KARACHI, March 3: The State Bank of Pakistan on Monday asked the board of directors of banks and development finance institutions (DFIs) to clearly define the role and responsibilities of chief executive officers (CEOs), chief financial officers (CFOs) and the audit committee.

The SBP issued guidelines on internal control and advised the board of directors of banks and DFIs to monitor the role of the CEOs and CFOs for the purpose of effective implementation of internal controls over financial reporting (ICFR).

According to the earlier guidelines, banks and DFIs were required to get attestation to and report on board’s endorsement regarding efficacy of internal controls, which are relevant to the financial reporting. The compliance of this requirement was deferred through another circular on December 30, 2006, for the year ended on Dec 31, 2006.

The SBP, on a representation from Pakistan Banks Association (PBA), said that it had been decided to amend the relevant para and allow further time to banks and DFIs and the auditors on the State Bank’s panel to enable them to fully equip themselves to comply with the requirement.

According to new guidelines, in the annual financial statements, the statutory auditor(s) of a bank and DFI are required to give their opinion and report on board’s endorsement regarding efficacy of ICFR of banks or DFIs. The statutory auditor(s) may follow the available best international practices to discharge this responsibility. The compliance with the requirement will be effective from the year ending on Dec 31, 2008.