THE CHARTERED INSTITUTE of Internal Auditors (IIA) has backed the Prudential Regulation Authority’s (PRA) call for ramping up corporate governance within organisations and boards playing an even more central role in ensuring its deeper take-up.
Ian Peters, IIA chief executive said: “It’s a significant step that the PRA is setting clear expectations for boards by increasing their focus on culture, risk appetite and the effectiveness of internal controls.
“The IIA’s financial services code, launched in 2013, similarly set expectations for how boards harness their internal audit functions to support them in their oversight of these areas and act as the board’s eyes and ears.
“The proposed supervisory statement will align well with the new provisions of the UK corporate governance code, he said, which draws attention to boards’ needs to gain appropriate assurance over organisational culture.”
His comments follow on from a speech given by Andrew Bailey, chief executive officer of the BOE’s Prudential Regulation Authority in Harrogate on Thursday where declared that it is “uncommon and rare to find a problem in the capital or funding business model of a firm which cannot be traced back to a failure of governance.”
“An effective board is at the heart of good governance,” he continued while individual board members must – and will – be held to a “clear standard of behaviour.”
Bailey’s speech coincided with the publication of the Bank of England’s consultation paper that trumpeted” aspects of board governance to which the PRA attaches particular importance” and “may devote particular attention in the course of its supervision.”
Peters stressed that boards can get the support they need to ensure that their objectives in such key areas are achieved by “setting higher expectations of their internal audit functions in terms of its scope, resources and status”.
He said the IIA would be formally responding to the PRA’s consultation giving particular emphasis to “how the board gets assurance that its policies and processes are being carried out effectively and that it gets the right quality of management information.”