Guidance on External Audits of Banks

The recent financial crisis not only revealed weaknesses in risk management, control and governance processes at banks, but also highlighted the need to improve the quality of external audits of banks. External auditors of banks can play an important role in contributing to financial stability when they deliver quality bank audits which foster market confidence in banks’ financial statements. Quality bank audits are also a valuable input in the supervisory process. The Basel Committee on Banking Supervision (the Committee, or BCBS) is issuing this document on external audits of banks to improve external audit quality of banks and enhance the effectiveness of prudential supervision, which contribute to financial stability. This document replaces the documents The relationship between banking supervisors and banks’ external auditors (January 2002)1 and External audit quality and banking supervision (December 2008).