loi m bakani : financial planning for tomorrow speech by mr loi m bakani, deputy governor of the bank of papua new guinea, at the 2005 money show, port moresby. topic of discussion : creating a conducive financial system infrastructure for financial planning. * * * the minister for finance & treasury, honourable bart philemon, other government ministers, central bank governor mr. wilson kamit, members and directors of the port moresby stock exchange, invited speakers, ladies and gentlemen. the bank of png has participated in the money show since its inception, and as with the other sponsors, we see our involvement as an important contribution towards the education of our people in financial planning and investment. the money show has truly become an annual venue and source of education and awareness on financial matters. our participation is not only because of the unique position we hold in the financial structure of the country, but because the governing act, the central banking act ( cba ) 2000, also requires us to promote educational awareness, provide financial advice and ensure the safety of the financial system. in this regard, i, on behalf of the bank of png commend other sponsors for their continued support and participation in the money show. the theme for this year ’ s money show is - “ financial planning for tomorrow ”. speakers before me have and those after me will talk specifically on financial planning. what is it, why is it important, and how individuals and business enterprises can manage their financial resources and make use of various income - earning opportunities available. i will talk specifically on the area that is much closer to the activities of the central bank, that of ‘ creating a conducive financial system infrastructure to facilitate financial planning ’. the activities of the bank of papua new guinea, as most of you are aware, are governed by several legislations. these legislation include the central banking act ( cba ) 2000, the banks and financial institution act ( bfia ) 2000, the savings and loan societies act, and recently, the life insurance and superannuation acts. we can look at the financial system infrastructure from a legislative, operational and policy perspective : legislative let me first talk about the legislative aspect of the financial system infrastructure. i have mentioned the legislation that governs the activities of the central bank. these legislations were part of the government ’ s reform in the financial sector undertaken since 2000, which have given the central bank greater independence to perform its roles and objectives

to achieve those objectives ; while at the same time making sure that the structure functions to maintain the organization's integrity, reputation, and accountability to its relevant constituencies. enforcement alone cannot guarantee good corporate governance. whilst measures to enhance corporate governance are primarily aimed at boards of directors, who are seen as the agents responsible for protecting shareholder value, the internal audit fraternity is another industry group that is of particular importance. it is evident that the significance of internal auditing as a key contributor to corporate governance has emerged as a theme. this new paradigm in internal auditing will see the profession becoming a front player in ensuring good corporate governance structures. in this demanding environment, boards and senior management need quality advice from sources that can be trusted and that can offer an objective viewpoint. much of the focus of sarbanes - oxley in the united states and basle committee has been on the external audit function. equally, however, there is a need to ensure that internal audit is organised, resourced and empowered so that it can provide competent, impartial and fearless advice. in contrast to external auditors, however, our sense is that internal audit is still evolving as a profession and has further to go in promoting its own professional standards and profile in papua new guinea. we in bpng observe that internal audit in our supervised institutions is not based on widely utilised standards, recognised by audit committees for example, and it is not always focused on the same set of issues. internal audit functions vary from a narrow concern with compliance or financial accounts to a broader remit reviewing efficiency and effectiveness or acting as an internal consultant. my address today offers a prudential perspective on the role of internal audit. it starts with the separate roles of internal audit in the corporate governance framework. specific references will be made to the internal audit setup in the bank of png. it then sets out the expectations of internal audit held by prudential regulators at the international level and how the regulator assesses whether internal audit in the institutions it supervises meets these expectations. finally, i discuss some regulatory issue, the problems and challenges. my comments are offered in a constructive spirit to encourage debate within the internal audit profession. i will start by borrowing the definition of internal audit approved by the board of directors of your institute : “ internal auditing is an independent, objective assurance and consulting activity designed to add value and improve an organisation ’ s operations. it helps an organisation accomplish its objectives by bringing a systematic, disciplined approach to evaluate and