In the CBR, they are sure they have finally found a key to the auditor secret that complicates execution of the supervising function of the CBR. But the market thinks it isn’t a key but rather a picklock.
Photo: Valery Melnikov
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The Betraying Audit
The Central Bank of Russia (CBR) is resolved to drastically amend bank laws in part of the confidential data disclosure. Auditors will leak to it the bank secrets, the CBR decided.
CBR has submitted to the RF Finance Ministry’s Auditor Board a bill that commits auditors to inform the CBR about all facts affecting interests of depositors and bank creditors revealed during the bank probes. The requirements are spelled out in the package of amendments to the Act on Banks and Banking Operations and to the Auditing Act.
The matter at stake is narrowing the mere notion of audit and bank secrets. The proposal of the chief bank authority of Russia is simple. Reporting to the CBR about problems revealed by auditors during the probes won’t be deemed disclosure of the bank or audit secrets any longer.
In the CBR, they are sure they have finally found a key to auditor secrets that make supervising the banks so difficult for the CBR. But the market thinks it isn’t a key but rather a picklock. “That is not just that the CBR is shifting direct duties of bank supervising to auditors,” said Alexander Murychev, first executive vice president at Russia’s Union of Entrepreneurs and Industrialists. “The amendments turning bank auditors from independent consultants to controllers undermine the audit institution and strip the banks of consulting support.”
The thing is that once the banks doubt further confidentiality of difficulties disclosed to an auditor, they will stop exposing them at all. The aftereffect of the CBR amendments, the market forecasts, will be the boom of illicit audit. “In other words, the banks will be buying silence of auditors,” a chief of a big bank said on condition of anonymity.
www.kommersant.com
All the Article in Russian as of Mar. 07, 2007
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