IDEAS home Printed from https://ideas.repec.org/p/pra/mprapa/32614.html
   My bibliography  Save this paper

The role of the external auditor in bank regulation and supervision: A comparative analysis between the UK, Germany, Italy and the US

Author

Listed:
  • Ojo, Marianne

Abstract

This comparative analysis discusses the differences between the structure and systems of bank regulation operating in the UK, Germany, Italy and the US. The importance of harmonisation in achieving stated supervisory objectives is also emphasised. The main objective of this chapter is to illustrate how the external auditor's role could be harnessed more efficiently in the UK banking regulatory and supervisory process. This is of particular importance given the reduced supervisory role which the Bank of England has assumed since banking regulatory and supervisory powers and functions were transferred to the Financial Services Authority. External audits and in particular external auditors, have a greater role to play in bank regulation and supervision than was the case over 20 years ago. This is so mainly as a result of globalisation. The need for a single regulator which regulates not just the banking sector, but also the insurance and securities sectors, has arisen principally because of the rise of conglomerate firms. Single regulators are able to manage more effectively cross sector services' risks. Correspondingly, the functional overlaps between banking, insurance and securities business and their universal scope make it more difficult for a regulator to observe and comprehend such businesses. The difficulty of measuring and assessing risk within such institutions along with the speed with which assets can be adjusted in derivatives markets has led to more emphasis being placed on internal managerial control. Consideration is also being given to the structures that can be put in place to re inforce the incentives of all parties involved – not just to management but all parties including auditors and regulators. Because banking has evolved to a stage where conglomerates now have a significant presence and provide a range of services (and not just banking services), and because of the growing presence of international firms, the role of the external auditor has become so important.

Suggested Citation

  • Ojo, Marianne, 2007. "The role of the external auditor in bank regulation and supervision: A comparative analysis between the UK, Germany, Italy and the US," MPRA Paper 32614, University Library of Munich, Germany, revised Jan 2008.
  • Handle: RePEc:pra:mprapa:32614
    as

