Julia Irvine 15 May 2017 04:58pm

Assuring bank regulatory ratios

ICAEW has published its long-awaited framework for assuring bank capital numbers, following extensive consultation with banks, auditors and regulators

Bank Regulatory Ratios: ICAEW Assurance Framework is applicable to all regulatory ratios, including capital, liquidity and leverage, and is intended to deliver confidence in the key measures of resilience primarily for banks.

However, it is also applicable to other businesses facing prudential regulation, such as investment firms, and can be applied worldwide.

ICAEW Financial Services Faculty head Iain Coke explained that even though capital ratios are one of the most important ways to assess a bank’s stability, they are not audited.

“It is absolutely crucial that people can have confidence in them,” he said. “This is why the Prudential Regulatory Authority asked us in 2014 to look at how independent assurance could deliver that confidence. Today’s publication represents culmination of that project.

“Using this framework would mean the public, regulators and banks themselves can have more trust in these numbers.”

The framework sets out a number of overarching principles for providing robust assurance while allowing flexibility to apply it to most risk types whether operational, credit or liquidity risk.

It is designed to be modular, so that users can shape the scope of assurance work to fit their particular circumstances; this means it can be used by internal, as well as external, auditors.