Group Managing Director/Chief Executive Officer of Union Bank of Nigeria Plc, Funke Osibodu, has called on auditors and bank inspectors nationwide to embrace risk-based auditing as a way of abating the spate of high corporate failures witnessed in the country in recent times.
In her goodwill message at the annual conference of the bank's inspection department, held at its Corporate Head Office at Marina, Lagos, Osibodu recognised the department as one of the most important in any bank, stressing that inspection, as the last mile, should always strive to live up to expectations.
She observed that the banking system had become so porous because the inspectors, as the institution's last defence line, had not been as effective as they ought to be. She pointed out that the non-performing loan issue and bad debts in the entire banking system accumulated because the inspectors were preoccupied with the traditional auditing rather than risk-based auditing system.
According to her, risk-based auditing approach would further strengthen the business of banking, which was predicated on banking, and would give early warning signals before any loan becomes bad debt. Describing inspectors as men in black and tough people, she urged them to also wear their bullet proof vests by striving to be diligent and exhibiting the highest level of integrity in all their investigations even as they pursue any case of infraction conclusively.
The chief executive had postulated that the hallmark of good inspections does not lie in how many frauds they expose but on how many of such cases are nipped in the bud, emphasising that data integrity of any audit is its litmus test.
The conference observed that in the pursuit of traditional auditing, risk mitigants such as sectoral exposure limits, single obligor limits, loan approval limits, perfection of titles of securities for loan before disbursement, limits of insider lending and effective loan monitoring were not strictly investigated and monitored by inspectors
It also agreed that internal auditors should move from the traditional auditing, with all its drawbacks, to risk-based auditing in the current dispensation.