Organisational Initiatives INTERNAL AUDIT DEPARTMENT Assessing the Control Environment in MAS The Internal Audit Department (IAD) is an independent function that reports directly to the Audit Committee (AC). With the approval of AC, IAD conducted an extensive program of risk-focused audits during the year to ascertain the adequacy of controls and procedures for managing risks across the wide spectrum of MAS’ operations. These encompassed MAS' core functions and systems including reserve and monetary policy management, financial sector supervision and development, currency and corporate resource management as well as the IT infrastructure supporting these functions. In general, the system of internal controls of areas covered by IAD was assessed to be satisfactory for Financial Year 2004/05. Management also took prompt action to implement mitigating measures to address audit concerns and enhance the internal processes. During the year, IAD had instituted an audit-rating framework which provides for assessment criteria in determining the state of the control environment of an audited activity. It also facilitated the implementation of a pilot Control Self-Assessment exercise by the Currency Department to enhance the robustness of the existing system of controls. To benchmark against international best practices, IAD will conduct a quality review programme to determine the degree of conformity of its internal audit practices with the professional standards laid down by the Institute of Internal Auditors.