Australian Prudential Regulatory Authority Prudential Standard APS 510 – Governance – Overview and Summary of Requirements

• By: Staff Editor
• Date: March 19, 2013

• A regulated institution should have an independent and adequately resourced internal audit function.
• The objectives of the internal audit function should include evaluation of the adequacy and effectiveness of the financial and risk management framework of the regulated institution.
• The internal auditor should at all times have free access to all the regulated institution’s business lines and support functions.

• The Board of an ADI should undertake steps to satisfy themselves that the auditor who undertakes work for the ADI (or foreign ADI) is independent of the ADI/ foreign ADI and that there is no conflict of interest              
• As part of the process of ascertaining the independence of the auditor, an ADI/ foreign ADI should obtain a declaration from the auditor to the effect that the auditor is independent and that there is nothing to the auditor’s knowledge that could compromise that independence.

• The Board of a regulated institution should have in place a formal policy on Board renewal which provides details of how the Board intends to renew itself in order to ensure it remains open to new ideas/ independent firm /audit company for the conduct of audit work conducted in accordance with the Prudential Standards or the Reporting Standards.
• The formal policy should give consideration to whether directors have served on the Board for a period which could reasonably be perceived to materially interfere with their ability to act in the best interests of the regulated institution.
• Regulated institutions (including foreign ADIs) should ensure that their internal policy and contractual arrangements do not explicitly or implicitly restrict or discourage auditors or other parties from communicating with APRA.

 Additional Resources

Read the Australian Prudential Standard 510 - Governance in full here.