This system provides extensive guidelines for inspection of the internal control and audit function, and prescribes that a bank’s internal controls allow identification and controlling of risks. The Internal Audit Departments in banks are required to have appropriate resources and staff with the requisite skills. Tasks can be outsourced, allowing additional expertise to be brought in.
The auditors reported that overall experience with the quality of internal audit of banks was satisfactory. However, the FSAP for India laments at several points the fact that the Reserve Bank’s regulatory powers over banks are not neutral to bank ownership: 1.