Conducting an Audit and Review in Accordance with Certain Standards Set in the United States

Bank of Israel
Inspector of Banks Policy Department
Tel: 03-5640520 Fax: 03-5661110
528 P.O.B, Tel Aviv-61004

28 January 2014
Letter No. 2410-06-H

To:
Banking Institutions and Credit Card Companies

Subject: Conducting an Audit and Review in Accordance with Certain Standards Set in the United States (Banking Management Standard No. 304A)

Introduction

1. Banking Management Standard No. 304A "Conducting an Audit and Review in Accordance with Certain Standards Set in the United States" (hereinafter: "the Standard") establishes that an audit of the financial statements of banking institutions may be conducted either in accordance with auditing standards set by the Public Company Accounting Oversight Board of the United States (hereinafter: "PCAOB") or in accordance with auditing standards set by the PCAOB staff.

2. The PCAOB periodically publishes "Practice Alerts" issued by the PCAOB staff. On 24.10.2013, the PCAOB published Practice Alert No. 11 regarding considerations for audits of internal control over financial reporting.

3. In light of the aforementioned, a need arose to update the Banking Management Standards following consultation with the Accounting Profession Advisory Committee of the Israel Institute of Certified Public Accountants in conjunction with the Inspector of Banks. With the approval of the Governor, it was decided to adopt this directive as a guidance for updating the Standard as detailed below.

Amendments to the Standard

4. Section 4 (Appendix to the Standard) regarding "Practice Alerts issued by the PCAOB staff" shall be supplemented with:

Alert No. 11 – Considerations for Audits of Internal Control over Financial Reporting

Explanatory Notes

This directive is intended to adopt the PCAOB Practice Alert for the consideration of auditors in their audit work.

Effective Date

5. The provisions of the aforementioned directive regarding the audit of financial reports shall take effect for financial reports dated as of December 31, 2013, and thereafter.

Update to the Document

6. The following updates shall be made to the Banking Management Standards Document:

Insert page: [5] 304A-9 (1/14)
Remove page: [4] 304A-9 (2/13)

Sincerely,

David Zaken
Inspector of Banks

(1/14) [5] Inspector of Banks - Banking Management Standard No. 304A Conducting an Audit and Review in Accordance with Certain Standards Set in the United States Alert No. 11 – Considerations for Audits of Internal Control over Financial Reporting Alert No. 11 – Considerations for Audits of Internal Control over Financial Reporting

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Updates

Version No. Details Date
1 Original Letter 2242 09/02/11
2 Update 2272 7/8/10
3 Update 2298 3/4/2011
4 Update 2370 17/2/2013
5 Update 2410 28/1/2014