The State Bank of Pakistan (SBP) on Friday directed external auditors of all scheduled banks to share their audit findings with the inspectors of the central bank.
In a rare decision taken by the Banking Supervision Department (BSD) of the central bank, it has been further decided that findings of the inspection teams of the SBP would be shared on reciprocal basis with the external auditors of the banks.
The SBP decision says: “Similarly, the SBP inspection teams, on conclusion of their inspections, will share their concerns about the financial statements of the banks with the concerned external auditors.”
Sources of the central bank said that the SBP has invoked its extreme powers under section 35(3) of the Banking Companies Ordinance (BCO), 1962 and the basic aim of invoking this specific section is to regulate the affairs of the external auditors of the commercial banks of the country.
Sources said that the SBP however, in its usual official language has tried to explain the reason of invoking of section 35(3) BCO by saying:
“In order to promote coordination and sharing of information between the external auditors of banks and SBP inspectors, it has been decided that the SBP's inspection teams will hold meetings with external auditors of the banks before commencement of each inspection.”
The BSD Circular letter number 10 says further: “Furthermore, the banks are advised to ask their external auditors to send the copies of their letter to the Board of Directors of the bank and the Management letter directly to SBP within one week of the issuance of these letters.”
The letter adds: “As for the year 2002, both the aforesaid letters may be submitted to the BSD within 15 days from the date of this circular.”