the action plan must be reviewed and endorsed.