BSP wants relaxed rules in hiring external auditors for financial firms

Bangko Sentral ng Pilipinas (File photo / Philippine Daily Inquirer)

The Bangko Sentral ng Pilipinas (BSP) wants to relax the rules that banks and other financial institutions must follow when hiring external auditors, as well as expand the coverage of such guidelines to include entities like digital banks.

The BSP is collecting feedback from stakeholders on a draft circular that would revise the framework on the selection of external auditors for BSP-supervised financial companies.

At present, banks and other financial institutions regulated by the BSP can hire an external auditor—an individual practitioner or an audit firm—from an official list of qualified names. External auditors who either want to join the list or renew their inclusion must submit their application to the Securities and Exchange Commission (SEC).

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But under the proposed tweaks, external auditors no longer need to send an application to the SEC to be included in the list. Instead, they just need to meet the qualification and documentary requirements set by the BSP, which may ask for additional documents if deemed necessary.

That means failure to obtain a permit for inclusion from the SEC would no longer result in suspension or delisting of external auditors.

Meanwhile, those that will be removed from the list may apply again for inclusion after five years from the date of suspension.

At the same time, the draft circular wants to extend the coverage of the selection framework to include digital banks, credit card issuers and virtual asset providers.

Stakeholders have until Sept. 27, 2024 to comment on the proposed amendments.

“The BSP considers the external auditing profession as a partner in promoting the safety and soundness of (BSP-supervised financial institutions),” the draft circular from the central bank read in part.

“External auditors, through the conduct of audits and opinions rendered on Audited Financial Statements (AFS), contribute to enhancing corporate governance and empowering the public and investors to make informed financial decisions,” it added.