THE CENTRAL BANK allows trust companies that are part of a larger group to carry out an internal audit, either by itself or through a central unit of its parent company.
Circular No. 1141 signed by Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno stated that the internal audit function of trust companies should assess and complement other control initiatives such as management risk and compliance.
“In all cases, the audit should verify whether the trust and other fiduciary and investment management activities of the institution have been administered in accordance with the laws, rules and regulations of Bangko Sentral and sound fiduciary or fiduciary principles” , indicates the circular.
The BSP said a permanent audit function should be established, either under the trust company itself or under its parent bank or non-bank financial institution.
The circular allows the board of directors of a trust company to perform an internal audit which can supplement or replace an annual audit cycle.
“The audit may be carried out at intervals commensurate with the levels of risk assessed in trust and investment management operations,” the circular states.
The BSP stated that the group internal audit manager of a trust company should define the audit strategies, methodology, scope and quality assurance measures. These should be established in consultation and coordination with the trust company’s board of directors or audit committee.
The central bank has also given trust companies the option of outsourcing internal audit activities, provided that these are not outsourced to the trust company’s external audit firm.
The BSP has undertaken various reforms in the trust sector. Last year, trust companies were allowed to sell unit investment trust funds (UITFs) through individual and institutional agents to level the playing field with banks that have large distribution networks. .
The latest data from the central bank showed that there are 37 financial institutions supervised by the BSP with trust authorities, including banks, trust companies and other non-bank financial intermediaries.
Assets under management in the fiduciary sector reached nearly 5 trillion pesos at the end of September 2021, based on BSP data. — Noble LWT