CBC analysis says new audit requirements can strengthen trust in financial authorities

Nicosia, Cyprus. The Central Bank of Cyprus has published an analysis by internal audit director Constantinos Trikoupis examining how new international internal audit requirements could strengthen public trust in central banks and financial supervisory authorities.

The analysis said the requirements also create new demands for auditors as institutions face increased accountability and scrutiny.

Role of internal audit

Published on the CBC Blog under the title “Strengthening Trust Through Topical Requirements: The Evolving Role of Internal Audit in European Financial Authorities”, the analysis examined the growing role of internal audit in governance, transparency and risk management.

Trikoupis said public trust is among the most valuable assets of central banks and financial supervisory authorities, which are subject to scrutiny from governing bodies, national and European institutions, financial markets and society.

“Trust is the operational currency of public institutions,” Trikoupis said, stressing the need for independent, thorough and comparable assurance across Europe’s interconnected financial system.

He said internal audit supports institutional trust by providing independent assurance over governance processes, risk management and control systems.

Where institutional weaknesses arise, scrutiny increasingly extends beyond management decisions to the effectiveness and credibility of the assurance provided by internal auditors, he said.

Topical Requirements

Trikoupis identified the Topical Requirements introduced by the Institute of Internal Auditors as a response to the need for internal audit functions to demonstrate that their assurance remains robust, consistent and professionally supported.

The requirements are a mandatory component of the IIA’s International Professional Practices Framework and apply when a particular subject is included in an audit engagement.

They establish minimum expectations for matters auditors should assess while preserving professional judgement.

The issue was also discussed at a recent forum in London attended by heads of internal audit functions from European central banks and financial supervisory authorities. Participants considered the implications of the IIA’s new requirements and their broader contribution to institutional credibility.