arnold schilder : corporate governance, accounting and auditing post - enron issues address held by professor arnold schilder, executive director of the netherlands bank and chairman of the basel committee's accounting task force, on the occasion of the opening of the new premises of the bank of the netherlands antilles, curacao, 8 may 2002. * * * ladies and gentlemen, let me start by congratulating the bank of the netherlands antilles with the opening of their new premises. governor tromp, on behalf of the dutch central bank, i bring you the best wishes of governor wellink and my other fellow directors. also, in my capacity as board member of the dutch pensions and insurance supervisory board ( pvk ), i bring you their best wishes as well! so a positive start, and one would expect this week ’ s program to be orchestrated in the same way. however, governor tromp invited me to speak about more troublesome issues such as accounting and auditing after enron. i hesitated for a while, suggesting that we keep it a bit more general. but when preparing this speech, i realised he was right. we can no longer speak about accounting and auditing without mentioning enron. i address this issue from the perspectives ensuing from my mixed background. for 26 years i was involved in public accounting at one of the big four firms. ( you will agree that we can no longer speak about the big five, sadly enough ). in 1994 i finished my phd on the subject of auditor independence. in 1995 i visited curacao as the president of the dutch institute of public accountants royal nivra. and then, in 1998 i was invited to join the dutch central bank as the executive director of supervision, succeeding tom de swaan. as a consequence i became a member of the basel committee of banking supervision, and in 1999 i was asked to chair the basel committee ’ s accounting task force. you will notice this mix of accounting, auditing, regulation and supervision in my address. enron has seriously shaken our confidence. this is a grave matter, because it means confidence has weakened in rules and regulations, in supervisory authorities and in the functioning of the financial system in general. therefore, i will first discuss key issues regarding enron. from there we will proceed to confidence and trust, accounting and ethics. i will then review some challenges to the auditing profession. finally, i will draw some conclusions. my one - line conclusion will be that the

of financial institutions. the need to deepen capabilities and enhance capacity applies equally to us as a regulator and to law enforcement agencies. 31. one newer development is the greater use of technology tools and solutions including in the area of data analytics. i know many of you, in your respective firms, are already tapping on technology tools to improve your ability to detect fraud or unusual activities. some of you are aware of the ongoing discussions in singapore to develop utilities that can streamline “ kyc ” processes and uplift the overall quality and consistency of such checks and customer onboarding. we can expect the increased use of technology especially in the areas of aml / cft screening and risk monitoring. 32. as a financial regulator, the mas is able to look for linkages and patterns across financial institutions. these may include emerging risks or irregular relationships, or networks and linkages between entities or actors. mas is therefore also investing in the use of technology and analytics. recently, we announced the formation of a dedicated data analytics group which will complement and support the analytics units in our supervisory teams. this internal analytics “ hub - and - spoke ” model will deepen our “ suptech ” capability, in turn allowing mas supervisors to better tap the “ regtech ” capability that many fis have embarked on. this suptech - regtech linkage is targeted at driving adoption of technology for compliance and supervision efficiency and effectiveness. 33. a greater use of analytics to support our aml / cft risk monitoring and supervision work will hence be a key priority in mas. to illustrate, we expect to tap hadoop - based big data system to build complex network models that are better able to identify and pick up subtle patterns in entity behaviours. in the future, we hope to rely more recent technologies such as machine learning, deep learning and graphics processing unit ( gpu ) based computing, to deepen mas ’ s financial surveillance and supervisory insights. i know that some of the major fis are doing the same. our data analytics group will also look to establish a community of senior data 4 / 5 bis central bankers'speeches practitioners with the industry to support an exchange of views for mutual learning. 34. let me conclude by reiterating why we take ml / tf threats so seriously. singapore is an important global financial hub. our financial centre is home to many fis including a number of international firms. many of them serve the region including in global business lines or in regional corporate functions. our reputation