Internal Audit (IA)

Internal Audit (IA)

Understanding Internal Audit (IA) in Europe and Key Jurisdictions

Internal Audit (IA) is a cornerstone of governance and risk management, providing independent and objective evaluations of an organization’s processes, controls, and compliance. In Germany, Austria, Switzerland, Luxembourg, and Liechtenstein, IA ensures that financial institutions operate transparently, align with regulatory requirements, and mitigate risks effectively. Rooted in the International Standards for the Professional Practice of Internal Auditing (IPPF) established by the Institute of Internal Auditors (IIA), IA frameworks emphasize continuous monitoring, reporting, and enhancement of internal controls.

Legal and Regulatory Requirements for Internal Audit

Financial institutions worldwide must adhere to stringent IA requirements set by international, European, and national regulators.

International

  • Global Internal Audit Standards (IIA): The International Professional Practices Framework (IPPF) by the IIA outlines the core principles, standards, and best practices for IA, ensuring global consistency and quality.

Europe

  • ECB: The European Central Bank emphasizes IA as a critical component of its Supervisory Review and Evaluation Process (SREP), requiring robust audit functions to evaluate governance, risk, and compliance.
  • EBA: The European Banking Authority mandates IA frameworks under CRD V, ensuring alignment with risk management and operational resilience standards.
  • EIOPA: The European Insurance and Occupational Pensions Authority enforces IA requirements under the Solvency II Directive, focusing on governance and audit independence.
  • ESMA: The European Securities and Markets Authority outlines IA responsibilities under MiFID II, ensuring compliance with market integrity and investor protection.

Germany

  • BaFin:
    • MaRisk: Mandates IA frameworks for risk management and control evaluations.
    • MaGo: Focuses on governance and IA for insurers.
    • KAMaRisk: Governs IA practices for capital management companies.
    • ZAG-MaRisk: Specifies IA requirements for payment institutions.
  • DIIR-Standards: The German Institute of Internal Auditors (DIIR) provides additional guidance and best practices for IA implementation.

Austria

  • FMA: The Austrian Financial Market Authority enforces IA requirements under the BWG and VAG, ensuring audit independence and risk management alignment.

Switzerland

  • FINMA: The Swiss Financial Market Supervisory Authority mandates IA frameworks through its Circulars, focusing on governance, compliance, and operational risks.

Luxembourg

  • CSSF: The Commission de Surveillance du Secteur Financier outlines IA requirements in CSSF Circulars, emphasizing independence, transparency, and reporting.

Liechtenstein

  • FMA: The Financial Market Authority aligns IA requirements with European directives, ensuring comprehensive evaluations of governance, risk, and compliance frameworks.

Leitner & Associates‘ Internal Audit Solutions

We provide tailored IA solutions to help financial institutions establish or enhance their audit frameworks:

  • Audit: Comprehensive evaluations of IA functions to identify gaps and ensure regulatory compliance.
  • Consulting: Strategic guidance for designing, implementing, and optimizing IA processes.
  • Training: Customized programs to build IA expertise and align with global standards.
  • Interim Management: Experienced professionals to manage IA functions during transitions.
  • Outsourcing: Full-service IA management to ensure continuous monitoring and compliance.

Products for Internal Audit Implementation

From greenfield projects to optimizing existing systems, our products support every aspect of IA:

  • Commentaries: Expert analysis of IA regulations and best practices.
  • Guidelines: Frameworks for establishing and managing IA systems.
  • Policies: Clear documentation of IA roles, responsibilities, and governance.
  • Procedures: Detailed instructions for conducting internal audits effectively.
  • Control Plans and Checklists: Tools to monitor compliance and enhance IA processes.
  • Reports and Training Certificates: Documentation of IA efforts and validation of expertise.

Why Choose Leitner & Associates for Internal Audit?

At Leitner & Associates, we specialize in creating robust IA frameworks that meet international standards and local regulatory requirements, including MaRisk, CSSF, and FINMA guidelines. Whether implementing from scratch or optimizing existing systems, our solutions are tailored to meet your institution’s unique needs.