Audit

The G30 pointed out that internal audit plays an important role in the procedures
and control framework by providing an independent, internal assessment of the
effectiveness of this framework. The principal challenge for management is to ensure
that internal audit staff has sufficient expertise to carry out work in both the front
and back office. Able individuals with the appropriate financial and systems skills
are required to carry out the specialist aspects of the work. Considerable investment
in training is needed to ensure that staff understand the nature and characteristics
of the instruments being transacted and the models that are used to price them.
Although not part of the formal control framework of the organization, external
auditors and regulatory examiners provide a check on procedures and controls. They
also face the challenge of developing and maintaining the appropriate degree of
expertise in this area.