External Audit function is statutory and crucial requirement for the banks and other financial institutions to ensure the true and fair view of the financial statements. Being a prime regulator of financial sector of Pakistan, State Bank of Pakistan (SBP) is committed to improve the External Audit function of the banks and other financial institutions.

For the same purpose, the instructions on External Audit Function are aimed to be revised as there have been many developments on the subject in recent years. In the same line of thinking, SBP has devised the subject Framework which is divided into two parts. (Part-A & Part-B).

Part-A deals with the revised regulatory requirement relating to enlistment of the audit firms on the Panel of auditors maintained by State Bank of Pakistan u/s 35 of the Banking Companies Ordinance (BCO) 1962; their up-gradation / down-gradation / removal from the panel. It also provides guidance on supervisory expectations and relationship.

Part-B of subject framework provides the consolidation of existing legal and regulatory instructions on External Audit / Auditor for reference and guidance purpose.

The above instructions shall supersede earlier instruction issued vide BSD Circular no. 3 of 2003.

Attached: Framework for External Audit Function.