Purpose
The Internal Audit Division assists the Court of Directors and Executive Management in protecting the Bank’s assets, reputation, and sustainability. It does this by independently and objectively evaluating the effectiveness of internal controls, risk management and governance processes. As part of this assurance Internal Audit provides advice, insight and foresight and recommends cost-effective improvements, including efficiencies, which are agreed with management and tracked until implementation.
Independence
Internal Audit is independent of the day-to-day business of the Bank. Internal Audit staff assume no operational responsibilities and will not review a business area or function in which they have had recent management or operational responsibility or are otherwise conflicted.
The Head of Internal Audit reports to the Chair of the Audit & Risk Committee. The Head of Internal Audit has unhindered access to the Audit & Risk Committee and Executive Management and meets periodically with the Chair of Court and the Governor.
Authority
Internal Audit derives its authority from Court, via the Audit & Risk Committee, and the Governor, with the support of Executive Management. Internal Audit is authorised to examine the internal controls, risk management and governance arrangements in all areas of the Bank.
Internal Audit has full, free and unrestricted access to all Bank records, property and personnel, including where appropriate outsourced operations, within a reasonable period of making the request.
Resources
The headcount and other resources available to the Internal Audit Division will be determined annually by the Governors in consultation with the Head of Internal Audit and subject to the approval of the Audit & Risk Committee.
Professional standards
Internal Audit is committed to adhering to the mandatory elements of the Global Internal Audit Standards, to the principles of Ethics and Professionalism therein, and to the Application Note for the UK Public Sector published by HM Treasury.
Responsibilities
Internal Audit is required to:
- prepare and execute a risk-based audit plan which is approved annually by the Audit & Risk Committee and Executive Management. It may also perform advisory services and special investigations (including in relation to fraud incidents, high priority project/change activity, or processes involving 3rd party suppliers), as directed by the Audit & Risk Committee, requested by Executive Management, or determined by the Head of Internal Audit;
- identify, and agree with management, cost-effective opportunities to improve internal controls, risk management and governance processes. In circumstances where agreement with management cannot be reached the matter will be escalated to the Governor and, if still unresolved, full details will be reported to the Audit & Risk Committee;
- verify that such improvements are implemented within a reasonable timeframe;
- report the results of its audit work, including an opinion regarding the adequacy of the overall control environment in the area under review, to management;
- provide summaries of its work and performance in quarterly and annual reports to the Audit & Risk Committee;
- maintain frequent and open dialogue with management to maintain awareness of the key risk, control and governance issues facing the Bank;
- liaise closely with, and assess the effectiveness of, the other members of the Bank’s three lines risk management model;
- coordinate and cooperate with the Bank’s external auditors and, where applicable, the National Audit Office;
- provide assurance where required by applicable codes of conduct (such as BACS and CHAPS); and
- implement a quality assurance and improvement programme designed to evaluate conformance with professional standards, assess the efficiency and effectiveness of internal audit activity and identify opportunities for improvement.
Approval
This charter and mandate will be reviewed and approved annually by the Audit & Risk Committee. It was last approved on 19 March 2026.