Banks should have tougher internal auditors to stand up to senior decision makers within the firm and oversee risk taking, said Andrew Bailey, head of banking supervision at the Financial Services Authority.
Regulators now expect banks to have internal auditors that can provide a challenge to management, “driving improved governance, risk management and internal controls,” Bailey said in an e-mailed statement.
“The expectations of internal audit functions within financial services firms have hitherto been set too low,” Bailey said.
Bailey’s comments came in support of draft guidelines published today by the Chartered Institute of Internal Auditors that seek to improve governance within banks. Internal auditors assess whether organizations are managing risk properly and warn members of the firm’s board if they anticipate problems.
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