Financial Crime World

CNV Proposes Strengthening of Independence of External Auditors

The Comisión Nacional de Valores (CNV), Argentina’s securities regulator, has proposed a series of measures aimed at strengthening the independence of external auditors. These proposals are part of the CNV’s efforts to improve corporate governance and ensure transparency in the financial markets.

Key Proposals

  • Advance Approval for Special Services: The requirement for special services provided by external auditors to be approved in advance by the Audit Committee will prevent conflicts of interest and ensure that auditors are not influenced by management or other stakeholders.
  • Rotation of Audit Partner: Rotating the audit partner every five years will help to prevent long-term relationships between auditors and companies from developing into conflicts of interest.
  • Financial Expert on Audit Committee: Including a financial expert on the Audit Committee will provide an additional layer of oversight and ensure that financial statements are accurate and reliable.
  • Strengthening “Chinese Walls”: The regulator has suggested strengthening “Chinese walls” within auditing firms to prevent the sharing of confidential information between different departments or partners.

Rationale

The CNV believes that by increasing transparency and accountability, companies will be more likely to adopt best practices and reduce the risk of fraud and other malfeasance. These proposals are part of the regulator’s broader efforts to promote good governance practices in Argentina’s financial markets.

Enforcement Activities

In addition to these proposals, the CNV has reported on its enforcement activities over the past year. Notable highlights include:

  • Initiation of Cases: The initiation of 28 cases related to denunciations or market monitoring
  • Imposition of Sanctions: The imposition of sanctions in 143 cases
  • Legal Procedures: The regulator has been involved in several legal procedures, including defending appealed sanctions and initiating judicial claims

Conclusion

Overall, the CNV’s proposals aim to strengthen the independence and effectiveness of external auditors, and promote good governance practices in Argentina’s financial markets. By increasing transparency and accountability, companies will be better equipped to adopt best practices and reduce the risk of fraud and other malfeasance.