VIENNA, September 28, 2015 – More than a hundred of Europe’s leading practitioners in banking, including banking supervisors, external auditors of banks, and other representatives from the banking sector, met in Vienna, Austria, today to discuss the contribution of enhanced cooperation between external auditors and banking supervisors to financial stability.
The one-day conference at the Austrian National Bank was organized by the World Bank’s Centre for Financial Reporting Reform (CFRR) to discuss a range of actionable insights proposed by the CFRR in response to the findings of a survey on the relationship between these key players in the banking sector.
“In today’s complex system, one cannot know it all or cover everything. The business of banking has grown in size, complexity and interconnectedness. So in my view, good and constructive co-operation between supervisors and auditors is crucial to enhance the effectiveness of banking supervision. I hope this conference contributes to a better mutual understanding,” said Ewald Nowotny, Governor of the Austrian National Bank.
The recent global financial crisis highlighted weaknesses in the risk management, valuation, control and governance processes of banks as well as in their statutory audit and financial supervision. The crisis also underscored the importance of closer cooperation between external auditors and banking supervisors — who possess distinct skills and knowledge — in order to improve the oversight of banks’ activities.
During the conference, the CFRR presented its new publication ‘Financial Supervisors and External Auditors: Building a Constructive Relationship’. The publication aims to assist banking supervisors and external auditors in enhancing their relationship and is based on a survey conducted in 2014 in 35 countries, in collaboration with the European Banking Authority.
According to Henri Fortin, Head of the CFRR, “The survey confirmed that an effective relationship between banking supervisors and external auditors is a key factor in the quality of audits and the supervision of banks and, while each have distinct roles and responsibilities, they can both benefit from better communication and closer interaction.”
The event also highlighted specific areas in which auditors and supervisors collaborate closely, such as valuation in resolution — work which is being led by the World Bank’s Financial Sector Advisory Centre (FinSAC).
“By sharing policy actions based on best practices, we hope that this publication will improve audit quality and the supervision of banks, fostered by broader and deeper cooperation between auditors and supervisors,” said Pascal Frerejacque, Senior Operations Officer at the CFRR.
