It is the responsibility of Bank’s Board of Directors to:
- ensure that effective measures are in place to safeguard the Bank’s assets;
- ensure proper accounting records and reliable financial information by procedures designed to avoid or reduce risks and ensure compliance with applicable laws and regulations;
- ensure that an adequate and effective system of internal controls and procedures is established and maintained; and
- evaluate the effectiveness of the Bank’s internal control system, identifying control objectives, reviewing significant control policies and establishing relevant control procedures.
Control activities are closely monitored across the Bank by the Bank’s internal audit function, working independently of management. In addition, the risk management and compliance functions monitor control activities on an ongoing basis. All three functions cover all banking activities in general and key risk areas in particular. The Board's Audit & Compliance Committee reviews audit reports periodically and particularly where significant violations to the applicable regulations, prescribed policies and procedures have occurred. The Board's Audit & Compliance Committee ensures the implementation of regulations, policies and procedures through all Bank departments aimed at mitigating identified risks and safeguarding the interest of the Bank and its shareholders.
While the Board's Audit & Compliance Committee oversees and reviews the Bank’s compliance policies and their implementation, the Group Compliance department which reports to the Chief Risk Officer, is responsible for advising and monitoring compliance with local regulatory requirements. Compliance with anti-money laundering procedures and internal training in such procedures is also developed and administered by the Group Compliance department.
The Bank’s internal controls over financial reporting comprise processes designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with accounting principles. The Bank’s internal controls over financial reporting include policies and procedures that (i) are designed to ensure maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Bank; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles, and that receipts and expenditures of the Bank are being made only in accordance with authorizations of management and directors of the Bank; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Bank’s assets that could have a material effect on the financial statements. Internal controls are designed to ensure that adequate independent internal checks and balances exist in keeping with the maker-checker or four-eye principle and that the oversight roles are embedded in areas reporting independently to non-originating areas.
The Bank’s internal control system has been designed to provide reasonable assurance to the Bank’s Board of Directors and shareholders. All internal control systems, no matter how well designed, have inherent limitations and they may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions or that the degree of compliance with the policies or procedures may deteriorate.
However, improvement of control activities is an ongoing process at ADCB that includes identification, evaluation and management of significant risks faced by the Bank.