in september 2008, there was a sharp shift in sentiment ; we thought that we had an international banking system, but the outside world saw our banks as being oversized icelandic banks. they had, in fact, moved from the being toobig - to - fail to being too - big - to - save. there is a saying that banks are only international when they are alive and well, but when they get into trouble, they become a domestic concern. the icelandic government responded to the crisis by a force majeure act involving dividing the banks into two parts : a domestic part that was recapitalized and given to the creditors, and a foreign part that was liquidated. the fsa was given sweeping authority to take effective action. that is how we were able to slim the banks by 80 % almost overnight. in the wake of the crisis, he currency depreciated by 50 % and capital controls were introduced in cooperation with the imf at the same time as iceland entered an imf stand - by arrangement. for the imf, implementing capital controls in an advanced economy was a groundbreaking event. instantly we were faced with a double fx market, an offshore unofficial currency market and an official domestic one. the currency depreciated by 70 - 80 % in the offshore market from the precrisis level and a wide difference prevailed between the official and unofficial exchange rate for most of the period of the capital controls. i should mention that my predecessor, mar guðmundsson, was in charge of implementing the capital controls as well as stabilizing the economy, and on his watch, the capital controls were successfully abolished in 2017. the controls allowed us to restructure the banking system without the risk of capital flight and allowed the government to refinance itself, which otherwise would have been difficult at best given the massive fiscal outlays caused by the crisis. however, as the restructuring of banks proceeded, large amounts of capital were locked in the country behind the capital controls which also gave the authorities bargaining power in resolving legal disputes with hedge funds which by then had bought a majority of the outstanding claims on the defaulted banks. however, just like the american saying goes ; never let a good crisis go to waste, one of the good things of a collapsed financial system is that you can build a new one on a much sturdier foundation and a craftier design. ever since the crisis we have worked hard to build a new, sound and robust banking and financial

of internal auditors'professional standards focus on adding value by meeting the needs of management and the board. internal auditors add value by being effective independent assessors of the quality of the internal control framework and processes. auditors lose their independence when they perform management consulting roles for which they later will have to render an opinion. internal audit is one of the few corporate functions that has both the ability and the responsibility to look across all of the management silos within the corporation and make sure that the system of internal controls has no gaps and that the control framework is continually reviewed to keep up with corporate strategic initiatives, reorganizations, and process changes. when an auditor becomes part of management, the independent view is lost. external audit let's turn to the topic of quality assurance in the external audit process. as supervisors, we must take steps to encourage a high standard of professionalism among auditors. in some cases, this may mean undertaking an enforcement action against an accountant. the agencies are finalizing the accountant debarment rule, which will be one more tool we can use to correct errant behavior. however, before we do that, we should look at the lessons learned from some recent audit failures. the typical fact pattern in these failures indicates that some auditors are focusing on the form rather than the substance of transactions when making critical audit judgments. moreover, when looking at assurance services, such as the fdicia 112 auditor attestations, some auditors have a tendency to gloss over internal control deficiencies or simply ignore significant control deficiencies because they are " immaterial. " it is not meaningful for auditors to apply a financial statement concept of materiality to an attestation engagement on internal controls. from a supervisory perspective, we would consider the existence of a series of such immaterial deficiencies to be useful information in assessing the quality of the internal and external audit process. we need to change this mindset in the auditing community. some of this can be done through dialogue with the american institute of certified public accountants and the public company accounting oversight board, which we are doing. once auditors start to routinely report known deficiencies in internal controls, we should begin to eliminate the gap between what we expect an audit or attestation engagement to include and actual services provided by auditors. however, if we continue to find significant internal control deficiencies in safety and soundness examinations that the auditor knows about but fails to disclose, because they are judged to be