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Auditing Capital Adequacy and Stress Testing for Banks

Course Description
Because banks are at the center of the credit intermediation process between savers and investors, the financial services industry must be strong and resilient so it can be the foundation for sustainable economic growth. It is critical that banks’ risk exposures are backed by a high-quality capital base and are mitigated through a strong risk management governance.
Internal audit plays a very important role in providing independent assurance on the quality and effectiveness of the processes related to planning, executing, and reporting on capital adequacy. This course provides an overview of the types of capital and their impact on stability in financial services industry. It describes the effect that credit, market, and operational risks have on capital planning processes. It also delivers an in-depth look at the stress testing process, and highlights key elements of that process. Finally, the content describes the role of internal audit as it relates to auditing the key parts of the capital planning process by using the IIA’s Standards in tandem with various tools and techniques.
Learning Objective(s):
  • List the different types of capital and their impact over stability in the banking system.
  • Differentiate between the strategies and methods to model credit, market, and operational risk.

  • Evaluate how the capital processes support the bank’s stated risk appetite.

  • Recognize the bank’s scenario development processes designed to stress the risk models.

  • Define regulatory disclosure requirements. 

  • Recognize the role of internal audit in providing assurance for the bank’s capital planning process.
Course Duration: 1 day(s)
CPEs Available: 1.8
Knowledge Level: Basic
Field of Study: Auditing
Prerequisites: 
​None
Advance Preparation: 
​None
Delivery Method: QAS Self-Study