To: All Licensed Banks in Oman

Subject: Internal Audit Function in Banks

1. As banks are already aware, the Basel Committee on Banking Supervision has recently issued a paper on Internal Audit in Banks and the Supervisor’s Relationship with Auditors, with .the objective ‘of enhancing the internal audit function and harmonising and improving internal audit standards internationally. The paper contains 20 Principles, which are intended for general application, even though they could be .applied within a specific supervisory framework. The Central Bank of Oman also subscribes to the view that strong internal control including audit function is an essential component of sound corporate governance practices in banks.