By Aidila Razak
Internal auditors of banking institutions in Malaysia, were ill-equipped to deal with risk management issues, a recent survey found.
According to the joint survey by the Institute of Bankers Malaysia (IBBM) and audit firm KPMG— internal auditors admitted to be dissatisfied with their skills in assessing internal capital adequacy.
This includes the ability to assess the soundness of methodologies used by the banks to assess capital adequacy, stress-tests and build contingency plans.
“67 percent of internal audit respondents are not fully satisfied with their present competency level in this area,” the survey read.
Close to half of the auditor’s counterparts in the banks risk management units surveyed are also “not fully satisfied” with the internal audit unit’s competency in this area.
About a third of internal auditors were also not fully comfortable in the area of asset-liability management, while 42 percent have problems assessing market risks.
The auditors were, however, happy with their skill levels in assessing operational risks. They said that while training was conducted, half were dissatisfied with the relevancy of the training topics.
The survey also found that banks which have a strong check-and-balance framework which involves internal auditors fared better in downturns.
In a joint-foreword, KPMG Management and Risk Consulting Sdn Bhd’s Eckhart Koerner and IBBM’s Tay Kay Luan said that internal auditors have traditionally acted as “watchdogs” for management and board of directors.
However, they said, they must now also adopt a role as a third line of defence for the company.
“They go beyond merely ensuring the organisation’s compliance to internal policies as well as external guidelines and statutory requirements,” Koerner said in a press statement.
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