BSP sets internal audit rules for trust corporations
THE CENTRAL BANK is allowing trust corporations that are part of a bigger group to perform an internal audit, either by itself or through a central unit of its parent.
Circular No. 1141 signed by Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno said the internal audit function of trust corporations shall assess and complement other control initiatives like risk management and compliance.
“In any case, the audit shall ascertain whether the institution’s trust and other fiduciary business and investment management activities have been administered in accordance with laws, Bangko Sentral rules and regulations, and sound trust or fiduciary principles,” the circular said.
The BSP said that a permanent audit function should be established, either under the trust corporation itself or its parent bank or non-bank financial institution.
The circular allows the board of directors of a trust corporation to conduct internal audit that can supplement or replace an annual audit cycle.
“The audit may be conducted in intervals commensurate with the assessed levels of risk in trust and investment management operations,” the circular said.
The BSP said the head of the group internal audit of a trust corporation must define audit strategies, methodology, scope, and quality assurance measures. These should be set in consultation and coordination with the board of directors or audit committee of the trust corporation.
The central bank also gave trust corporations leeway to outsource internal audit activities, provided these will not be given to a trust corporation’s own external audit firm.
The BSP has been undertaking various reforms in the trust industry. Last year, trust corporations were allowed to sell unit investment trust funds (UITFs) through individual and institutional agents to level the playing field with banks that have broad distribution networks.
Latest central bank data showed there are 37 BSP-supervised financial institutions with trust authorities, including banks, trust corporations, and other non-bank financial intermediaries.
The assets under management of the trust industry reached nearly P5 trillion as of end-September 2021, based on BSP data. — L.W.T. Noble
