If necessary, regulators may consider limiting the scope of non-auditing services or requiring the auditors to submit a request for approval prior to engaging in non-auditing activities in the same entity that they provide auditing service. One good example is the Sarbanes Oxeley Act, which was issued in the U.S. in 2002 disallowing audit firms from providing specifc functions to their audit clients such as bookkeeping, financial information system design and appraisal service, etc. Second, the work of the auditors should never replace supervisory responsibilities. Audited financial statements are not prepared to serve supervisory purposes and external auditors are not trained as bank supervisors. Accounting policies and definitions used by auditors may be different from those required by supervisors under Thai regulatory standards, although in general they tend to be the same. For example, there are differences between supervisory guidelines and accounting requirements on asset classification and provisioning. Whereas the supervisory guidelines prescribe minimum specific ratios of loan provisions depending on the quality of loans, the accounting standard is less specifc and only requires banks to set aside appropriate provisions. Second, the method used by regulators to set aside provisions is based on an “expected loss model”, while the accounting standards require provisions based on an “incurred loss model”. These conceptual differences can lead to different outcomes on such critical issues as the volume of classified asset, the adequacy of provisions, and therefore, capital adequacy. It’s useful to be mindful of these differences and understand the context that leads to the need to maintain these differences.
To this point, the recently introduced alternative procedure for the simplification of the auditing of the financial statements of very small businesses should support these efforts and facilitate the timely transmission of the financial statements to the credit institutions. It is of utmost importance that a timely flow of up-to-date customers' financials is maintained by banks at all times. Unquestionably, this will be beneficial for both parties, banks and clients, as any events signalling a deterioration of the client's financial standing will be captured early on. Consequently the most suitable restructuring solution may be sought, which could ensure the continuation of a healthy and economically viable business relationship. Conclusion To sum up, the world's economies have been through a lot in recent years, from the challenge of the pandemic, to the impact of the war in Ukraine. It is up to us to come through these challenges unscathed or even stronger, wiser and better prepared for a brighter future. We have done it before, we can do it again. After all, to quote Gever Tulley (an American writer, speaker, educator, and entrepreneur) - persistence and resilience only come from having been given the chance to work through difficult problems. Thank you for your attention. 4/4  BIS - Central bankers' speeches