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CBI Banking Laws Article 46 Audit
3/28/15
1. Each bank shall appoint an independent external auditor with qualifications and experience in the audit of banks acceptable to the CBI. The external auditor shall be appointed by the bank’s shareholders at the general meeting of shareholders, provided that if the bank fails to appoint an auditor satisfactory to the CBI, the CBI shall appoint such auditor. 2. The auditor, or any member of the audit firm, shall not be an administrator, owner, affiliate, employee, agent or representative of the bank for which the auditor is to be appointed and shall not have an interest in the bank, with the exception of holding a deposit -34 - ANNEX A in the bank. Should the auditor acquire any such interest in the bank during the course of the appointment, the services of the auditor shall be terminated and a temporary alternate auditor be appointed by the CBI until the bank appoints a new auditor. 3. The auditor shall not provide services to the bank that are connected with the internal audit function of the bank, except for occasional training purposes. 4. No bank shall appoint the same auditor continuously for a period of more than 5 years without an exemption granted by the CBI. 5. In accordance with internationally-recognized auditing standards and any standards issued by regulation of the CBI, the auditor shall audit the bank’s operations on a consolidated basis and: a. issue a statement to the bank indicating whether the auditor or any member of the audit firm: (i) holds an ownership interest in the bank; and (ii) complies with the provision of paragraph (3); b. assist the bank in maintaining proper accounting systems and procedures; c. assist the bank in maintaining proper financial control and risk management systems and procedures; d. upon request by the audit committee, attend meetings of the audit committee; e. within three months after the end of the financial year, prepare for the board of directors of the bank an audit report together with an audit opinion as to whether the financial statements are complete, fair and properly drawn up and present a full and fair view of the financial condition of the bank in accordance with the provisions of this Law; in particular, the audit report shall state: (i) whether any explanation or information requested from the administrators, employees or agents of the bank in the course of the audit was satisfactory; (ii) the degree of adequacy of, and the bank’s adherence to, internal control measures and accounting systems in effect; (iii) the method for keeping documents, records, and books, and the latter’s orderliness and inclusion of operations needed to enable monitoring, auditing, and internal and external audit; (iv) the adequacy and performance of the bank’s management regarding protection of the funds of the bank and depositors; (v) deficiencies in the bank’s activities, the auditor’s recommendations for the management regarding the deficiencies, and the extent to which management -35 - ANNEX A applied the auditor’s recommendations and remarks made in connection to operations in previous years; and (vi) the degree of accuracy of periodic statements sent to the CBI; and the correspondence of the statements with the content of records, books, accounting systems and practices in effect at the bank and with the CBI’s orders in this regard; f. provide the board of directors and the CBI with a report stating the auditor’s opinion on the bank’s system of loan classification and concerning the provisioning for doubtful claims indicating any deficiency in the provisioning needed for the bank’s assets according to the CBI’s orders; g. inform each member of the board of directors and the CBI about any act by an administrator, officer, employee or agent of the bank of which the external auditor has become aware that constitutes a material violation of a provision of this Law or any regulation or order issued by the CBI; and h. inform each member of the board of directors and the CBI about any irregularity or deficiency in the bank’s administration or operations of which the external auditor has become aware and which could be expected to result in a material loss for the bank. 6. Each bank shall send copies of the audit report to the CBI not later than 30 days after it becomes available. Where the CBI is not satisfied with the auditor’s report, it may require the appointment of another auditor to prepare a new audit report within a specified time. Article 47 Additional duties 1. The CBI may impose on an auditor, in addition to any duty specified in Article 46, a duty to: a. submit to the CBI such additional information in relation to the audit as the CBI considers necessary; b. submit a report, carry out an inspection or establish any procedure as specified by the CBI; c. submit to the CBI a report on the financial and accounting systems and internal controls of the bank; or d. certify whether or not adequate measures to prevent money-laundering or terrorist financing have been adopted by the bank and are being implemented in accordance with such regulations, orders and guidelines issued by the CBI. 2. The auditor’s costs for performing any such additional duties requested by the CBI shall be borne by the bank.
