Circular Regarding Reliance on Audited Financial Statements for Customers (Ref 10/1/14233, dated 18/11/2015)

In the Name of Allah, the Most Gracious, the Most Merciful

Reference No.: 14233 / 1/10
Date: 6/5/1437 AH
Corresponding Date: 18/11/2015 AD

Circular to Licensed Banks

Greetings,

Inspection rounds on banks revealed that some of them granted a number of customers credit facilities based on unaudited financial statements from a legal auditor, on the grounds that the audited (verified) financial statements are prepared for tax purposes and do not reflect the true financial status of the customers, whereas the data used by the banks cannot be verified for accuracy. Our instructions No. (47/2009) dated 10/12/2009 stipulated that facilities granted without at least an annual credit study based on audited financial statements fall under the definition of facilities placed under monitoring, making the granting of credit based on financial statements not audited by a legal auditor an improper and unsafe banking practice.

Accordingly, I emphasize the necessity for banks to rely on financial statements audited by a legal auditor in accordance with regulations and reflecting the true financial status of customers when making credit decisions (this applies to customers required to prepare such statements in accordance with the provisions of prevailing legislation).

Compliance by banks with this requirement will be verified through inspection rounds by checking the extent to which facilities granted to customers align with what their audited financial statements reflect.

With highest respect,

The Governor
Dr. Ziad Friez

Copy: To the Honorable Jordanian Association of Certified Public Accountants P.O. Box (927267) Amman (11190) Jordan

Website: www.cbj.gov.jo • E-mail: info@cbj.gov.jo • Fax: 4638889, 463972, 463971 • Phone: 463-301 • P.O. Box 37 Amman 11118 Jordan