Bank auditors and bank supervision
Held on Monday, October 22, 2018, 12.30-2.15pm.
Hannah Scobie (EEFC)
Aytekin Ertan (LBS)
Emmanuel de George (LBS)
John Hitchins (Aldermore)
Andrew Meek (FRC)
It is ten years since the financial crisis, and seven years since the House of Lords Economic Affairs Committee concluded that ‘[the] breakdown of dialogue between bank auditors and regulators made the financial crisis worse’.
While there have been improvements to bank capital requirements and financial reporting since the crisis, including extended auditor’s reports in financial statements, the central problem remains. A bank is only a going concern so long as its depositors believe it is a going concern. What auditors say publicly about banks has real implications for their solvency and for financial stability.
What they say – or can say – privately to the prudential regulators also matters. But is it working? Professor Hannah Scobie, chairman of the European Economics & Financial Centre, has recently led a survey of auditor-regulator relations across all 28 EU member states, in association with a team from London Business School*. We are pleased to welcome Hannah, along with two of her collaborators Aytekin Ertan and Emmanuel de George (both Assistant Professors of Accounting at the LBS), to discuss their findings – which suggest that greater regulation of the audit profession could improve financial stability.
But are they right? What are the implications for client confidentiality and other stakeholders who depend on the service that bank auditors provide? To kick off the response, we will be joined by John Hitchins, chair of the audit committee for Aldermore Goup – and a former chairman of the ICAEW’s Banking Committee, whose 26 years as a partner at PwC included work for Lloyds Bank, the Bank of England, Bank of Ireland, Barclays and JPMorgan.
Also joining us will be Andrew Meek, Acting Director of Audit Quality Review at the Financial Reporting Council. Andrew has been with the FRC since 2006 (most recently as Inspections Director), having previously worked on banking audits at PwC.
As ever, I can promise a lively discussion. If you (or a colleague) would like to join us, please let us know by emailing firstname.lastname@example.org or by calling the Centre on 0207 621 1056. As usual, there will be wine and sandwiches.
* To give academic credit where it is due: Karthik Balakrishnan, Assistant Professor of Accounting at the LBS, was also an author of the report.