IIA Provides Feedback on FSB’s Proposed Guidance
A component of The IIA’s global advocacy initiative is to respond to exposure drafts disseminated by regulatory and standard-setting bodies around the world. Internal auditing plays a critical role in helping organizations address governance, risk management, and control matters, so The IIA recently provided feedback on the Financial Stability Board’s (FSB’s) Guidance on Supervisory Interaction with Financial Institutions on Risk Culture Consultative Document.
The IIA agrees with the concept of increasing the intensity and effectiveness of supervision for the promotion of a sound risk culture within financial institutions. Although the Consultative Document offers high-level, principle-based guidance with enough detail to provide management direction, there are opportunities for further advancement, such as:
Emphasizing an environment of risk culture, where undertaking risk on behalf of the institution is done within tolerance levels approved by the board and senior management, as opposed to an environment of risk avoidance.
Providing or referencing additional direction useful to both the institution and the supervisor when assessing the effectiveness of an institution’s risk culture.
The IIA submitted these recommendations in a comment letter to the FSB Jan. 31. For more information about the FSB’s proposed guidance, click here.
To view The IIA's response letter, click here.