Forensic audits of banks are going to be regular – Economic

Forensic audits of banks are going to be regular – Economic

António Costa

antonio.costa@economico.pt

Yesterday 00:05

Carlos Costa announced in Parliament that, beyond the BES, there were three more forensic audits in progress. A second is already known, is Montepio, now there hunting the other two.

What is, after all, a forensic audit to a bank? The question became mandatory, and the response even more, from the time the governor of the Bank of Portugal introduced this innovation in banking supervision policy because the case GES / BES and now, with the revelation that Montepio is another of the institutions concerned. Officially, the regulator does not comment, but the Economic Daily knows that to Carlos Costa, it is not necessary to have criminal or fraudulent evidence, as happened in the BES , the Bank of Portugal trigger this process. And forensic audits are going to be regular.

Following the “Special Inspections Program (SIP)” held in 2011, Carlos Costa decided to include, as part of regular supervision of the banking system, periodic audits and cross on the overall portfolio of credit and asset classes most exposed to macroeconomic developments or market. This language, with the mark of the regulator, could be replaced by assessment of credit granted to customers who could potentially defaulting, in particular the analysis of the guarantees that are ‘hold’ these financings. Or lack thereof. The Bank of Portugal, it is known, identified 12 business groups that had high levels of exposure to BES and began to comb the conditions of these contracts ..

The latest news about BES , the astronomical losses of 3.5 billion euros in the first half of this year and the need, following that, to create the New Bank also led by Vítor Bento, and transform the BES a ‘bad bank’, yet showed so that the operations had proven insufficient. The regulation, particularly the Bank of Portugal, but also the CMVM has more power today than it had burst when the BPN case, there are other instruments of intervention, especially after the entry of the ‘troika’ in Portugal, but it has not arrived. Regulators are at the forefront of criticism from investors, only exceeded by the authors of the cases themselves, as Ricardo Salgado in BES . And that’s what Carlos Costa said. The Bank of Portugal has started to incorporate the regular supervisory process forensic audits.

The problem is that the news that a bank is subject to a forensic audit, after what happened in BES , after all guarantees and who ultimately prove inconsequential, is a dangerous fuse. Carlos Costa announced in Parliament that, beyond the BES , there were three more forensic audits in progress. A second is already known, is Montepio, now there hunting the other two.

After all, what are these audits? By their nature, forensic audits are conducted by multidisciplinary teams of auditors and lawyers and are more focused on the evaluation of internal governance practices of a particular institution.

Both forensic audits, incidentally, as the cross, are performed by independent auditing firms, and aim in both cases, for example, confirm proper valuation of assets and liabilities, assessing practices of risk management or conduct of the operations approved with the corporate rules, says a source the Economic.

It is in this context that other sources of financial sector guarantee the Economic whatever forensic audits, whether global audits “are performed not because there is necessarily suspicious of practice irregularities, but as instruments Further evaluation of the activities undertaken by institutions subject to supervision, contributing to the adoption of best management practices and risk control. “