    Download full text from publisher

    File URL: https://mpra.ub.uni-muenchen.de/32614/1/MPRA_paper_32614.pdf
    File Function: original version
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Alessandro Goglio, 2001. "Sectoral Regulatory Reforms in Italy: Framework and Implications," OECD Economics Department Working Papers 294, OECD Publishing.
    2. Marco Moscadelli, 2004. "The modelling of operational risk: experience with the analysis of the data collected by the Basel Committee," Temi di discussione (Economic working papers) 517, Bank of Italy, Economic Research and International Relations Area.
    3. Holger Vieten, 1995. "Auditing in Britain and Germany compared: professions, knowledge and the state," European Accounting Review, Taylor & Francis Journals, vol. 4(3), pages 485-514.
    4. Polizatto, Vincent P., 1990. "Prudential regulation and banking supervision : building an institutional framework for Banks," Policy Research Working Paper Series 340, The World Bank.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Ojo, Marianne, 2009. "Regulating the International Audit Market and the removal of barriers to entry: The provision of non audit services by audit firms and the 2006 Statutory Audit Directive," MPRA Paper 18624, University Library of Munich, Germany.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Ojo, Marianne, 2008. "The role of the external auditor in bank regulation and supervision: A comparative analysis," MPRA Paper 15747, University Library of Munich, Germany, revised Jun 2009.
    2. Ojo/Roedl, Marianne, 2008. "The role of the external auditor in bank regulation and supervision: A comparative analysis between the UK, Germany, Italy and the US (Third Edition: Financial Crises, Enron and Northern Rock)," MPRA Paper 36284, University Library of Munich, Germany, revised Jun 2009.
    3. Stefan Mittnik & Sandra Paterlini & Tina Yener, 2011. "Operational–risk Dependencies and the Determination of Risk Capital," Center for Economic Research (RECent) 070, University of Modena and Reggio E., Dept. of Economics "Marco Biagi".
    4. Marco Rocco, 2011. "Extreme value theory for finance: a survey," Questioni di Economia e Finanza (Occasional Papers) 99, Bank of Italy, Economic Research and International Relations Area.
    5. Robert Jarrow & Jeff Oxman & Yildiray Yildirim, 2010. "The cost of operational risk loss insurance," Review of Derivatives Research, Springer, vol. 13(3), pages 273-295, October.
    6. Adriana D. Kugler & Giovanni Pica, 2006. "The Effects of Employment Protection and Product Market Regulations on the Italian Labour Market," Chapters, in: Julián Messina & Claudio Michelacci & Jarkko Turunen & Gylfi Zoega (ed.), Labour Market Adjustments in Europe, chapter 4, Edward Elgar Publishing.
    7. J. Christopher Westland, 2015. "Economics of eBay’s buyer protection plan," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 1(1), pages 1-20, December.
    8. S�verine Plunus & Georges Hübner & Jean-Philippe Peters, 2012. "Measuring operational risk in financial institutions," Applied Financial Economics, Taylor & Francis Journals, vol. 22(18), pages 1553-1569, September.
    9. Ikefuji, Masako & Laeven, Roger J.A. & Magnus, Jan R. & Muris, Chris, 2020. "Expected utility and catastrophic risk in a stochastic economy–climate model," Journal of Econometrics, Elsevier, vol. 214(1), pages 110-129.
    10. Lu, Zhaoyang, 2011. "Modeling the yearly Value-at-Risk for operational risk in Chinese commercial banks," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 82(4), pages 604-616.
    11. Ojo, Marianne, 2006. "Avoiding Another Enron : The Role of the External Auditor in Financial Regulation and Supervision," MPRA Paper 1147, University Library of Munich, Germany.
    12. Giuseppe Galloppo & Alessandro Rogora, 2011. "What Has Worked In Operational Risk?," Global Journal of Business Research, The Institute for Business and Finance Research, vol. 5(3), pages 1-17.
    13. Pflug Georg Ch. & Schaller Peter, 2009. "A note on pivotal Value-at-Risk estimates," Statistics & Risk Modeling, De Gruyter, vol. 27(3), pages 201-209, December.
    14. Stefan Aulbach & Verena Bayer & Michael Falk, 2012. "A multivariate piecing-together approach with an application to operational loss data," Papers 1205.1617, arXiv.org.
    15. Mainik Georg & Rüschendorf Ludger, 2012. "Ordering of multivariate risk models with respect to extreme portfolio losses," Statistics & Risk Modeling, De Gruyter, vol. 29(1), pages 73-106, March.
    16. Gambacorta, Leonardo, 2008. "How do banks set interest rates?," European Economic Review, Elsevier, vol. 52(5), pages 792-819, July.
    17. Lisa Evans & Christopher Nobes, 1998. "Harmonization of the structure of audit firms: incorporation in the UK and Germany," European Accounting Review, Taylor & Francis Journals, vol. 7(1), pages 125-148.
    18. Xiaolin Luo & Pavel V. Shevchenko & John B. Donnelly, 2009. "Addressing the Impact of Data Truncation and Parameter Uncertainty on Operational Risk Estimates," Papers 0904.2910, arXiv.org.
    19. Eling, Martin & Loperfido, Nicola, 2017. "Data breaches: Goodness of fit, pricing, and risk measurement," Insurance: Mathematics and Economics, Elsevier, vol. 75(C), pages 126-136.
    20. Gietzmann, M. B. & Quick, R., 1998. "Capping auditor liability: The German experience," Accounting, Organizations and Society, Elsevier, vol. 23(1), pages 81-103, January.

    More about this item

    Keywords

    comparative; analysis; external; auditor; US; UK; Germany; Italy; bank; regulation;
    All these keywords.

    JEL classification:

    • K29 - Law and Economics - - Regulation and Business Law - - - Other

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:pra:mprapa:32614. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Joachim Winter (email available below). General contact details of provider: https://edirc.repec.org/data/vfmunde.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.