Please refer to the Guidelines on Internal Controls issued vide BSD Circular No. 7 dated May 27, 2004.

2) In terms of Para 7(c) of the above referred Guidelines, Banks/ DFIs are required to get attestation to and report on Board’s endorsement regarding efficacy of internal controls which are relevant to the financial reporting. The compliance of this requirement was deferred vide BSD Circular Letter No. 3 dated December 30, 2006, for the year ended December 31, 2006. On representation from Pakistan Banks Association (PBA), it has been decided to amend the relevant para and allow further time to Banks /DFIs and the Auditors on the Panel of State Bank Pakistan to enable them to fully equip themselves to comply with the requirement. Accordingly, following amendments in the guidelines and timeline have been made:-

a) Para 7 (c) of the guidelines has been replaced with new para 7.1 as follows:-
“7.1 Opinion of Statutory Auditors
In the annual financial statements, the statutory auditor(s) of a Bank / DFI are required to give their opinion and report on Board’s endorsement regarding efficacy of Bank / DFI’s internal controls over financial reporting (ICFR). The statutory auditor(s) may follow the available best international practices to discharge this responsibility.”
b) The compliance with the requirement of new para7.1 will be effective from the year ending December 31, 2008.

3) For the purpose of effective implementation of ICFR, the Board of Directors of Banks / DFIs should clearly define the role and responsibilities of CEO, CFO and the Audit Committee and monitor the same.

4) Banks / DFIs are advised to ensure compliance with the guidelines. All other instructions on the subject shall, however, remain unchanged.

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