XN000022-1991-01-01 — Page 3

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TUESDAY, JANUARY 1, 1991

GUIDELINE FOR COMMUNICATION BY AN AUDITOR WITH BANKING COMMISSIONER

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THE COMMISSIONER OF BANKING HAS ISSUED A STATEMENT DESCRIBING WHEN THE AUDITOR OF A BANK OR DEPOSIT-TAKING COMPANY SHOULD SEE THAT MATTERS OF CONCERN ARE BROUGHT TO THE COMMISSIONER'S ATTENTION, A GOVERNMENT SPOKESMAN SAID TODAY (TUESDAY).

THE STATEMENT HAS BEEN THE SUBJECT OF CONSULTATION WITH REPRESENTATIVES OF THE BANKING INDUSTRY AND THE AUDITING PROFESSION. IT FOLLOWS AN AMENDMENT IN JUNE 1990 TO THE BANKING ORDINANCE.

PREVENTED BY ANY

"THIS MADE IT CLEAR THAT AN AUDITOR IS NOT DUTY TO HIS CLIENT FROM COMMUNICATING WITH THE COMMISSIONER ANY INFORMATION OR OPINION OF WHICH HE BECAME AWARE IN HIS CAPACITY A8 AUDITOR OF THE BANK OR THE DEPOSIT-TAKING COMPANY, THE SPOKESMAN SAID.

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"THE PROVISION IN THE ORDINANCE IS WORDED VERY GENERALLY. STATEMENT THEREFORE PROVIDES A MORE DETAILED INDICATION OF CIRCUMSTANCES IN WHICH AN AUDITOR IS EXPECTED TO TAKE THE INITIATIVE IN SEEING THAT MATTERS ARE BROUGHT TO THE COMMISSIONER'S ATTENTION," HE SAID.

"USUALLY THIS WILL BE VIA THE AUTHORISED INSTITUTION; ONLY EXCEPTIONALLY WOULD AN AUDITOR BE EXPECTED TO REPORT WITHOUT HIS CLIENT'S KNOWLEDGE.

"THE PROCEDURES SET OUT IN THIS STATEMENT PROVIDE AN 'EARLY SUPERVISORY WARNING' SYSTEM TO HELP THE COMMISSIONER TAKE APPROPRIATE ACTION TO PROTECT DEPOSITORS, THE SPOKESMAN SAID.

IT IS UNDERSTOOD THAT THE HONG KONG SOCIETY OF ACCOUNTANTS WILL SHORTLY BE PUBLISHING, AS AN EXPOSURE DRAFT, A GUIDELINE FOR THEIR MEMBERS CONCERNED WITH BANK AND DEPOSIT-TAKING COMPANY AUDITS. THIS WILL COVER IN PART SIMILAR GROUND ΤΟ THE COMMISSIONER'S STATEMENT.

NOTE TO EDITORS:

COPIES OF THE STATEMENT ARE AVAILABLE FOR COLLECTION FROM THE GIS NEWSROOM.

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