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Rules to be applied on firms auditing banks

Published : Thursday, 1 February, 2024 at 12:00 AM  Count : 257

The central bank has taken initiatives to increase the scope and accountability of audit firms in bank audits. Not only on the basis of the information provided by the bank, but the irregularities and corruption should be checked in detail.

At least 80 per cent of a banks risk-based assets should be brought under audit. An audit firm cannot audit the same banks annual report and cash assistance to exports. The central bank has prepared a draft of the rules in this regard.

Advertisements will be issued soon in newspapers for the views of various parties.

Audit firms are required to be appointed every year to audit the annual reports of banks and financial institutions and verify the correctness of cash assistance in exports. Bangladesh Bank has recently released the names of 31 eligible institutions.

Another 20 institutions have appealed to the central bank for inclusion in the list. In 2021, 47 institutions were declared eligible by the central bank. At present there are policies for the appointment of auditors, but now the detailed scope of work is being fixed through the rules.

Banks will appoint auditors in the light of rules while appointing audit firms. Apart from this, the audit firms will get more fees than now. The central bank will remove any audit firm from the list of qualified institutions if it does not comply with the rules.

The draft rules state that the external audit firm will submit an interim report to the central bank. Where there are irregularities related to loan categorization and provisions against loans, transactions and loans in foreign currency and whether there have been any irregularities in the submission of various statements to Bangladesh Bank (BB), whether the overdue loan information has been submitted to CIB on time, the information should be provided.

Liquidity conservation-related observations should also be given. Apart from this Bangladesh Bank needs to be informed - if there is any such thing, it should be informed. Apart from this, it should be seen whether defaulted loans, debt write-offs, rescheduling, restructuring, interest waivers have been done properly. The internal audit and control system of the bank is properly effective, money laundering regulations are being followed. It also said that there are inconsistencies in the banks capital, provisions, cash flow, asset and liability management.

It should be seen whether the rules have been properly followed in sanctioning and disbursing of loans, whether there has been any irregularity or trickery to increase profits.

And in the case of auditing more than 80 per cent of risk-based assets, the first 10 branches should be included in the hierarchy of risk-based assets along with the head office. Apart from this, it has been asked to look at all types of risks including liquidity in foreign currency transactions.

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