Internal control in banks is a key and an initial
comprehensive banking supervision part and its importance has become both the
external auditors of banks departments and monetary authorities pay particular
attention as a first line of defense in preventing and scalable risk and errors
that can be exposed to the bank this control is based on starting to develop
rules and regulations basic functioning of the bank's control.
In this context, the internal control systems
are considered in each bank of important regulatory tools as a precautionary
measure aims through means and procedures to ensure the health of the
calculation of what is written in the records and the protection of the assets
of the bank and raising the efficiency of the staff and encourage them to
adhere to the policy set.
It must be
noted in this regard that the internal control achieved many benefits
including, for example:
- Detection of irregularities and shortcomings.
- A reference guide for the operations of the
bank.
- Reduce the cost.
- Minimize losses.
- Reduce the audit, as well as lost time.
- Improve the quality of financial reporting.
As is known, the internal control in banks are
divided into two types:
- Control and protective to prevent and reduce
irregularities and dangers and errors that can be exposed to the bank.
- Revealing a control to detect irregularities
and errors and then processed and modified controls to prevent such things and
source of the control mainly internal audit reconciliations and calculations of
administrative and financial audit.
What we are interested
in this area of internal control is prohibitive or protective control of
these components are derived from the following:
- Efficiency and good staff training and
integrity.
- Segregation of duties conflicting.
- Actual control of the asset accounting
entries.
- Review the signatures of clients.
- Approval of the exchange of persons
Commissioners.
To achieve a
sound regulatory system must have the following basic components are available:
1. organizational structure and management and
a clear and written into account and identifies the following:
- The main and sub-departments in the bank.
- The sequence and administrative powers and
responsibilities.
- Communication ways.
2.
proper accounting system and written based on an integrated set of records and
accounts of the classified guide and a set of documents meet the need of the
bank, as well as the design of documentary accounting cycles achieved effective
control. That this system aims in general to compile and summarize, record and
display operations related to the bank and determine the responsibility and
accountability of all assets and liabilities related to it.
3.
The existence of practical and specific written instructions clearly show the
work procedures and controls to All sections of the level of bank's operations.
To achieve
these ingredients must be the existence of operational procedures to ensure a
sound internal control system and is as follows:
1. separation of conflicting tasks such as
separating the task of implementing the process for task recorded in the books
and the separation of task Remember assets recorded for the task, and
segregation of duties through accounting procedures.
2. devolution of powers is determined where the
powers of the people clearly.
3. The existence of physical control over the
assets.
4. ongoing assessment of internal controls
through internal audits, budgets and financial reports And administrative.
5. An integrated functional system determines
the functional specifications and conditions of its proceedings.
6. registration of accounting operations on
time specified.
7. find a circle of scrutiny active in the bank
and reports to the President and members of the Board of Directors.
8. Property insurance against risks and to
staff who possess the custody of cash.
9. Use the dual means of control over critical
operations.
10.asthaddam trial balances and accounts of
total surveillance and periodic reconciliations.
However this
use of most banking institutions to computers, it must establish internal
systems for the control of the computer and put some general measures to
control such as:
- The separation of the functions of the
computer management functions for other departments.
- Not to authorize the computer to carry out
any management process related to the bank's activities.
- Develop an appropriate system for assessing
the work within the Computer Management.
- Develop instructions determine the conditions
to approve the amendment of computer programs.