The Bangko Sentral ng Pilipinas (BSP) is set to revise the guidelines for selecting external auditors at financial institutions under its supervision, aiming to streamline the process in line with broader changes to corporate governance frameworks.
In a draft circular distributed to banks and non-banks, the central bank has proposed updates to the selection framework for external auditors, citing Section 58 of Republic Act No. 8791, or the General Banking Law of 2000, as amended.
The revisions are intended to enhance the quality and oversight of financial statement audits at BSP-supervised financial institutions (BSFIs).
The BSP noted that external auditors play a crucial role in safeguarding the stability of BSFIs, contributing to stronger corporate governance and providing the public and investors with more reliable financial data.
Under the draft rules, BSFIs will only be permitted to appoint auditors listed on the BSP’s “List of Selected External Auditors for BSFIs,” and must choose firms or individuals whose classifications match or exceed their own.
The Monetary Board retains the authority to require BSFIs to engage higher-tier auditors as part of supervisory actions or to conduct specific reviews.
Auditors will be categorized into three groups: Group A for universal and commercial banks, foreign banks, digital banks, and trust entities; Group B for thrift banks, quasi-banks, virtual asset providers, and credit card issuers; and Group C for rural and cooperative banks, pawnshops, and remittance firms.
External auditors seeking inclusion in the BSP’s list must meet stringent criteria and submit necessary documentation.
Their eligibility will be reviewed periodically by the BSP, which will assess the quality of audits and compliance with regulatory requirements.
The circular, open for feedback until September 27, also updates guidelines on audit engagements, reporting requirements, and supervisory actions, including provisions for suspending or delisting external auditors from the BSP’s list.
