Ministry of Finance, Practice of Independent Auditing Announcement No. 8: Interbank Letter Inquiry Measures

Issued: January 21 2001
Effective: July 1 2001
Applicability: For the purposes of these Measures, "interbank letter inquiry Measures" refer to the Measures by which a registered accountant in the name of a commercial bank sends inquiry letters to other banks (confirming banks) and obtains and evaluates the replies thereto in order to verify the account balances or other information in relation to that commercial bank (Article 2).

Main contents: According to the Measures, subjects of interbank letter inquiries generally include information of (1) various accounts between the commercial bank and the confirming bank, (2) contingent liabilities arising between the banks in off-balance sheet transactions such as provision of security, undertaking and endorsement, (3) asset repurchase agreements and outstanding options, (4) forward foreign exchange contracts and other contracts, and (5) negotiable securities in the custody of the confirming bank (Article 10). The Measures provide that in selecting confirming banks, the registered accountant shall consider the amount of the relevant balance, the nature, frequency and amount of the relevant transactions, the reliability of the relevant internal controls and the audit risks (Article 4). In the inquiry letter, the registered accountant shall either request the confirming bank to confirm the accuracy and completeness of the information set out therein, or request the confirming bank to provide the required information (Article 6). The registered accountant shall request the confirming bank to send its reply directly to the accounting firm to which he or she belongs (Article 7).
Related legislation: Independent Auditing Basic Guidelines