board of directors and management and they have a fiduciary duty to manage the institution in a honest and prudent manner. an unfit board and management will run the institution down for sure. the bank has developed and issued prudential standards and guidelines, and directives to allow the licensed financial institutions to develop appropriate risk management tools and practices that limit risks to prudent levels. it is the responsibility of boards, trustees and management of each individual institutions to adhere to these prudential and statutory requirements. the bank also conducts on - site inspections and off - site surveillance based on information provided by the licensed financial institutions. even the most successful supervisory agencies must rely, to some degree, on the information provided by individual financial institutions that it regulates, so that corrective measures can be taken – including placing them on statutory management and initiating liquidation of financial institutions. this brings us to the important issue of corporate governance, which has gained increased attention all around the world, including papua new guinea. although the companies act does not specifically emphasize corporate governance, the bank expects all the financial institutions that it supervises to adopt and implement good corporate governance practices. the issue of strong corporate governance cannot be overly emphasized because the roll - on effect of a financial institution collapsing, particularly in the case of a bank or life insurer, can be very dramatic for both individuals, and can severely affect the stability of the financial system. recent experiences in the asia, us, australia, and even papua new guinea, particularly in the superannuation industry, indicate that the risk of such collapses are heightened where poor corporate governance prevail. the bank, however, is aware that each financial institution is unique, in terms of its structure, objectives and operating environment, and circumstances change over time, particularly in regard to globalization, technology and innovation. it is, therefore, impractical to “ prescribe ” how an institution should structure its corporate governance practices. the bank, therefore, places the onus on the financial institutions, the need to embrace effective internal control measures, good accounting and strong corporate governance practices, and thorough risk - management procedures. these are fundamental to the institution ’ s management in achieving its objectives of ensuring proper conduct of business, so that the assets of institutions are safeguarded, fraud is detected and prevented, and accounting records are accurate and completed on time to prepare reliable financial information. external auditors, thus play a very important role in this game because their primary role is to test and ce

fx limits, conditions imposed on a bank ’ s license, and any other relevant bpng instructions while financial stability is the supervisor ’ s primary concern and monitors the present and future viability of the institution through the use of financial statements the auditor provides, the auditor, on the other hand is concerned with the institution as a “ going concern ” and expresses professional view on the “ true and fairness ” of the institution ’ s condition expressed in its account. at the end of the day, both the supervisor and the auditor is looking at the same coin but from different sides. this commonality therefore justifies the position for closer understanding and knowing of each other ’ s concerns, and the need to maintain good working relationship and liaison between supervisor and external auditors in order to promote a sound and stable financial system. it is in this light that i feel the need for auditors and accounting associations of png to come down hard on members who do not properly carry out their tasks, be it deliberate or otherwise. sanctions for such behaviour be punitive and must be enforced and not for show only. our experiences with some of your members in their roles as external auditors leave a lot to be desired. at the very least annual public advertisement of registered auditors is a necessity. how will anyone know if a firm or an individual is a registered member of the png auditors charter? is this information readily available?