Auditing Credit Risk Management

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Practice Guide for the Financial Services

Credit risk has always been considered a key risk for financial services organizations and, for a good number of organizations, maybe the most critical risk. This guidance provides internal auditors with a baseline skill set that allows them to test and evaluate the effectiveness of their organization’s credit risk management framework and processes.

This guidance will enable internal auditors to:

  • Understand the importance of credit risk in a financial services context.
  • Understand the regulatory environment and requirements related to credit risk.
  • Understand the risk governance and risk management processes surrounding credit risk.
  • Describe the nature and basis of measurement of the probability of default.
  • Design an audit engagement that assesses the appropriateness and effectiveness of the credit risk management framework and the adequacy of the institution’s credit profile.
  • Be able to apply IPPF and risk-based internal audit techniques to assess and audit credit risk in their organization.