New Basel Committee paper explores roles of auditors and bank supervisors

Press release  | 
21 January 2002

The Basel Committee on Banking Supervision today issued an updated and expanded version of its paper The relationship between banking supervisors and banks' external auditors, jointly developed with the International Auditing Practices Committee (IAPC) of the International Federation of Accountants (IFAC). The IAPC is issuing the paper as an International Auditing Practice Statement.

As the business of banking has grown increasingly complex at both the national and international levels, the tasks and responsibilities of bank supervisors and external auditors, as well as the challenges they face, have become increasingly demanding. The Basel Committee and the IAPC share the view that a greater understanding among banking supervisors and external auditors of their respective tasks and responsibilities and, where appropriate, more communication between them will improve the effectiveness of bank audits and supervision, to the benefit of the public at large.

The purpose of the new paper is to provide information and guidance on how the relationship between bank auditors and supervisors can be strengthened to their mutual advantage, taking into account the Basel Committee's Core Principles for Effective Banking Supervision. Specifically, the paper:

  • describes the primary responsibilities of the board of directors and management;
  • examines the essential features of the role of external auditor;
  • examines the essential features of the role of supervisors;
  • reviews the relationship between bank supervisors and the external auditor; and
  • describes additional ways in which auditors and the auditing profession can contribute to the supervisory process.

Both the Basel Committee and the IAPC recognise that because the nature of the relationship between auditors and bank supervisors varies significantly from country to country, the guidance may not be applicable in its entirety to all countries. Nonetheless, it will provide a useful clarification of the respective roles of the two professions in the many countries where significant working relationships exist or where the relationship is currently under study.

Notes for editors

Basel Committee on Banking Supervision

The Basel Committee on Banking Supervision was established by the central bank Governors of the Group of Ten countries in 1975. It consists of senior representatives from banking supervisory authorities and the central banks of Belgium, Canada, France, Germany, Italy, Japan, Luxembourg, the Netherlands, Spain, Sweden, Switzerland, the United Kingdom and the United States. Its current chairman is William J McDonough, President and Chief Executive Officer of the Federal Reserve Bank of New York. The Committee usually meets at the Bank for International Settlements (BIS) in Basel, where its permanent Secretariat is located.

Task Force on Accounting Issues

The Basel Committee's Task Force on Accounting Issues has the lead responsibility in the Committee's consideration of accounting and auditing issues. It is chaired by Prof Arnold Schilder, Executive Director of the Netherlands Bank, and comprises accounting and auditing experts from the different Basel Committee member institutions.