External audits of banks is intended to improve the quality of a bank’s external audit and enhance the effectiveness of prudential supervision, thereby contributing to financial stability.
The document sets out guidelines regarding the audit committee's responsibilities in overseeing the external audit function and the prudential supervisor's relationships with external auditors of banks and relevant audit oversight bodies. It also includes expectations and recommendations for enhancing the quality of external audits of banks.
Specifically, the document includes a framework to assist audit committees in the governance and oversight of the external audit function and highlights key areas where significant risks of material misstatements in banks' financial statements often arise.
For more on this topic, read the BCBS press release.