improve the effectiveness of risk management, control, and governance processes. ” as we see it, the basic function of internal audit is independent appraisal of an institution ’ s internal controls, including controls over financial reporting. simply put, it is about reviewing activities to ensure that they are carried out as intended. of course, a by - product of internal audit will be recommendations on internal control and process improvements that could be made, an important role for internal audit at large and complex financial institutions in particular. the bank of png internal audit charter was drawn up with the assistance from the imf technical advisor and reviewed periodically – by the internal audit department ; it was approved by senior management ( governor ) and subsequently confirmed by the board of directors as part of its oversight role. in the charter, the bank ’ s senior management gives the internal audit department the right of initiative and authorises it to have direct access to and communicate with any member of staff, to examine any activity or entity of the bank, as well as to access any records, files or data of the bank, including management information and the minutes of all consultative and decision - making bodies, whenever relevant to the performance of its assignments. the charter states the terms and conditions according to which the internal audit department can be called upon to provide consulting or advisory services or to carry out other special tasks and the charter is communicated throughout the organisation. to perform their role effectively, internal audit requires organizational independence from management to enable unrestricted evaluation of management activities and personnel. to ensure independence, manager internal audit reports directly to the governor and also has direct access to the audit committee on matters considered of significant importance to the functioning of the bpng. audit committees require the help of internal auditing departments in order for them to be able to effectively fulfill their obligations to the board, the shareholders, and other outside parties who have a stake in the organisation. the contribution of internal auditors as business advisors or consultants to the organisation and their role in ensuring compliance with various statutes, policies and procedures cannot be overemphasized. these new challenges that are faced by internal auditors require them to acquire the necessary skills and competencies on a continuous basis. this makes it necessary for them to place them on a learning path so that they could update themselves with new developments. he / she should know all aspects of the operations in order to perform an effective job as an internal auditor. in this respect, the work done by the institute of internal auditors in

its rugged geographical terrain and sparsely distributed provinces which stand to benefit considerably from the use of electronic and mobile phone banking. the greatest challenge is to extend these services to the “ unbanked ” segment of the population who are mostly in the rural areas. in this respect a trade store in the remote part of papua new guinea could be an agent of this service and this could solve the everyday problem of a farmer who has to travel long distances and incurs high costs to get the required financial services in urban towns. role of bank of png section 7 ( c ) of the central banking act 2000 specifies that bank of png has to promote an efficient national and international system. in this regard, the bank welcomes the introduction of electronic payments and mobile banking products, which can assist in reducing transaction cost and contribute to the expansion of financial services in the country, particularly in the rural areas. whilst the bank seeks to encourage the introduction of new innovative instruments for payments, it also needs to ensure that high levels of standards are maintained for safety, security and cost effectiveness with adequate levels of protection for consumers ’ interests. in other words, the bank wishes to ensure that electronic payments and mobile banking instruments are appropriately regulated to mitigate any potential incidences that might give rise to systemic risk on the entire financial system. it is also important that the other legislations such as the proceeds of crime act ( pca ), information, communication and technology act ( icta ) and independent consumer, competition, commission act are also adhered to provide the necessary safety net for financial transactions. in this regard, the bank of png introduced its statement of intent on electronic payments and mobile banking in may 2010. it outlines the current views and approach of the central bank towards electronic and mobile payment services and sets out the measures which the bank intends to adopt in the future. this forum demonstrates the bank ’ s intention to work with our development partners in achieving the governments objectives of promoting financial inclusion, access to finance, and reduce the cost of banking that will lead to sustained economic growth. in this regard, the bank of papua new guinea has been actively involved with the development of microfinance industry, the mobile phone banking and payment services, and is now finalizing a project with donor partners to undertake a financial literacy survey and linkage program for the unbanked. these programs will see the introduction of a financial inclusion and literacy policy which will be submitted to the government for adoption, and development of a microfinance regulation