CH1 AUDIT OF BANKS

• The Philippines' banks are classified into three types:

  • universal and commercial;
  • rural and cooperative;
  • thrift
• _____________ perform the function of _______________ money and valuables and extending loans, credit and payment services in the form of checking accounts, money orders, cashier's checks as well as the issuance of debit and credit cards.

  Banks; safekeeping
• ____________________ (particularly the universal and commercial banks) are also allowed to engage in other intermediation activities

  Large banks
• The financial system is composed of two general groups namely: _________ and ________________ financial institutions.

  banks; non-bank
• ________include: universal banks, commercial banks, thrift or savings banks and the rural and cooperative banks. These institutions are allowed to collect ___ to fund loans and also perform the function of providing credit and payment services

  Banking institutions; savings and time deposits
• universal and commercial banks total deposits

  12 trillion Philippine pesos
• Primarily responsible for mobilizing domestic savings and converting funds into directly productive investments

  Banking and finance sector
• are also allowed to engage in other intermediation activities such as investment banking and may offer other forms of portfolio investment instruments and insurance products.

  Large banks( the universal and commercial banks)
• These institutions are allowed to collect savings and time deposits to fund loans and also perform the function of providing credit and payment services

  Banking institutions
• These institutions are not allowed to collect deposits but may encourage the general public to invest household savings in various financial instruments

  Non-bank financial institutions
• have the largest resources and offer the widest variety ofbanking services outside of collecting deposits and providing loans.

  Universal and commercial banks
• underwriting and other functions of investment houses, investing in equities and non-allied undertakings

  Universal and commercial banks services
• They accumulate the savings of depositors and provide housing loans and financing for short-term working capital as well as medium- and long-term financing

  Thrift banks
• Promote and expand the rural community by mobilizing savings and extending loans and other financial services to farmers to help with the purchase of seeds, livestock, fertilizers, and other farm inputs and the marketing of their produce.

  Rural and cooperative banks
• offering a wide variety of services such as investment houses, financing companies, investment companies, securities dealers/brokers, lending investors, government non-bank financial institutions, venture capital corporations, non-stock savings and loans associations, pawnshops and credit card companies.


  non-bank financial institutions
• The Independent central monetary authority of the Philippines that has regulatory and supervisory power over banks and non-bank financial institutions

  Bangko Sentral ng Pilipinas (BSP)
• accepting deposits and offerchecking account services

  commercial banks
• provides all kinds of services of commercial banking and exercise the powers of an investment house and invest in non-allied enterprises

  universal banking
• the value of loans granted by universal and commercial banks in the Philippines

  9.7 trillion Philippine pesos
• The law requires all lenders under BSP supervision to grant a 30-day grace period or extension for the payment of loans due within the enhanced community quarantine (ECQ) period, without imposing additional interest, penalties or charges on their borrowers

  Bayanihan Act RA No. 11469
• This is to make sure that Filipinos continue to have access to basic government and financial services amid the COVID-19 situation.

  know-your-customer (KYC)
• 1. Experience2. Resources3. Use of experts/specialist

  Acceptance
• 1. Various reporting requirements2. Accreditation requirements

  Highly Regulated
• 1. Complex FIs2. Complex estimates3. Assets could rapidly change in value

  Peculiar Transactions
• 1. Debt modification due to BARO2. ECL-COVID 19 overlay


  Extensive use of PFRS 9
• 1. Inherent risk of fraud especially in a highly digitized environment2. Compliance pressure

  Fraud Consideration
• 1. Authenticity of documents2. Inherent Limitations

  Remote Auditing and COVID-19 limitations
• BSP RAP

  Regulatory Accounting Principle for Banks
• if the financial statements have been prepared in accordance with both frameworks (RAP and GAAP)

  Totally Unqualified opinion
• If the financial statements are in accordance with only one of the frameworks

  unqualified opinion in that framework and qualified or adverse opinion with the other framework
• As stated in the new Basel Committee ________________________, internal audit provides independent assurance ....in promoting an effective governance process and the long-term soundness of the bank

  Corporate Governance Principles for Banks
• internal audit provides ___________

  independent assurance
• Top 5 - Ranking as to Total Assets (Universal and Commercial Bank Group) - As of September 30, 2020

  1. BDO Unibank Inc.2. Land Bank of the Philippines3. Metropolitan Bank & TCO4. Bank of the Philippine Islands5. Philippine National Bank
• Top 5 - Ranking as to Total Deposit Liabilities (Universal and Commercial Bank Group) - As of September 30, 2020

  1. BDO Unibank Inc.2. Land Bank of the Philippines3. Metropolitan Bank & TCO4. Bank of the Philippine Islands5. Development Bank of the Philippines
• Banking and finance sector

  
• Banking and finance sector


  is primarily responsible for mobilizing domestic savings and converting these funds into directly productive investments
• Financing


  done to raise productive capacity by purchasing additional capital equipment, acquiring, or leasing idle property, building, and expanding factories,
• The Philippines' banks are classified into three types: universal and commercial banking, rural and cooperative banking, and thrift banking.

  TRUE
• Universal and Commercial banks


  Of these segments, _______ that accepted domestic deposits and offered checking account services had dominated the Philippines' banking industry, with its total deposits valued at approximately 12 trillion Philippine pesos.
• Banks


  perform the function of safekeeping money and valuables and extending loans