Central Bank's early warning system unchanged by appeals
Published 07/12/2011 | 05:00
AUDITORS have failed to secure any notable changes to the Central Bank's new 'auditor protocol', despite submissions from heavyweight firms calling for tweaks to the new regime.
The Central Bank yesterday published the final version of the new rules after considering submissions made by the likes of Ernst & Young and Mazars.
The final document is virtually identical to the initial proposals put forward by the Central Bank, which compelled auditors to have more regular engagement with the regulatory authority.
From 2012, regulated firms will have to make the contact details of their audit partner available to the Central Bank within five days of the auditor's appointment.
The auditing firm will also have to "endeavour to share with the Central Bank any information it believes may assist the Central Bank in the exercise of its supervisory functions".
The sharing of information will be facilitated by a clause in the "terms of engagement" for an audit that acknowledges the right of the audit firm to "discuss any issue that is of relevance" with the Central Bank, yesterday's document said.
Ernst & Young had argued that that phrasing was "unsatisfactory" since it would "not necessarily protect the auditing firm from a claim" by its own client for breach of confidentiality and breach of statutory duty.
Fellow accountancy giant Mazars, meanwhile, said that proposals for disclosure at "pre audit meetings" could "conflict with the requirements of international auditing standards". The references to the pre-audit meetings were not changed in the final document.
Other provisions in the new rules include post-audit meetings and continuous review with the Central Bank.
Described as "the silent ones" in the Nyberg report on the banking crisis, auditors have come in for fierce criticism for not calling attention to the problems building at the banks.
The new Central Bank regime is designed to ensure that regulators have direct access to auditors so they can get early warning of any budding problems.