Malawi: Directive on Audits

Publication Date: 13 Mar 2006
Published by: Reserve Bank of Malawi (RBM)
Document Type: Other (PDF)

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Audit requirements for banks and financial institutions in Malawi

This directive applies to all banks and other financial institutions licensed under the Banking Act on both a solo and a consolidated basis. It serves to provide the Reserve Bank with a mechanism to obtain the assurance that sound corporate governance principles are entrenched in licensed institutions.

Effective from 13th March, 2006, the directive includes:

• A preliminary section that includes the short title of the directive, its authorization, its application and the interpretation of various terms that it contains such as “audit”, “Banking Act”, “International Accounting Standards” etc.
• The “Statement of Policy” that focuses on the objectives of the directive and its rationale, which is that:
  • Modern times increasingly recognize the role of good governance in corporate institutions;
  • Bad governance causes institutional failures;
  • The banking industry in Malawi needs an enhancement of the culture of good governance;
  • The audit function is a key player in this endeavor.
• Information on the establishment and functions of the “Audit Committee”.
• The processes that go into the “Annual Independent Audit”, such as:
  • The appointment of an independent auditor;
  • Stipulations of the letter of engagement;
  • Notification to the Reserve Bank;
  • Submission of the audit report, etc.
• Publication of audited financial statements. These include:
  • Publication of statements in the media;
  • Exhibition of statements at head office.
• Communication between the Reserve Bank and independent auditors.
• Remedial measures and administrative sanctions.