Annual Report 2010 03 August 2011 - Banka Qendrore e ...

Annual Report 2010
CBK
6. Internal Developments
6.1. Internal Control
Head of Internal Audit
Duties and responsibilities of the Head of Internal Audit (HIA) are regulated under Law on
CBK (Articles 60 and 61). HIA also continued to be focused on the area of Internal Audit,
control and implementation of budget and operational analyses during 2010.
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Internal Audit
The Internal Audit also in 2009 has acted on the basis of the annual plan proposed by the
HIA with the preliminary approval by the Audit Committee as well as by the Governing
Board.
Annual Audit Plan for 2010 is drafted taking for granted the professional background and
experience of the staff engaged in auditing as well as the audit outcomes from the previous
years. In this context, a particular emphasis was laid on the International Audit Standards,
then on preparation of a manual on audit of information technology and auditor’s training
on audit of financial supervision.
Audits in CBK are conducted based on the Annual Action Plan preceded by Annual
Assessment of risk in compliance with International Standards of Professional Practices of
Internal Audit of the Internal Auditors’ Institute-IIA (Institute of Internal Auditors) as well
as in compliance with section 11 of the Internal Audit Statute. Specifically, in the course of
preparation of the Annual Plan, the Internal Audit is based on the following standards:
Standard 1110.A1; Standard 2010; Standard 2010.A1; Standard 2010.C1. The approval of
the Annual Audit Plan is also prepared according to Standard 2020, i.e. it has initially been
approved by the Audit Committee as an independent body, where the final approval was
done by the CBK Board. The Annual Audit Plan was also in compliance with dynamics of
developments, objectives and CBK Strategic Plan for the period 2010-2015.
Risk-based audits made audits focus more on the areas where the material loss and
reputation damage are more significant, which implies that the risk in central bank serves
as a benchmark to the auditor. Consequently, audits were conducted monthly, quarterly,
biannually, and annually. The following areas are considered to have more evident risk,
which can be seen in tabular and graphical presentation.
Except audits according to the Annual Audit Plan, some “ad hoc” audits were conducted
during 2010 upon the request of the Board and of the Management. During 2010, the
Internal Audit examined, evaluated and reported on the inadequacy of internal control
systems installed by the management.
Following examinations and evaluations of internal control systems, transaction
assessment, and verification of compliance with applicable laws, rules, and regulations, the
Internal Audit prepares reports in writing, which include the management responses on
findings and recommendations. Reports are initially considered as draft reports, while after
being discussed with the management of the relevant field and having included written
comments by the management, the report becomes final and is signed by the Head of
Internal and is forwarded to the CBK decision making authorities, whereas on quarterly
basis, findings, recommendations, comments by management and follow-up of
implementation of recommendations are forwarded to the Audit Committee, which is
composed of two CBK Board non-executive members.