Loan Portfolio Audit

What?

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.

Why?

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

Who?

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.

Process

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