This is from CBI Laws Article 46 Internal audit The CBI’s internal audit department, headed by the chief internal auditor, shall perform internal audit functions which shall include the following: a. the review and recommendation to the Board of procedures and practices for proper risk management and, thereafter, the supervision of their implementation on a continuing basis; b. the performance of periodic audits of the administration and operations of the CBI to ensure proper observance of laws applicable to the CBI and of decisions of the Board; c. the review of the periodic financial statements referred to in Article 44, paragraphs (2) and (3), and related documents of the CBI; d. the preparation and delivery to the Board, whenever deemed appropriate by the Board and at least once every quarter, of reports and recommendations regarding the financial statements and records, the budgetary and accounting procedures, the risk management and other controls within the CBI, the efficiency and cost effectiveness at which the CBI operates, and any other matter within its competence and area of responsibilities on which a report may be requested by the Board; and e. any other assignment that may be given to the internal audit department by the Board, provided that such assignments do not disrupt its principal task set forth herein.
Article 44 Exemption from certain taxes 1. The CBI shall be exempted from the following taxes and duties: a. taxes on income or profits of the CBI; b. personal property taxes on assets of the CBI; c. taxes on transfers of funds and other financial transactions; d. taxes in the form of stamp duties on issuance of the CBI’s securities and banknotes; e. customs duties, import duties, sales taxes, value added taxes on imports of gold, banknotes, and coins to be delivered to the CBI; and 26 - f. sales tax on domestic supplies of gold, banknotes, and coins to the CBI. 2. The CBI shall be liable for property taxes on immovable property only if, as a general rule, Government ministries are liable for such taxes and duties on the immovable property in their ownership or use. 3. The CBI shall be liable for any other taxes or duties, except as otherwise stipulated in the specific laws regulating such taxes or duties.
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3/28/15
1. Each bank shall appoint an independent external auditor with qualifications and experience in the audit of banks acceptable to the CBI. The external auditor shall be appointed by the bank’s shareholders at the general meeting of shareholders, provided that if the bank fails to appoint an auditor satisfactory to the CBI, the CBI shall appoint such auditor. 2. The auditor, or any member of the audit firm, shall not be an administrator, owner, affiliate, employee, agent or representative of the bank for which the auditor is to be appointed and shall not have an interest in the bank, with the exception of holding a deposit -34 - ANNEX A in the bank. Should the auditor acquire any such interest in the bank during the course of the appointment, the services of the auditor shall be terminated and a temporary alternate auditor be appointed by the CBI until the bank appoints a new auditor. 3. The auditor shall not provide services to the bank that are connected with the internal audit function of the bank, except for occasional training purposes. 4. No bank shall appoint the same auditor continuously for a period of more than 5 years without an exemption granted by the CBI. 5. In accordance with internationally-recognized auditing standards and any standards issued by regulation of the CBI, the auditor shall audit the bank’s operations on a consolidated basis and: a. issue a statement to the bank indicating whether the auditor or any member of the audit firm: (i) holds an ownership interest in the bank; and (ii) complies with the provision of paragraph (3); b. assist the bank in maintaining proper accounting systems and procedures; c. assist the bank in maintaining proper financial control and risk management systems and procedures; d. upon request by the audit committee, attend meetings of the audit committee; e. within three months after the end of the financial year, prepare for the board of directors of the bank an audit report together with an audit opinion as to whether the financial statements are complete, fair and properly drawn up and present a full and fair view of the financial condition of the bank in accordance with the provisions of this Law; in particular, the audit report shall state: (i) whether any explanation or information requested from the administrators, employees or agents of the bank in the course of the audit was satisfactory; (ii) the degree of adequacy of, and the bank’s adherence to, internal control measures and accounting systems in effect; (iii) the method for keeping documents, records, and books, and the latter’s orderliness and inclusion