IIA Auditing Capital Adequacy and Stress Testing for Banks

Because banks are at the center of the credit intermediation process between savers and investors, the banking system 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 holds 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 from the Institute of Internal Auditors (IIA)provides an overview of types of capital and their impact on stability in banking systems. 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 IIA standards in tandem with various tools and techniques.