Transparency is the key, and by sharing comprehensive and accurate data, CFOs not only facilitate a smoother audit and supervision process but also reinforce the bank’s commitment to integrity and compliance, said Reserve Bank of India (RBI) Deputy Governor, Swaminathan J.
While addressing the Conference of Statutory Auditors and Chief Financial Officers of Commercial Banks and All India Financial Institutions (AIFIs), the Deputy Governor said while CFOs ensure the accuracy, completeness, and integrity of the bank’s financial statements and reports; they do this alongwith meeting strict statutory and regulatory deadlines.
Although there is a Chief Risk Officer dedicated to risk management, the CFO’s contribution in this area is crucial, particularly in managing capital adequacy, maturity mismatches and liquidity,Swaminathan J, Deputy Governor, RBI
He further said the CFOs also play a pivotal role in strategic planning, budgeting and investor relations. In fact today, their role is also about leading the institution towards sustainable growth and resilience.
RBI DG’s expectations from a CFO
CFOs possess a profound understanding of their institution’s strengths and weaknesses, It is, therefore, their duty to familiarise auditors and supervisors with the nuances of the bank’s operations, particularly new auditors and first-time members of supervisory teams, mentions Deputy Governor.
It is imperative to eschew the notion of hiding, withholding, or providing incomplete information to these teams, he adds.
The DG also recommends keeping alive the channel of escalation to the Chair of the Audit Committee of the Board (ACB), if a higher level of guidance is needed in any matter.
Rather than implementing short-term fixes, understanding and addressing the underlying causes of these issues ensures that compliance is sustained over the long term.
He urged CFOs to invest in technology and data analytics which would empower them to provide more accurate and real-time financial insights.
‘Auditor’s judgement should discern the intent of the regulations, and then assess’
Auditors must go beyond mere technical compliance. Instead, they should discern the intent of the regulations, prioritise substance over form and assess its application in practice so as to enhance the credibility of audit outcomes.he noted.
Speaking on the defence model, cenbank DG stated that the first line of defence is Line management, followed by Compliance and Risk Management with the third line being Internal Audit. The fourth and most critical line of assurance for a Regulator is the bank’s Statutory Auditors.
While maintaining meticulous standards and adherence to regulatory guidelines as well as auditing standards, they should promptly report incipient vulnerabilities to both the bank management and the RBI, he emphasised.
Transparency and impartiality are of the utmost importance in fostering trust among stakeholders, including regulators, investors, and the public, concluded RBI’s DG Governor.
