LogoRegulatory Alerts
2021-12-23

Oversight of the work of the external auditor

The Banking Supervision Department updated Proper Conduct of Banking Business Directive no. 301 to align with Basel Committee guidelines on external audits. The revision mandates that banking corporations ensure their Audit Committee possesses the necessary skills and resources to effectively oversee external auditors. These requirements apply to financial statement audits commencing on January 1, 2023.

Bank of Israel logo

Israel

Bank of Israel

Click to view thumbnail

Banking Supervision Department On-site Examination Division December 23, 2021 Circular Number C-06-2681 To: The banking corporations and merchant acquirers Issue: Oversight of the work of the external auditor (Proper Conduct of Banking Business Directive no. 301) Introduction

  1. Proper Conduct of Banking Business Directive no. 301 on “the Board of Directors” (hereinafter, Directive 301) establishes that, among other things, the Audit Committee of a banking corporation or merchant acquirer (hereinafter, “banking corporation”) is responsible for overseeing the work of the external auditor.
  2. In view of the publication of the Basel Committee guidelines regarding external audit at banking corporations1 (hereinafter, “the Basel Committee guidelines”) and the accumulated experience, the need arose to update the Proper Conduct of Banking Business Directive. In view of the above, and following consultations with the Liaison Committee with the Institute of Certified Public Accountants in Israel and the Advisory Committee on Banking Business Affairs, and with the approval of the Governor, I have decided to update the directive as follows.
  3. The banking corporation’s board of directors is to verify that the skills of the Audit Committee members match the responsibility and roles assigned to the Committee, and that the Committee is allocated suitable resources enabling it to adequately supervise the work of the external auditor. The updates to the directive
  4. In Section 36(d) of the Directive, Paragraph (3a) shall be added after Paragraph (3). Explanatory remarks As a part of its responsibility to oversee the work of the external auditor, the Audit Committee should to implement, amongst others, the Basel Committee guidelines

1 BCBS: External audit of banks, March 2014.

Banking Supervision Department On-site Examination Division regarding external audit at banking corporations concerning the Audit Committee and its relations with the external auditor. Application 5. The directives listed in this Circular shall be in effect with the auditing of the financial statements from January 1, 2023 and onward. File update 6. Update pages for the Proper Conduct of Banking Business Directives file are attached. The following are the update instructions: Remove page Insert page (09/21) [25] 301-1-53 (12/21) [26] 301-1-53 Sincerely, Yair Avidan Supervisor of Banks

Share