Central Bank makes proposal on auditors

THE CENTRAL Bank has proposed that it should meet the external auditors of the banks at least twice a year – before and after their audits – to prevent a repeat of the mistakes of the banking crisis.

In a consultation paper, the Central Bank has suggested meeting the lead partner from the bank’s audit firm. In addition, a meeting should be held during the planning of the audit involving the Central Bank, the auditors and the chairman of the bank’s audit committee or an independent non-executive director from the bank.

At the pre-audit meeting, the Central Bank wants the auditors to detail risks being taken by the bank, changes in the business and weaknesses identified previously.

Following the sign-off of the audit report, the Central Bank proposes a meeting with the auditors to discuss where management “applied significant judgment” and its effect on the auditor’s view of the bank’s financial statements and its risk profile.

“This discussion would include the level of professional scepticism applied by the auditor,” said the Central Bank, which will publish protocol for bank auditors later this year. Comments on the paper must be submitted by September 23rd.

In his March 2011 report on the banking crisis, former Finnish civil servant Peter Nyberg described auditors as “the silent observers”, saying that the focus of their work on the banks was too narrow and backward-looking.