1. The Board is responsible for ensuring that the risk governance framework of the Bank, and if applicable, Group, provides for appropriate oversight of financial reporting and external audit. The framework must, at a minimum, provide for:

1. a.Documentation in an appropriate mandate or terms of reference of the role and responsibility of the Board audit committee, including with respect to financial reporting; and
2. b.Board-approved policies, procedures, systems, internal controls and independent assurance by the internal and/or external audit functions of the Bank on the preparation of financial statements and prudential reporting to the Central Bank.

2. Banks must prepare their financial statements in accordance with the International Financial Reporting Standards (IFRS) and the instructions of the Central Bank. Such instructions may include, but are not limited to, the submission and publication of financial statements, classification and provisioning of financial items or guidance on the application of specific IFRS in the UAE banking sector.

3. The Board’s responsibilities for governance structures applicable to all financial instruments measured at fair value must include:

1. a.Reviewing and approving written policies related to fair valuations;
2. b.Ongoing review of significant valuation model performance for issues escalated for resolution and all significant changes to valuation policies;
3. c.Ensuring adequate resources are devoted to the valuation process;
4. d.Articulating the Bank’s tolerance for exposures subject to valuation uncertainty and monitoring compliance with the Board’s overall policy settings at an aggregate Bank-wide level;
5. e.Ensuring independence in the valuation process between risk taking and control units;
6. f.Ensuring the appropriate internal and external audit coverage of fair valuations and related processes and controls;
7. g.Ensuring the consistent application of accounting and disclosures; and
8. h.Ensuring the identification of significant differences, if any, between accounting and risk management measurements, and that these are well documented and monitored.