Banking · Risk Based Internal Audit
A commercial bank has implemented the Risk Based Internal Audit (RBIA) framework. Which statement best describes the role of audit and inspection under this new framework concerning credit appraisal?
Verified Solution4 OptionsUpdated: October 2026👁️1 View
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- 1The audit focuses primarily on inspecting the physical security of the bank's branches and cash vaults, treating credit risk as a secondary concern.
- 2The audit must mandatorily conduct a full Concurrent Audit on every single retail loan, as they are large in numerical value.
- 3The audit will prioritize the review of large, complex, or high-risk credit proposals for adherence to internal rating models, pricing guidelines, and sanctioning authority limits.✓
- 4The audit's role is strictly limited to checking that all loan documents are physically present, irrespective of the quality of the appraisal.
Correct answer
The audit will prioritize the review of large, complex, or high-risk credit proposals for adherence to internal rating models, pricing guidelines, and sanctioning authority limits.
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