The Government will strengthen Norges Bank’s management and control system

“The Government has submitted a bill today with proposals that will strengthen Norges Bank’s management and control system in line with the best international practices and recognised principles for sound central bank management,” says the Norwegian Minister of Finance Ms Kristin Halvorsen.

The rules of the Norges Bank Act on managing and controlling Norges Bank have stood virtually unchanged since they were enacted in 1985. During this period the bank’s activities have changed and become more complex, not least as a result of the task of managing the Government Pension Fund – Global. Since the Norges Bank Act was enacted, the view of what constitutes good corporate governance has evolved. The Norges Bank Act should reflect this development. The bank’s governing bodies have taken several steps in their internal rules for strengthening the control regime, but important management and control principles should be expressed in the Norges Bank Act. The key legislative proposals are:

Norges Bank shall be required to prepare accounts pursuant to the Accounting Act 
The Government proposes making Norges Bank subject to the Accounting Act. Under current practice the Supervisory Council establishes the bank’s accounting rules. In the Ministry’s view the accounting rules should have a clear and independent basis in law.

New auditing scheme: an externally elected auditor
Today the Central Bank Audit is responsible for auditing the bank’s accounts. Its employees are formally employed by the bank. In line with best international practices auditing should be completely independent of the bank.

“A system where the Supervisory Council elects an external auditor will provide the best overall control regime. The elected auditor audits the bank’s accounts while the Office of the Auditor General audits the Ministry of Finance’s management of the Government Pension Fund – Global on the basis of the bank’s audited accounts,” says Minister of Finance Kristin Halvorsen.

Clarification of the responsibilities of the Supervisory Council and Executive Board
The Norges Bank Act does not spell out the specific contents of the oversight responsibilities of the Supervisory Council. A clarification of the specific contents of the duties in the act will make it clear to both the Supervisory Council and the surrounding world the type of oversight that is to be carried out. To clarify the interfaces between the functions of the Executive Board and Supervisory Council, the act should also clarify the management and control responsibilities of the Executive Board. Under the draft bill, the Supervisory Council is to have its own secretariat.

“An independent and professionally strong secretariat is important for enabling the Supervisory Council to carry out its important oversight tasks,” says Minister of Finance Kristin Halvorsen. 

Statutory internal auditing
Internal auditing is an important control tool for the board. Norges Bank has built up a separate internal auditing unit.

“Such an important control scheme should be enshrined in statute,” says Minister of Finance Kristin Halvorsen.

 

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Read more:

Press releases:

• Government Pension Fund: Long-term management in turbulent times
• The Government will strengthen Norges Bank’s management and control system
• Government Pension Fund: Broad review of Norges Bank’s active management
• Government Pension Fund: Developing and strengthening the ethical guidelines
• Government Pension Fund: Climate on the agenda

Report no. 20 to the Storting