Internal Audit Practices for Culture and Conduct

This document is an Industry Practice Note that outlines the role of Internal Audit in assessing culture and conduct within financial institutions. It references the MAS Information Paper on Culture and Conduct Practices, particularly focusing on Outcome 7, which emphasizes the need for banks to incorporate assessments of behavior and culture into their internal audit processes. The document details various practices observed among member banks of the Culture and Conduct Steering Group, including the integration of culture assessments into audit methodologies and the evaluation of risk culture frameworks. It also discusses the importance of monitoring both culture and conduct, highlighting distinct considerations for each. Furthermore, it presents observations on leveraging tools and human behavioral expertise to enhance audit effectiveness, as well as the challenges faced in improving the competencies of Internal Audit teams. The document concludes by stressing the critical role of Internal Audit in managing culture and conduct risks and the potential benefits of integrating behavioral science into audit methodologies.