4. General framework of the communication between competent authorities and auditors

Competent authorities and auditors are both responsible for establishing effective communication between them in accordance with the first subparagraph of Article 12(2) of Regulation (EU) No 537/2014.

The communication to be established between competent authorities and auditors should be open and constructive, as well as adaptable to unexpected future developments.

Competent authorities and auditors should establish adequate processes and be aware of them in order to build and ensure effective communication.

Competent authorities and auditors should contribute to developing a mutual understanding of their respective roles and responsibilities.

The parties should discharge their respective responsibilities and one party should not use the work of the other as a substitute for its own work. The supervised credit institution should remain the main source of information for the parties’ work.

Effective communication between competent authorities and auditors should facilitate the sharing of information about the credit institution which is relevant to the competent authorities’ and the auditors’ respective functions. Sharing of information should take into account the different responsibilities of competent authorities and auditors, which derive from the different scope and purpose of their functions.

Any information shared during the communication between competent authorities and auditors is subject to the confidentiality requirements laid down in Section II of Chapter 1 in Title VII of Directive 2013/36/EU and the disclosure in good faith to the competent authorities by auditors of any information emerging during this communication does not constitute a breach of any contractual or legal restriction on disclosure of information in accordance with Article 12(3) of Regulation (EU) No 537/2014.

Competent authorities should apply a proportionate approach in their communication with auditors and use their resources efficiently to establish effective communication.

A proportionate approach to the application of these guidelines aims to align the elements of the communication between competent authorities and auditors as referred to in Sections 5 and 6 of these guidelines (scope of information shared, form of communication, participants in the communication, frequency and timing of communication, communication with auditors collectively) with the credit institution’s size, internal organisation and nature, scope and complexity of its activities, so that the objective of these guidelines is achieved efficiently.

In particular, in-depth communication should be held with auditors of credit institutions referred to in Article 131 of Directive 2013/36/EU (global systemically important institutions (G-SIIs)²⁰ and other systemically important institutions (O-SIIs)²¹ ) and other institutions determined by competent authorities based on an assessment of the credit institution’s size and internal organisation and the nature, scope and complexity of its activities.

²⁰ Commission Delegated Regulation (EU) No 1222/2014 of 8 October 2014 supplementing Directive 2013/36/EU of the European Parliament and of the Council with regard to regulatory technical standards for the specification of the methodology for the identification of global systemically important institutions and for the definition of subcategories of global systemically important institutions (OJ L 330, 15.11.14, p. 27). 21 EBA Guidelines on the criteria to determine the conditions of application of Article 131(3) of Directive 2013/36/EU in relation to the assessment of other systemically important institutions (O-SIIs) (EBA/GL/2014/10).

In addition, competent authorities should assess on an on-going basis whether it is necessary to apply in-depth communication with the auditor of any credit institution due to ad hoc or emerging issues, such as:

•  recent significant findings from the supervisory assessment or statutory audit
•  recent developments that may change the risk assessment or the level of supervisory effort applied to a credit institution
•  a change in the auditor being appointed to perform the statutory audit of a credit institution (including cases when a new auditor enters the market for statutory audits of credit institutions)
•  the dismissal or resignation of the auditor during the audit engagement.