What is it about?

The changing role of the external auditor is not only evidenced by the evolutionary changes which have taken place in respect of emerging technological risks which necessitate more robust and effective systems of internal controls and corporate governance, but also the future roles to be assumed by automation, Artificial Intelligence , block chain and distributed ledger technologies.....

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Why is it important?

This is important from the perspectives of the need for greater accountability mechanisms - as facilitated by an effective system of corporate governance (monitoring, supervision) and internal controls. Further, forward looking techniques which are facilitated through the implementation of Artificial Intelligence will also greatly enhance the auditor's role in bank supervision (off-site or on-site).

Perspectives

The need for effective implementation of monetary policies - supported by macro prudential policy tools - as well as the engagement of external auditors to facilitate supervisory review (Pillar Two) and reporting/disclosure requirements (Pillar Three), also complement the minimum capital requirements - as typified and embodied under Pillar One - all of which are vital components of the Basel risk based capital adequacy framework. Risk based supervision incorporating the use of external auditors comprises a vital aspect of the supervision and regulation of banks and with the emergence of new forms of risks, the auditor's ability to detect and control these - within the framework of the audit risk model (AR= IR*CR*DR), will be a crucial tool in facilitating the intended goals and objectives of financial regulation.

Prof Marianne Ojo
Northwestern University

Read the Original

This page is a summary of: A Global Perspective on the Changing Perceptions of the Role of the External Auditor and the Significance of Audit Developments, SSRN Electronic Journal, Social Science Electronic Publishing,
DOI: 10.2139/ssrn.1998812.
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