Around 40 percent of the bankers do not want to work in the internal audit departments due to the huge work pressure, a survey found.
Bank officials do not choose to be in the department as they have to spend more time there, which hampers their family life, according to a survey titled “Internal Audit and Performance of Banks in Bangladesh”.
Conducted by the Bangladesh Institute of Bank Management (BIBM), the survey is part of a research which was made public at a workshop in the institute's auditorium in the capital yesterday.
Abdul Qayum Mohammad Kibriya, a BIBM faculty member, presented the research paper at the event where Abu Hena Mohd Razee Hassan, deputy governor of Bangladesh Bank, was the chief guest.
Only 1.52 percent of a bank's employee work in the internal audit department, meaning there is a huge shortage of manpower in such units, according to the survey.
Most banks strongly agreed that internal audits help minimise irregularities, develop asset quality, rectify procedural and recording errors and prevent money laundering risks.
However, banks are unwilling to invest in strengthening internal audit systems and go as far as refraining from taking measures over poor audits.
All banks think that there is a positive relation between quality of internal audits and performance. However, 20 percent of banks think that strong internal audits may leave some negative impact on performance.
About 92 percent of banks opined that it was possible to retain record of rejected credit proposal due to strong audit system of the bank but only 12 percent retain such record.
A majority of banks opined that customers with bad intention might switch over from banks with strong internal audits to one where it is lenient.
They also believe that effective internal audits could help reduce business costs with international corresponding bank as well as documentation lapses of the bank.
A comprehensive evaluation about internal audits and its impact on bank performance has been taken from 389 executives working at the branch level of different banks.
Through discussions with executives of internal audit units, a number of instances have been identified where internal audits played a role in enhancing performance.
It saw that though a strong internal audit may initially lead to a loan portfolio reduction, it could prevent loans from becoming classified and suffering from a shortage of security in the long run.
The survey observed that despite the effective roles played in preventing irregularities, banks were unwilling to invest more to enhance the internal audit system and had little interest in improving skills of the relevant staff.
Respondents also opined that no action was taken by the top management or board for poor audit ratings of branches and departments.
It is expected that banks will establish separate, robust and independent internal control and audit departments aimed at bringing out better results in the mid and long terms, said Razee Hassan.
The deputy governor said an independent internal audit may be considered a third eye of boards and regulators.
He said shareholders may own a part of a bank but they should not be involved in day-to-day operations.
A prudent board of directors may avoid oversight on the business activities through formulating broad-based policies and monitoring compliance status, said Hassan.