of operations needed to enable monitoring, auditing, and internal and external audit; (iv) the adequacy and performance of the bank’s management regarding protection of the funds of the bank and depositors; (v) deficiencies in the bank’s activities, the auditor’s recommendations for the management regarding the deficiencies, and the extent to which management -35 - ANNEX A applied the auditor’s recommendations and remarks made in connection to operations in previous years; and (vi) the degree of accuracy of periodic statements sent to the CBI; and the correspondence of the statements with the content of records, books, accounting systems and practices in effect at the bank and with the CBI’s orders in this regard; f. provide the board of directors and the CBI with a report stating the auditor’s opinion on the bank’s system of loan classification and concerning the provisioning for doubtful claims indicating any deficiency in the provisioning needed for the bank’s assets according to the CBI’s orders; g. inform each member of the board of directors and the CBI about any act by an administrator, officer, employee or agent of the bank of which the external auditor has become aware that constitutes a material violation of a provision of this Law or any regulation or order issued by the CBI; and h. inform each member of the board of directors and the CBI about any irregularity or deficiency in the bank’s administration or operations of which the external auditor has become aware and which could be expected to result in a material loss for the bank. 6. Each bank shall send copies of the audit report to the CBI not later than 30 days after it becomes available. Where the CBI is not satisfied with the auditor’s report, it may require the appointment of another auditor to prepare a new audit report within a specified time. Article 47 Additional duties 1. The CBI may impose on an auditor, in addition to any duty specified in Article 46, a duty to: a. submit to the CBI such additional information in relation to the audit as the CBI considers necessary; b. submit a report, carry out an inspection or establish any procedure as specified by the CBI; c. submit to the CBI a report on the financial and accounting systems and internal controls of the bank; or d. certify whether or not adequate measures to prevent money-laundering or terrorist financing have been adopted by the bank and are being implemented in accordance with such regulations, orders and guidelines issued by the CBI. 2. The auditor’s costs for performing any such additional duties requested by the CBI shall be borne by the bank.
This is from CBI Laws Article 46 Internal audit The CBI’s internal audit department, headed by the chief internal auditor, shall perform internal audit functions which shall include the following: a. the review and recommendation to the Board of procedures and practices for proper risk management and, thereafter, the supervision of their implementation on a continuing basis; b. the performance of periodic audits of the administration and operations of the CBI to ensure proper observance of laws applicable to the CBI and of decisions of the Board; c. the review of the periodic financial statements referred to in Article 44, paragraphs (2) and (3), and related documents of the CBI; d. the preparation and delivery to the Board, whenever deemed appropriate by the Board and at least once every quarter, of reports and recommendations regarding the financial statements and records, the budgetary and accounting procedures, the risk management and other controls within the CBI, the efficiency and cost effectiveness at which the CBI operates, and any other matter within its competence and area of responsibilities on which a report may be requested by the Board; and e. any other assignment that may be given to the internal audit department by the Board, provided that such assignments do not disrupt its principal task set forth herein.
Article 44 Exemption from certain taxes 1. The CBI shall be exempted from the following taxes and duties: a. taxes on income or profits of the CBI; b. personal property taxes on assets of the CBI; c. taxes on transfers of funds and other financial transactions; d. taxes in the form of stamp duties on issuance of the CBI’s securities and banknotes; e. customs duties, import duties, sales taxes, value added taxes on imports of gold, banknotes, and coins to be delivered to the CBI; and 26 - f. sales tax on domestic supplies of gold, banknotes, and coins to the CBI. 2. The CBI shall be liable for property taxes on immovable property only if, as a general rule, Government ministries are liable for such taxes and duties on the immovable property in their ownership or use. 3. The CBI shall be liable for any other taxes or duties, except as otherwise stipulated in the specific laws regulating such taxes or duties.
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