Commercial banks are also affected by recent amendments to the “law on auditors” and by new provisions restricting the term of office of external audit firms.
Bank of Cyprus was the first to let go of EY, its long associate, and hire PwC. And now Hellenic Bank is set to hire a new audit firm after being with KPMG for over a decade.
Hellenic’s final decision on this should come within two weeks, according to insiders. They are now reviewing tabled bids, with the new audit firm set to take over on January 1, 2021.
The lender’s annual financial results show the total fee for the audit of 2018’s annual accounts amounted to €1.6 million.
According to the new European regulation, which was also adopted in Cypriot legislation, the external auditor has to be changed every nine years.
And at least four years have to pass from the date of expiration of the initial contract before a bank’s auditor can submit a new tender.
This is to ensure that the auditor’s independence from the audited entity is enhanced. Also, to ensure that in the long term the client is not dependent on the auditor and the auditor on the client.
There was no such restriction in the past and this explains why most banks had the same big firm as external auditors for decades.