BANCO DE PORTUGAL INTERNAL AUDIT CHARTER
1. Purpose
By means of the Internal Audit Charter, the Board of Directors of Banco de
Portugal (hereinafter the “Bank”) defines the mission, authority and
responsibilities of the Audit Department (Departamento de Auditoria – DAU).
2. Mission
The Audit Department provides assurance and consulting services, which aim to
add value and improve the operational effectiveness of the Bank in an
independent and objective way. The Audit Department helps the Bank to
accomplish its objectives using a systematic and disciplined approach to evaluate
and contribute to the improvement of the effectiveness of risk, control and
internal governance processes of the Bank.
All activities, operations and processes of the Bank may be subject to assessment
by the internal audit function.
The Audit Department, in its assurance activity, will ensure, in an impartial and
preventive manner, the effectiveness, operability, security and compliance of the
Bank’s services, systems, processes and activities representing higher potential
risk, in order to give priority to the prevention of risks inherent in the complexity
of the processes and fast changing environment that characterize the purpose and
the context of the Bank’s activity.
The Audit Department is also responsible for participating in the tasks and
common audit engagements carried out by the ESCB/Eurosystem audit function,
according to the audit policy and procedures approved by the Governing Council
of the European Central Bank (ECB).
The Bank may entrust the Audit Department with the audit function of its Pension
Fund and the respective management entity, as well as with the provision of audit
services in external entities whose financial oversight is legally entrusted to the
Bank’s Board of Auditors.
The Audit Department, following a decision of the Board of Directors, may
participate in committees and working groups, carry out hearings, inquiries,
studies, investigations and consultancy tasks, and develop initiatives and events
focused on the promotion of culture and good practices in areas related to risk
management, control, compliance, security and governance, including with the
participation of the financial community.
3. Independence and Objectivity
The Audit Department reports directly to the Board of Directors.
No hierarchic dependence may exist between auditors and any other staff
contacted during the audit engagements, including heads of management bodies,
each of which must report solely to the management bodies or organizational
units they belong to.
Auditors must not assume direct authority or responsibilities over audited
activities, and shall, in general, avoid any conflicts of interest whenever carrying
out their tasks.
Auditors must not participate in audit engagements involving units or services in
which they had worked within the previous year or in any assurance activities in
which their objectivity may be compromised by other special circumstances.
Any facts or circumstances that may compromise the independence or the
objectivity of the audit function, or any auditor in particular, must be reported to
the Head of the Audit Department, who must inform, whenever necessary, the
Member of the Board of Directors responsible for the Audit Department.
4. Conformity with the Standards and the Code of Ethics of the IIA
The Audit Department shall observe the International Standards for the
Professional Practice of Internal Auditing (Standards) of The Institute of Internal
Auditors (IIA), as well as its Code of Ethics.
5. Proficiency and Due Professional Care
The Audit Department ensures the performance of its duties according to high
standards of proficiency and due professional care.
The Head of the Audit Department ensures that the audit function acquires and
maintains the knowledge and skills necessary for the achievement of its objectives
and the accomplishment of its responsibilities in an effective way.
6. Responsibilities
The Audit Department performs the audit engagements according to its annual
audit plan as approved by the Board of Directors. Any relevant changes to the
audit plan shall be approved by the said Board. The performance of any
engagements not included in the annual audit plan, or any “ad hoc” investigations
or inquiries, may be decided by the Governor, or by the Member of the Board of
Directors responsible for the Audit Department.
The Audit Department shall:
a) Prepare the annual audit plan for the Bank, based on an adequate risk
assessment methodology;
b) Submit the annual audit plan, including other current activities, to the Board of
Directors for approval;
c) Program and control the performance of its plan and communicate to the
Board of Directors any relevant changes occurred;
d) Report the results of the audit engagements to the Board of Directors, heads
of department and managers of other autonomous units involved, and the
Board of Auditors;
e) Report regularly to the Board of Directors, through its Member responsible for
the Audit Department, about the development of the annual audit plan and
other activities and relevant matters, including the most relevant issues
analyzed during the year related to internal control, risk exposures, and the
exercise of the internal audit function;
f) Monitor and assess the implementation status of the open recommendations
issued by the Audit Department, and report the results to the Board of
Directors;
g) Coordinate activities and exchange information with the Banks’ External
Auditor, for a better discharge of mutual responsibilities, adequate coverage of
all Banks’ activity and elimination of duplicated work.
The Head of the Audit Department, within the framework of this Internal Audit
Charter, sets out in an Audit Manual the principles and operational rules and
procedures for the daily running of the Audit Department and the operational
development of the audit engagements.
7. Access to Information
In discharging their assurance responsibilities, the Audit Department and the
auditors therein have unrestricted access rights to all staff, records, information,
systems, facilities (including premises with restricted access), equipment, and any
other Bank’s resources.
All requested information must be provided in a truthful and appropriate manner,
within a reasonable time span and without undue delay.
The Audit Department can request permanent access (read-only mode) to
information systems and databases, whenever deemed necessary for the effective
execution of its duties.
The Audit Department shall inform the Board of Directors, without delay, about
any attempt to obstruct or cause difficulties to the exercise of its work.
8. Reporting of Incidents and Complaints against the Bank
The heads of department and managers of other autonomous units shall inform
the Audit Department immediately after the occurrence of any relevant incident.
The Audit Department can request permanent access (read-only mode) to the
incident databases of the Bank.
All organizational units should send to the Audit Department copies of all
complaints about the operation of the services or staff performance.
9. Quality Assessment
The Audit Department shall maintain a programme aiming to ensure and enhance
the quality of the internal audit function. Such programme involves continuous
and periodic reviews, including internal and external quality reviews.