The relationship between banking supervisors and banks' external auditors

February 2001

Issued for comment by 12 June 2001

Executive Summary

This International Auditing Practice Statement has been prepared in association with the Basel Committee on Banking Supervision. It was approved for publication as an exposure draft by the International Auditing Practices Committee and by the Basel Committee.

Banks play a vital role in economic life and the continued strength and stability of the banking system is a matter of general public concern. The separate roles of bank supervisors and external auditors are important in this regard. The growing complexity of banking makes it necessary that there be greater mutual understanding and, where appropriate, more communication between bank supervisors and external auditors.

The purpose of this Statement is to provide information and guidance on how the relationship between bank auditors and supervisors can be strengthened to mutual advantage, and it takes into account the Basel Committee's Core Principles for Effective Banking Supervision. However, as the nature of this relationship varies significantly from country to country the guidance may not be applicable in its entirety to all countries. The International Auditing Practices Committee and the Basel Committee hope, however, that it will provide a useful clarification of the respective roles of the two professions in the many countries where the links are close or where the relationship is currently under study.

Comments on this exposure draft should be submitted by 12 June 2001 . Comments may be submitted by post to the Basel Committee on Banking Supervision, CH-4002 Basel, Switzerland, faxed to +41 61 280 9100 or e-mailed to bengt.mettinger@bis.org. Comments may alternatively be submitted to EDComments@ifac.org or faxed to the IFAC Secretariat (+1 973 286 9570). Unless respondents request confidentiality, their comments are a matter of public record.