Deposit-taking Business Code of Practice - Appointment of Auditor

Summary

This Code, part of the five-part Code of Practice for Deposit-taking Business issued by the JFSC under the Banking Business (Jersey) Law 1991, sets out statutory and Code requirements governing how Registered Persons (banks) appoint, oversee and terminate their external auditors. It applies separately to Jersey Incorporated Banks (JIBs) and Overseas Incorporated Banks (OIBs), reflecting differing statutory arrangements under the Banking Business (Accounts, Auditors and Reports) (Jersey) Order 2023 (BAO).

• JIBs: Must appoint a JIB Auditor with adequate skill, resources and experience, notify the JFSC of the appointment, and notify the JFSC on termination, with the auditor required to make a statement on termination.
• OIBs: Must appoint both an OIB Auditor (for entire business) and a Branch Auditor (for Jersey business), notify the JFSC of both appointments, and notify the JFSC on termination of either, with a statement from the relevant auditor.
• JFSC powers: The JFSC may object to the appointment of a JIB Auditor or a Branch Auditor (but not an OIB Auditor) and may require information on the proposed auditor's skill, resources and experience, which must also be shared with the bank.
• Governance: JIBs and OIBs must each have a robust process for approving appointment, reappointment, removal and remuneration of their (Branch) Auditor, and must monitor and assess the auditor's independence and effectiveness.
• Communication and reporting: Both JIBs and OIBs must maintain effective communication with, and require reporting from, their auditor to support oversight responsibilities, and must keep records of these activities as business records.
• Exemptions: The JFSC may waive or vary requirements under BAO Article 17 on request, provided no customer or client is likely to be prejudiced.
• Guidance: JIBs and OIBs should have regard to the Basel Committee's March 2014 guidelines on external audits of banks, applied via the audit committee or, if none exists, the board.

The Code has been effective since 23 February 2024 for all Registered Persons; the February 2024 version made only typographical corrections to the earlier text, with a tracked-changes version available from the JFSC.

Key obligations

• Every JIB must appoint an auditor (JIB Auditor) and notify the JFSC of the appointment.
• Every OIB must appoint both an OIB Auditor and a Branch Auditor and notify the JFSC of both appointments.
• A Registered Person must notify the JFSC upon terminating a JIB Auditor's or (for OIBs) an OIB Auditor's or Branch Auditor's appointment; the auditor must make a statement to the JFSC on termination.
• A JIB or OIB must have a robust process for approving, reappointing, removing and remunerating its auditor.
• A JIB or OIB must monitor and assess the independence and effectiveness of its auditor.
• A JIB or OIB must maintain effective communication with its auditor and require the auditor to report on all relevant matters.
• A JIB or OIB must maintain business records relating to auditor appointment, oversight and communication.
• If the JFSC requires information from a proposed auditor regarding skill, resources and experience, that information must also be provided to the relevant bank.

Applies to

Jersey Incorporated Banks (JIBs), Overseas Incorporated Banks (OIBs), Registered Persons under the Banking Business (Jersey) Law 1991

Deadlines

• 23 February 2024: Effective date of the Appointment of Auditor Code for all Registered Persons.

Related documents

• This document is made under Banking Business (Jersey) Law 1991