Call for revising guidelines on internal control, compliance in banks

Bangladesh Institute of Bank Management or BIBM has called the Bangladesh Bank for reworking ‘immediately’ the Guidelines on Internal Control and Compliance in Banks to get the desired results.

It presented a report titled ‘Review Paper of Internal Control and Compliance of Banks 2017’ at a workshop in Dhaka on Thursday.  

“Under current framework, internal control system of banks will not improve rather it may deteriorate,” the report says.

There remains a concern among the heads of internal audit departments of the banks that they will not be appropriately evaluated by the audit committee boards if they report to the board directly, bypassing inter control and compliance department heads, according to the report.

“Sometimes it is not possible for the head of the audit to explain a sensitive matter to the ACB, which is rather convenient for the head of internal control and compliance department or ICCD because of his or her senior position.

“Besides, in most of the cases, the chairman of ACB directly communicates with the head of ICCD instead of IA,” the report explains.

It also alleges most of the banks in Bangladesh ‘conceal’ their internal audit reports due to ‘inconsistencies’ in the present structure of their ICCDs.

The report says the internal audit reports of the banks are made following the wish of the top management, and so any information on irregularities, if the auditors find any, are not published properly.

Prof Md Mohiuddin Siddique, a director of the BIBM, headed a five-member team of researchers that conducted the study on 34 government, private and foreign banks in Bangladesh. 

The study found only one bank with strong internal control system and 18 others satisfactory.

Abu Hena Mohd Razee Hassan, a deputy governor of the Bangladesh Bank who also works as the chairman of BIBM’s executive committee, was the chief guest at the programme.

BIBM Director General Toufic Ahmad Choudhury chaired the workshop also attended, among others, by Dhaka Bank Audit Committee Chairman Syed Abu Naser Bukhtear Ahmed, BIBM Prof (Supernumerary) Md Yasin Ali, and NRB Bank Managing Director Md Mehmood Husain.

Abu Hena said strong internal control system is very important for a sustainable banking system.

He said the Bangladesh Bank enacted a guideline on core risk management for the banks in 2003 and was amending it following the demand of the time.

Bukhtear blamed a lack of proper control system for the scams involving Hall-Mark Group, Bismillah Group and BASIC Bank and recent irregularities in Farmers Bank and NRB Commercial Bank.

He emphasised strengthening internal control and compliance to overcome the situation.

Prof Yasin urged the Bangladesh Bank to play a role in letting the ICCDs of the banks work independently.