XVI Meeting of Internal Auditors of Central Banks

Inauguration and opening of the meeting

Miguel Cantillo Simón, Member of the Board of Directors and Chairman of the Audit Committee, Central Bank of Costa Rica, gave the welcome speech to the XVI Meeting of Internal Auditors of Central Banks.

Additionally, Maribel Lizano Barahona, Acting Internal Auditor of the Central Bank of Costa Rica and Roberto Marino López, Advisor to the General Management of CEMLA gave opening remarks to the Meeting. They highlighted the presence of a significant number of experts in the field of internal audit from various regions of the world such as Latin America, North America, Europe and Asia. The large turnout at this meeting underscored the importance of the issue for central banks. They noted that it is extremely satisfying to resume these Internal Auditors' Meetings, as the last meeting was held in 2019 in Chile and was a successful Meeting with great learning for all participants.

They commented that the heads of internal audit of the various central banks, as well as other audit experts from international organizations, would share the experiences of their countries on different topics of interest in this area of competence. The various speakers explored the transformation of the function and daily work of the internal auditor to make a strategic contribution to their organization, addressed the issue of how to broaden the auditor's perspective to substantive aspects and how to improve their methods with the incorporation of technology and the development of new skills, based on reflection on recent experiences and future perspectives.

The first session was a Focus Group: "Internal Audit Benchmark" moderated by participants from Banco de México. The presentation was given by Martha Martinez, Specialty Leader, Internal Audit, Banco de México.

In the second session, the paper "Challenging the status quo: flexibility and agility in audit plans" was presented by David Galán Ramírez, President, Institute of Internal Auditors of Costa Rica and former Internal Auditor of the Central Bank of Costa Rica. He noted that internal auditors can follow the principles of "Design Thinking" to provide security, answer their clients' questions, and help them solve problems.

In the third session, the topics related to: "Taking on the challenge of internal audit consulting services" were presented. The presentation was given by Herizo Andriantseheno, Chief Audit Officer, Bank of Canada. He commented on the types of consulting services, the advantages and challenges of consulting engagements, and the Bank of Canada's experience with consulting services.

In the fourth session, the topic entitled "Modernizing the monitoring of audit results through the use of information technologies" was addressed by Silvia Quintard Flehan, General Auditor, Central Bank of Chile and Jeannette Maturana, Head of the Department of Automation and Data Analytics of Internal Audit, Central Bank of Chile. They commented that before incorporating any technological tool into the audit and monitoring function, it is necessary to ensure that the audit work is of quality and adds value to the organization.

In the fifth session, Andrew Cook, Director of Professional Guides, Financial Services, Institute of Global Internal Auditors (IIA) presented "The Proposed Global Internal Auditing Standards: What Do You Need to Know?". In this regard, he commented that internal auditing is most effective when: 1) It is carried out by qualified internal auditors in accordance with the Global Internal Auditing Standards, which are established to safeguard the public interest. 2) The internal audit function is positioned independently with direct responsibility to the board of directors. 3) Internal auditors are free from undue bias and influences and are committed to conducting objective assessments.

In the sixth session, Jorge Badillo Peralta, Board Member, Global Institute of Internal Auditors (IIA) spoke about "Modernization of Audit Reporting and Accountability." He pointed out that the Audit Report is a key element of the performance of an Internal Audit department, as it is the final product of its work, it is its final deliverable.

In the seventh session, José Luis Pérez Arredondo, Internal Auditor, Banco de México and Martha Martínez, Specialty Leader, Internal Audit, Banco de México, commented on the "Model of the 3 lines: design, effectiveness and challenges". They noted that the three-line model in the financial sector is widely used, especially by central banks and financial institutions to respond to the complexity and critical nature of their risks. Its main characteristics are: 1. Regulatory soundness. It allows financial institutions to structure and evidence their approach to risk management so that it can be understood and evaluated by regulators. 2. Nature of the risks and clarity in the service channels. It defines who is responsible for managing, supervising and providing assurance on these risks, which facilitates the work in the case of institutions with a high degree of complexity. 3. Accountability. To decrease the risk of scandals and crises and strengthen trust and resilience.

In the eighth session, Julio Alejandro Poveda Suárez, Deputy Director, Computer Audit, Banco de la República, Colombia, spoke about "Fostering cyberresilience from internal audit". He defined cyberresilience as the ability of a process, business, organization, or nation to anticipate, resist, recover, and evolve to improve its capabilities in the face of adverse conditions, stress, or attacks on cyber resources that are needed to function.

In the ninth session, Manfred Kopper Castro, Sustainability Services Partner, EY Central America presented the topic "The role of internal audit in sustainability: Environmental, Social and Governance (ESG)". In this regard, he pointed out that internal audit should be a strategic partner of the organization's ESG Sustainability program to increase the level of confidence in the management of risks and opportunities, the measurement and reporting of progress, and the achievement of objectives and commitments.

In the tenth session, Luis Enrique Pardo Merino, Director of Internal Audit, Bank of Spain, commented on "Breaking paradigms with audits of substantive processes in Central Banking". He discussed the rising interest rate environment and its financial impact, the withdrawal of temporary easing measures on collateral, the revision of valuation haircuts, collateral eligibility, the increasing use of internal valuation systems for non-marketable assets, and the monitoring of structural market developments in sustainability products.

In the eleventh session, José Luis Pérez Arredondo, Internal Auditor, Banco de México and Martha Martínez, Specialty Leader, Internal Audit, Banco de México, presented the Focus Group: "The Impact of Digital Transformation on Internal Audit: Data Analytics and Artificial Intelligence".

At the eleventh session, Maribel Lizano Barahona, Acting Internal Auditor, Central Bank of Costa Rica, presented "The Potential of the Soft Skills of the Modern Auditor".

The Meeting was closed by Roberto Marino López, Advisor, CEMLA.