Constructive and effective relationships between the prudent supervisors and audit regulators can enhance financial sector supervision, says the Central Bank Governor Dr. Indrajit Coomaraswamy.
The Dr. Coomaraswamy was speaking at the 12th International Forum of Independent Audit Regulators (IFIAR),in Colombo. The three-day forum is hosted by the Sri Lanka Accounting and Auditing Standards Monitoring Board (SLAASMB). “We also believe that such a regulation process helps audit professionals to achieve full potential of its role in the financial market.”
Noting that maintaining financial system stability, market confidence and consumer protection are core objectives of the regulator, the governor stressed that it is important to look at financial stability as a necessary condition for achieving prosperity and sustainable growth.
“In order to achieve these objectives, we believe the regulators should have a robust monitoring and supervision system. There should be a firm expectation in the market place, that the regulatory requirements will be enforced. The regulators should also have deep insights into the market it is supposed to regulate. For this, it is essential to have in-depth dialogue with the stakeholders.”
The governor also stressed that regulators should also posses the required knowledge about the financial markets as well as the ability to address unforeseen risks resulting impossible market failures.
“Auditors can contribute to financial stability by delivering quality bank audits, thereby increasing the market confidence in banks and the financial statements. As a prudential regulator of the financial services of market ,the Central Bank intends to get a clear understanding from the activities of the independent audit regulators on many aspects including the reliability, relevance of financial statements of banks, finance companies and other financial service providers.”
The governor further noted it is important to be aware of audit risks and challenges faced by audit committees and the Central bank looks forward for feedbacks from audit regulators on such matters.
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