BNAO Performs Audit on Banking Supervision

The Bulgarian National Assembly tasked the Bulgarian National Audit Office (BNAO) with performing an audit on banking supervision following much public attention on the difficult situation of one bank in particular.

Pursuant with the National Assembly’s decision in April 2015, the BNAO performed the audit with the specific focus on the “Effectiveness and Efficiency of Banking Supervision by the Bulgarian National Bank for the Period January 1, 2012-December 31, 2014.”

The audit, in the spirit of the adopted “Contact Committee Statement” of the Heads of the Supreme Audit Institutions (SAIs) of the European Union Member States and the European Court of Auditors (June 2015 in Riga, Latvia), aims to ensure effective banking supervision arrangements following the introduction of the Single Supervisory Mechanism (SSM), a new European system of banking supervision.

The audit scope included identifying key issues concerning the (1) legal framework of banking supervision, (2) planning of supervisory functions, as well as (3) performing and reporting distant supervision and on-the-spot checks. Specific supervisory activities were examined using a random sample of on-the-spot checks and distant supervision performances during the audited period.

System- and results-oriented approaches were primarily used based on risk assessments associated with implementing audit tasks.

The following methods for collecting information used to achieve the audit objectives included:

Study of legal and internal acts;

Collecting and researching documents that dealt with:

     —The legal framework of banking supervision;

     —Planning and performing supervisory on-the-spot checks (including distant);

     —The collection and analysis of documents for undertaking actions as a result of the performed supervision; and

     —Documentary checks, interviews, questionnaires and examination of documentation associated with on-the-spot checks and distant supervision defined on a sample basis.

Quantitative, qualitative, system analysis and systematizing methodologies were used to analyze the data, followed by a summation gathered from questionnaires, interviews and reports.

The audit report, presented to the National Assembly by the BNAO President, Tzvetan Tzvetkov, included 13 recommendations the BNAO made to the Bulgarian National Bank Governing Council on how to improve the banking supervision and increase its effectiveness.

Though the deadline for implementing the recommendations is November 1, 2016, the Bulgarian National Bank announced that many of them have already been implemented.

You can find the published audit report on the BNAO website at

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