Regulatory Alerts2009-10-12
Prudential Guideline No. 4: External Audit Requirements
Issued by the Central Bank of Solomon Islands, this guideline mandates that all licensed financial institutions require their external auditors to submit compliance and risk management reports alongside audited financial statements. The auditor reports must verify adherence to capital adequacy, large credit exposure limits, loan loss provisioning standards, and prudential reporting instructions, while foreign bank branches must additionally confirm that intercompany transactions are arm's length and properly documented. Institutions must coordinate with the regulator to select specific risk management areas for annual audit review within 45 days of the audit start, with non-compliance subject to cease-and-desist orders or management replacement under the Financial Institutions Act 1998.