Independent Validation Audit of ICAAP in Banks

(Principal Course Developers of this Learning Series: Ms. Lyn I. Javier, Ms. Edel Mary Vegamora, and Ms. Mary Jane C. Japor)

I. SPEAKERS:

MS. EDEL MARY VEGAMORA, CIA, CRMA, CPA, FELLOW of ICD's Society of Fellows

- Former Bank Executive, with C-suite Roles as Chief Financial Officer (CFO), Chief Audit Executive (CAE), Chief Internal Auditor (CIA), in Universal Banks/Commercial Banks.

- As CAE or CIA: performed Independent Validation/Review of certain Unibanks's ICAAP;

- As CFO: served as Chairperson of the ICAAP Committee for a commercial bank.

- Chairperson of Finance and Audit Course Committee, BAIPHIL

MR. DOM B. GAVINO, JR.

- Chief Financial Officer, Deutsche Bank

- Former President, Bankers Institute of the Philippines, Inc.

MS. MARY JANE C. JAPOR

- Vice President - Lead Finance Control I, ING Bank N.V. – Manila Branch

- Former Director, Bankers Institute of the Philippines, Inc..

MR. REGINALD C. NERY

- SVP/Chief Audit Executive, Bank of Commerce

- Director, Bankers Institute of the Philippines, Inc.

SUBJECT MATTER EXPERTS FROM BANGKO SENTRAL NG PILIPINAS

II. LEARNING OBJECTIVES OF THE ICAAP WEBINAR SERIES:

- The Speakers will facilitate the Learning Process of the Participants, through lecture and learning assessments, such as online quiz, as well as case discussion in an interactive setting.

- The Participants are expected to gain some practical insights into the role of the independent Auditor/Validator of the Bank's ICAAP Report to the Board (and to the BSP). In this regard, the Participants are expected to take part in the discussions and learning assessments during this webinar series.

- The Speakers will aim to influence the Analytical and Critical Thinking Process of Participants, with Focus on the Key Topics in the AGENDA for this ICAAP webinar series.

- As part of their learning process, the Participants are advised to do some preliminary reading of the BSP circulars on the topic of "Risk Based Capital Adequacy Framework", "Capital Adequacy Ratio" or "CAR", "Qualifying Capital", "ICAAP", which are available in the website of BSP https://www.bsp.gov.ph​​​

- The Participants are expected to already possess a good grasp of the banking business and of the culture of compliance with banking rules, as this ICAAP Webinar Series is designed to focus on the complex strategic, governance, risk management, internal controls and operational elements of the bank's Internal Capital Adequacy Assessment Process (ICAAP) that is mandated by the Banking Regulator.This ICAAP webinar series is not advisable, and is not designed, for individuals who are beginners in their banking experience or beginners in the management of capital adequacy for banks.

III . COURSE OUTLINE

DAY 1

· Status of the Philippine Banking System

· Principle of Proportionality

· Overview of the Basel Framework

· Pillar 2

· Key elements of ICAAP

DAY 2

· The strategic and financial drivers of Regulatory Capital Adequacy in banks; the key elements and financial methodologies for determining the risk-based CAR, the Qualifying Capital, the Risk-Weighted Assets (Ref: "RBCA Framework");

· The financial methodology for translating the financial & strategic projections into the ICAAP's Internal CAR projections;

· The bank's "Embedding" of ICAAP components as part of strategic business unit operations, as part of risk management process, as part of the bank-wide compliance system and IT, and as part of Finance operations;

· The common issues that may be encountered by the bank as regards their regulatory capital adequacy compliance, the bank's ICAAP implementation, and Management's ICAAP Report to the Board and to the BSP.

· What nature of Policy Issues could possibly arise as part of the bank's implementation and embedding of ICAAP;

· What nature of Risks and Regulatory Exposure could arise whenever the bank's Regulatory CAR compliance and ICAAP implementation are inadequate;

· What nature of Financial Issues could possibly be highlighted as part of the bank's implementation and embedding of ICAAP;

· The bank's follow-thru on the Independent Audit Findings or the BSP Regulator's Findings arising from previous ICAAP Audit / Regulator Examination;

What nature of Board Questions (and Decisions Required) may arise as part of the Board's Effective Challenge of Management's ICAAP Report.

DAY 3

· Illustrative Example: Framework for ICAAP METHODOLOGY and Framework for the Auditable ICAAP COMPONENTS.

· Illustrative Example: Determining the Engagement Objectives, and the Audit Strategy for Bank's ICAAP.

· Assessing the bank's Governance Framework, the Compliance Culture and Control Environment for ICAAP.

· Assessing the bank's Embedding of ICAAP.

· Assessing the bank's Action or Planned Resolution to address the Independent Auditor's and the Banking Supervisor's Findings & Recommendations on ICAAP.

DAY 4

· Assessing the basis of management's key assumptions that impact the: projected capital requirements, in the ICAAP.

· Assessing/ Validating Key Financial Statement Accounts Projection that are described in the ICAAP Report.

· Assessing/ Validating the bank's Capital Recovery Plan, the Dividend Plan, as well as the implementation thereof or revisions thereto.

· Assessing/Validating management's decision for taking up an "internal capital charge" (or none thereof) for Legal Risk exposure, and for Strategic Risk exposure, in line with ICAAP rules.

DAY 5

· Assessing/Validating the Risk Management's decision to take up an "internal capital charge" (or none thereof) for projected 'Stress Scenarios' exposure, Contingent Risk exposure (i.e., recently Pandemic Risk exposure) in line with ICAAP rules.

· Assessing/Validating management's decision to take up an "internal capital charge" (or none thereof) for Compliance Risk exposure, or Regulatory Risk exposure.

· Assessing/Validating the Risk Management's decision to take up an "internal capital charge" (or none thereof) for projected Concentration Risk exposure, in line with ICAAP rules.

· Assessing/Validating management's decision to take up an "internal capital charge" (or none thereof) for Reputational Risk exposure.

· Assessing/ Validating the bank's overall financial model / methodology for the projected RBCA Risk-Weighted Assets, for the projected Regulatory Qualifying Capital Requirements, that are disclosed in the ICAAP Report.

DAY 6

· What nature of "value-add" would the Auditor/Validator possibly contribute to the adequacy and effectiveness of the bank's ICAAP?

· How could the Auditor/Validator assess the acceptability / adequacy of Management's Action Plan, or Resolution to address the Audit Findings?

· How would the Auditor/Validator articulate his/her Overall Conclusion on the independent validation of management's ICAAP Report to the Board?

· How would the Auditor/Validator or the CAE express his/her Overall Assessment of the adequacy and effectiveness of the bank's governance, risk management and internal controls for ICAAP?

· Illustrative Example/Pro Forma Template for the Audit Report on the Independent Validation/Audit of the bank's ICAAP.

IV. SCHEDULE:

Day 1 - 15 February 2023, Wednesday, 1:30 PM - 5:30 PM

Day 2 - 16 February 2023, Thursday, 1:00 PM - 5:00 PM

Day 3 - 17 February 2023, Friday, 1:00 PM - 5:00 PM

Day 4 – 20 February 2023, Monday, 1:00 PM - 5:00 PM

Day 5 – 21 February 2023, Tuesday, 1:00 PM - 5:00 PM

Day 6 – 22 February 2023, Wednesday 1:00 PM – 5:00 PM

V. TRAINING FEE PER PARTICIPANT:

From Member Institution – P 8,400.00

From Non-Member Institution – P 11,760.00

**VAT inclusive