Dear Sirs,

PANEL OF AUDITORS UNDER SECTION 35
OF BANKING COMPANIES ORDINANCE, 1962

Please refer to BPRD Circular No.25 dated the 10^th October, 1995 under cover of which a panel of auditors maintained under Section 35 of the BCO, 1962 was circulated and subsequent changes/amendments were carried out in the panel from time to time. The panel of auditors has been reconstituted under the revised criteria for placement of firms on the SBP’s Panel of Auditors (Annexure-A).

2)        The panel shall remain operative as under:-

a)                  Banks/NBFIs having total assets (net of contra items) above Rs.50 billion or having 100 or more branches may engage any of the auditors placed in Category ‘A’.

b)                 Banks/NBFIs having total assets (net of contra items) of Rs.5 billion to Rs.50 billion or number of branches from 10 to 99 may engage any of the auditors placed in Categories A or B.

c)                 Banks/NBFIs having total assets (net of contra items) below Rs.5 billion or number of branches below 10 may engage any of the auditors placed in either of the Categories A, B or C.

3)                 Other instructions on the subject are as under:-

a)                  The audit firms, which attain the minimum eligibility criteria thresholds, are eligible to audit Banks/NBFIs in the specific category.

b)                 An audit firm of a higher category can also conduct audit of a lower category bank/NBFI.

c)                 The panel will be reviewed once in every two years.

d)                 During this period, the State Bank may also downgrade the category of any firm or remove it from the panel in the following cases:-

i)                   If material misstatement of facts and figures is observed in the statements or reports supplied to the State Bank duly certified by the auditing firm, which will materially alter the assessment of financial position of banks/NBFIs in an adverse manner.

ii)                Failure of the auditing firm in securing a “Satisfactory” Annual Audit Compliance Report (ACR) from ICAP. In order to ensure compliance with this requirement, the auditing firm will be required to invariably submit a copy of their ACR to the State Bank every year, failing which their category may be downgraded by the State Bank.

e)         Banks/NBFIs shall appoint auditors from the revised panel for the accounting year ending 31^st December 2001 and onwards.

            These instructions supercede all earlier directives issued from time to time on the subject.