Page 52 - A&T BANK ANNUAL REPORT 2012

GENERAL INFORMATION
CORPORATE MANAGEMENT
FINANCIAL INFORMATION
Pursuant to the framework of the Regulation on the Internal
Systems of Banks, the Audit Committee was established by
the Bank’s Board of Directors to execute the auditing and
monitoring functions of the Board. The Director of Internal
Systems, appointed by the Board of Directors in accordance
with the requirements of the Banking Law, Internal Systems
Regulation, and other relevant rules and regulations,
coordinates the Internal Systems Department and works
under the supervision of the Bank Audit Committee.
Although the functions, duties and responsibilities related to
internal auditing are wholly separate from those related to
internal control and risk management within the Bank, the
Inspection Council, the Internal Control Department and the
Risk Management Department all work in conjunction with
one other.
The primary objective of A&T Bank’s internal systems
policies is to increase shareholder value by balancing risk
and return in banking activities. Internal auditing and risk
management activities must start before, rather than after,
risks are assumed. As a result, A&T Bank focuses on future
events, rather than those that have already transpired.
The Audit Committee believes in the necessity of building
and operating an efficient and sufficient internal systems
structure appropriate for the Bank’s activities and
characteristics under ever-changing conditions. Accordingly,
A&T Bank has established the systems required for a strong
and controlled expansion by making organizational changes,
effected in previous years.
The global economic crisis has revealed various application
errors in internal auditing and risk management; it has also
shown how very important these functions are. The impacts
of the Arab Spring began to be felt in 2011 and continued
throughout 2012. As a result, since the Bank’s main partner
is the Libyan Foreign Bank, current risks in Libya have put
the importance of risk management and internal auditing
into sharp focus.
The Inspection Council and the Internal Control Department
plan and execute their activities with a risk-based approach
that focuses on minimizing operational risk as well as
conforming the Bank’s activities to both internal rules and
external legislation, all while increasing efficiency and
service quality. Reports on audit results are delivered to
relevant executives in a timely manner to ensure that any
weaknesses are eliminated without delay.
The Inspection Council and the Internal Control
Department continued their activities apace in 2012. The
“Self-Assessment Application,” implemented in 2010 to
raise awareness of internal controls among head office
departments’ staff and branch personnel while improving
efficiency and effectiveness in internal auditing functions, has
continued its operation in 2012.
In addition to standard audits carried out every year, A&T
Bank has also prioritized its business processes; to this end,
the Bank conducts “Business Processes Risk Analyses”
within the framework of the “Management Declaration” and
carries out process and information systems audits.
A&T Bank has also focused on establishing an effective
information security framework. The Bank continued its
daily monitoring efforts in order to identify user activities
carried out during the previous work day, report any unusual
activities and take preventative measures as required.
The Risk Management Department is responsible for
analyzing, identifying, measuring, monitoring, reporting
and controlling risks. It also establishes and applies risk
management policies, guidelines and rules in compliance
with principles approved by the Board of Directors. Risk
analysis reports related to credit, market and operational
risks are submitted to the Audit Committee, Senior
Management and the Board of Directors on a monthly basis
to be evaluated and taken into consideration during the
decision-making process.
To supplement its existing analytical tools, including duration,
scenario and stress testing, which are used to manage
liquidity, interest rate and foreign exchange rate risks, A&T
Bank purchased new computer software to ensure better
market risk and asset-liability management. The integration
work on these projects continued in 2012. The Bank also
REPORT OF THE AUDIT COMMITTEE
ON INTERNAL SYSTEMS OF THE BANK