Bank Seeks Closer Collaboration with External Auditors

Port Moresby, Papua New Guinea - The Bank of Papua New Guinea (BPNG) has emphasized the need for a tripartite approach in supervising licensed financial institutions, which involves closer collaboration between the institution, external auditors, and regulators.

Strengthening Relationships through Collaboration

According to the BPNG, this approach is crucial for fostering stronger relationships between the parties involved, particularly with external auditors. The bank believes that this will enable auditors to better understand the regulatory concerns and perform their audit functions effectively.

Enhanced Compliance Reporting

In a recent statement, the BPNG said it would like licensed financial institutions to:

• Attest their internal control systems
• Conduct checks and balances on governance structures
• Issue comprehensive disclosure statements, including disclosures along several risk dimensions
• Provide a statement on compliance with all prudential standards and FX limits
• Declare whether the board and senior management have identified key risks facing the institution

The bank also wants external auditors to verify these compliance reports.

Shared Goals: Financial Stability and Viability

The BPNG’s primary concern is financial stability, while the auditor’s concern is the institution’s viability as a “going concern.” However, both parties are looking at the same issue from different perspectives. The BPNG believes that this commonality justifies the need for closer understanding and knowledge of each other’s concerns.

Call to Action: Ensuring Proper Auditing Practices

Meanwhile, the Auditors and Accounting Association of Papua New Guinea has been urged to take action against members who do not properly carry out their tasks. The association has been called upon to impose punitive sanctions on such members and ensure that they are enforced.

Transparency in Registration Process

In related news, there have been concerns raised about the lack of transparency in the registration process for auditors. It is unclear whether a firm or individual can easily check if another auditor is registered with the PNG Auditors Charter. The BPNG has called for greater transparency in this regard.

Conclusion: Promoting Financial Stability

The bank’s efforts to promote closer collaboration between regulators and external auditors are seen as crucial for maintaining financial stability in Papua New Guinea. By fostering a stronger understanding between the parties involved, the BPNG aims to create a more robust regulatory environment that supports the country’s economic growth.