CBR might get power to license auditors
MOSCOW. Nov 2 (Interfax) - The Central Bank of Russia (CBR) might get the power to license auditing companies.
The advisability of giving the CBR this power was acknowledged at a meeting on regulation of financial markets that was held with First Deputy Prime Minister Igor Shuvalov in October, a source familiar with the situation told Interfax.
At the meeting, officials discussed a bill to amend the law on banks and banking and the law on auditing in regard to the procedure for cooperation between auditing organizations, individual auditors and the CBR.
The CBR told Interfax that auditing organizations will have to be accredited by the CBR in order to secure the right to conduct external audits of the most important financial institutions and public companies. The CBR is now working out this proposal with the Finance Ministry.
The issue of giving the CBR the authority to monitor the quality of the work of such auditing organizations is also being discussed.
Government oversight over the activities of self-regulating organizations of auditors is now exercised by the Finance Ministry, but the subject of insufficient regulation in this field has increasingly come into the public spotlight. The CBR has repeatedly raised the problem of unscrupulous auditors who affirm the false financial statements of banks whose balance sheets are then found to have multibillion-ruble holes after the lenders lose their licenses. The CBR regularly sends the Finance Ministry information about such auditors, but does not interfere in the process of self-regulation, since it does not have the legal right to do so.
Central Bank chief Elvira Nabiullina has repeatedly said that it is necessary to introduce additional requirements for companies that audit the financial statements of banks, nongovernmental pension funds and insurance companies.
"We are convinced and insist that additional requirements and the possibility of applying oversight measures and sanctions for noncompliance with these requirements be introduced, at least for auditing companies that have the right to audit the financial statements of financial institutions - not only banks, but also insurance companies and nongovernmental pension funds, which essentially manage other people's money and work with the money of citizens," Nabiullina said in July.
The CBR drafted amendments this year that restrict access of unscrupulous auditors to work with banks' financial statements. The regulator proposed to blacklist auditors who issue conclusions that a court finds to be knowingly false, and to introduce criminal accountability for auditors for the veracity of their conclusions.
In addition, CBR first deputy chairman Sergei Shvetsov said that only a few dozen of the best auditing companies should be allowed to audit the financial statements of public issuers.
