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Supervisors and Auditors: Building a Constructive Relationship
September 28, 2015Vienna, Austria

Senior banking supervisors, external auditors of banks, and other representatives from the banking sector, will meet in Vienna on 28 September to brainstorm on a number of actions that could be taken to improve the relationship between banking supervisors and external auditors, and to discuss how enhanced cooperation between external auditors and banking supervisors can contribute to financial stability.

The recent financial crisis highlighted weaknesses in the risk management, control and governance processes of banks as well as in their statutory audit and financial supervision. Since banking supervisors and external auditors play key roles in maintaining financial stability, their respective roles and interactions have come under increased scrutiny in the wake of the downturn. Since then, regulators and law makers have strived to address these shortcomings.

In particular, a 2014 Basel Committee on Banking Supervision paper explored the interaction between supervisors and external auditors and linked enhanced relationships with improved audit quality of banks’ financial statements and effective banking supervision.

On September 28, 2015, the CFRR is pleased to organize a conference at the Austrian National Bank for leading practitioners in the area of banking supervision and focusing on this important topic. The catalyst for this event is the launch of a World Bank publication about “Financial Supervisors and External Auditors: Building a Constructive Relationship”. This publication is based on findings of a survey reflecting the views of 85% European supervisors which was conducted with the support of the European Banking Authority and developed after several workshop discussions with senior staff of banking regulatory agencies from Europe and Central Asia.

The conference will present the findings of the survey and areas for consideration for policy makers and regulators in the context of the efforts to improve corporate governance arrangements in banks and contributions to enhanced supervision. Panel discussions will then review possible actions proposed by the report to improve and deepen the cooperation between external auditors and supervisors for enhanced audit quality, financial supervision and governance in financial institutions. Discussions will also address the role of auditors and practical questions in carrying out independent valuations in the particular event of a bank’s resolution under the European Bank Recovery and Resolution Directive.  This event will be an excellent opportunity for fruitful interaction between participants and high-level panelist speakers.

The recent financial crisis – the effects of which are still being felt today - exposed weaknesses in the risk management, control and governance processes of banks. It also revealed deficiencies in banks’ statutory audit and financial supervision, underscoring the need to introduce stronger cooperation between external auditors and supervisors for more effective regulations and practices.

Over recent years, calls to reform the financial reporting sector have become more vociferous and the roles of banking supervisors and external auditors, who are instrumental in maintaining market discipline and financial stability, have come under increasing scrutiny. To help its South Western Europe and Central Caucasus partner countries in addressing these shortcomings, the World Bank’s Centre for Financial Reporting Reform (CFRR) has made contact with regulators and law makers in a number of these countries in order to help them enhance their practices.

The main focus of the conference, which is being hosted by the Austrian National Bank, will be the presentation of a CFRR publication to assist banking supervisors and external auditors in enhancing their relationship. ‘Financial Supervisors and External Auditors: Building a Constructive Relationship’ is based on a survey conducted in 2014 in 35 countries, covering four main themes related to the current relationship between these stakeholders overseeing the banking sector.

The publication will serve as a useful tool for policy makers and regulators. Beside incorporating feedback from European supervisors – of whom 85% responded to the survey – the publication specifies a number of actions that could be taken to improve the relationship between these practitioners in the banking supervision and auditing world. Discussions will also address the role of auditors and practical questions in carrying out independent valuations in the event of a bank’s resolution under the European Bank Recovery and Resolution Directive.

  • The Centre for Financial Reporting Reform (CFRR) in Vienna, Austria, provides a range of knowledge, convening and capacity development services in support of financial reporting reform, institutional strengthening and the dissemination of good practice in the area of financial reporting and auditing. Part of the World Bank’s Governance Global Practice, CFRR supports client countries in Europe and Central Asia to adopt and implement high-quality financial reporting standards as a key element of strong corporate governance systems.
Location
  • Austrian National Bank (OeNB): Otto-Wagner-Platz 3, 1090 Vienna



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