The loan portfolio audit enables stakeholders to understand the risks inherent in a financial service provider’s loan portfolio, and the systems and procedures used to mitigate this risk.
The loan portfolio audit is intended to help interested stakeholders to:
- Measure compliance with local regulation and international standards
- Demonstrate operational and credit quality soundness
- Prove consistency with internal policies and procedures
- Improve portfolio management systems
Financial service providers, investors, DFIs, development agencies and other stakeholders.
How it works?
The loan portfolio audit:
- Assesses implementation of credit policies, procedures and processes and highlights non-compliances affecting operational risk
- Identify the main risk factors related to the lending methodology
- Verify loan file accuracy and completeness
- Assess the reliability of reported portfolio quality indicators and accuracy in the calculation of loan loss provisioning based on local regulatory requirements and international standards
- Confirm the existence of clients through face-to-face meetings and phone calls
The Loan Portfolio Audit is performed with a combination of a desk review and field visit to clients and the FI’s branches. The final report provides a clear overview of the FI’s portfolio quality and structure, in depth evaluation of the credit process and complete list of compliance gaps identified and related guidance remarks for improvement.