ORDER OF THE MINISTRY OF FINANCE OF THE REPUBLIC OF MOLDOVA

of October 6, 2006 No. 71

About approval and enforcement of the Provision on audit practice

In pursuance of Article 7 (5) the Law of the Republic of Moldova "About auditor activities" I ORDER to N729-XIII of February 15, 1996:

1. Approve the Provision on Audit Practice (PAP) 1004 "Relations between the bodies regulating banking activity and external auditors".

2. Enact in the territory of the Republic of Moldova PPAP 1004 "Relations between the bodies regulating banking activity, and external auditors" for financial records audit, covering the periods since January 1, 2007.

The Provision on Audit Practice (PAP) 1004 "Relations between the bodies regulating banking activity and external auditors"

Introduction

1. This Provision on audit practice is developed on the basis of World situation on audit practice 1004 "Relations between the bodies regulating banking activity, and external auditors" (IAPS 1004 "The relationship between bank supervisors and external auditors"), accepted by the International federation of accountants (IFAC), in the editorial office 2001 years.

Purpose

2. The purpose of this provision consists in provision of information and recommendations of procedure by which the relations between external auditors of bank and regulating authorities can be expressed in mutual advantage.

3. Banks play significant role in economy. They store population savings, provide means for payment for goods and services and finance business development and trade. To perform these functions reliably and effectively, each bank shall gain trust of the population and the clients. Banking system stability as in national, and internationally, began to be recognized problem of public interest. This public interest is reflected according to the procedure by which banks, unlike most other business entities, are subordinated to circumspect observation from bodies of bank regulation.

4. Financial statements of banks are subject to audit by external auditors. The external auditor books audit according to the Code of professional behavior of auditors and accountants and applicable audit standards, including in what it is told about independence, objectivity, professional competence and diligence and adequate planning and observation. The opinion of the auditor gives reliability of the financial reporting and increases trust to bank system.

5. As banking activity develops in difficult situation, tasks of bodies of bank regulation and external auditors become harder and harder. In many cases bodies of bank regulation and external auditors face identical problems and more and more their roles are recognized as supplementing. Besides that bodies of bank regulation use results of activities of auditors, they can also address external auditors and for accomplishment of other additional tasks. At the same time external auditors in accomplishment of the functions also apply to regulating authorities for information which can help them with accomplishment of their tasks more effectively.

6. It is obvious that the best mutual understanding of role and responsibility of bodies of bank regulation and external auditors, respectively and where communication between them is necessary, improves efficiency of financial records audit of banks.

7. Role and responsibility of council of the bank and management, executive body, external auditors of bank and bodies of bank regulation follow from provisions of the legislation and for external auditors - from professional practice.

This provision is not intended to reduce or change these roles or responsibility. More likely, is intended to provide the best understanding of nature of roles of council of the bank and executive body, external auditors of bank and regulating authorities as the wrong representations concerning such roles can lead to situations in which one unreasonably are based on results of activities of others. This provision aims to eliminate possible wrong representations and offers procedure in which everyone can use as much as possible effectively results of activities of others. Therefore, provision:

(a) provides primary responsibility of council of the bank and executive body (paragraphs 10-15 of this provision);

(b) studies essential characteristics of role of external auditors (paragraphs 16-29 of this provision);

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