‘Internal audit under the microscope’

Date 25 October 2012

Supervisor Remco Spigt, a registered accountant , is responsible for investigating the internal audit systems of banks. Part 2 of our feature ‘Behind the scenes’ at the supervisory authority.

Remco Spigt

Why was the internal audit targeted as an area for investigation?
An efficient and properly functioning internal audit system is vital for risk management. DNB naturally likes to see banks making ongoing investments in a high quality internal audit system. But we don’t have enough insight to be sure that this is currently happening. That’s why we’re now closely scrutinising the internal audit systems of the banks.’

Hot issues?
‘We’re looking at the quality, organisation and staffing of these systems, based on the principles of the Basel Committee and the Dutch Financial Supervision Act. Some of the questions we ask include: Does the internal audit system comply with the relevant regulations and standards? Is the internal auditor abiding by the rules of his profession? Is he identifying all the possible risks and is he doing so correctly? We’re also examining whether the internal audit process can work independently of, say, the Board of Management. Another question we must ask is whether a bank is investing sufficiently in its internal audit system or whether it is reducing it in the context of financial cutbacks.’

How are you going about this work?
‘At the beginning of September, all the banks were sent a self-assessment questionnaire. We expect to get these back by the end of October. Our team will then start analysing the answers.’

When will the banks hear more about the results?
‘The plan is to issue a sector report at the end of December. In it, we’ll give our assessment of the internal audit of the sector as a whole based on our investigations. The results will be anonymised. In 2013 we will then be visiting a selection of banks, notably the ones where we’ve identified gaps or other issues. But if we encounter any acute problems anywhere, we’ll naturally contact the banks in question immediately in November.’

Is it interesting work?
‘Yes. I’ve always worked as a registered accountant. I used to work for the internal audit department at ABN AMRO, and since May 2008 I’ve been a supervisor at DNB. I’ve really fallen on my feet, since there never hasn’t been a crisis! I spent a couple of years supervising a number of smaller banks, but since June this year I’ve been working at the new thematic supervision of banks department. The supervision gives me a broad idea of what’s going on in the sector. That makes it interesting. It’s also quite varied. After all, next year we’ll be investigating a whole series of new themes.’