Subject: Reporting Responsibilities of the Internal Audit Departments of Licensed Banks

1. As licensed banks may be aware already, Central Bank of Oman has consistently taken the stand that a properly organised Internal Audit Department plays a very important role in a licensed bank’s day to day operations by ensuring (a) the bank’s adherence to approved procedures, (b) compliance with operating rules and regulations.

2. It has also come to the notice of the Central Bank that the reporting responsibilities of licensed banks’ internal audit departments vary from bank to bank. Sometimes, it has been observed that the lack of properly planned reporting responsibilities has virtually nullified the concept of independent reporting normally associated with the internal audit department.

3. The Board of Governors of the Central Bank have considered this issue at length and have decided that henceforth, all licensed banks shall comply with the following requirements in regard to their internal audit departments’ reporting responsibilities.

   • a) The Heads of the Internal Audit Department of all locally incorporated banks shall directly report to the Board of Directors of the respective banks.