South African Reserve BankBank Supervision DepartmentANNUAL REPORT 1995Issued by Authority MISSIONTO PROMOTE THE SOUNDNESS OF BANKS THROUGH EFFECTIVE SUPERVISION PHILOSOPHYMarket principles underlie all activities and decisions, and we strive to project an image of professionalism, integrity, credibility and impartiality at all times. We subscribe to a service-orientated approach, which entails accessibility and availability, and a high premium is placed on ethical behaviour at all levels of activity. A relationship of mutual trust between this Department and all other key players is regarded as essential and is built up through regular open communication. ROLE OF THE EXTERNAL AUDITORSFollowing on the quotation in the 1994 Annual Report regarding the role of the audit committee and the internal auditors, we wish to highlight the importance of the external auditors: The external auditor's main objective is to express an opinion on whether the published financial statements of a bank fairly present the bank's financial position and the results of its operations for the period for which such statements are prepared.The auditors are required to play an integral role in providing various levels of assurance to supervisors, and, in conjunction with the directors and senior management, to evaluate the bank's policies and quality of risk management and the reliability of the information contained in the regulatory returns. SOUTH AFRICAN RESERVE BANKBANK SUPERVISION DEPARTMENTAnnual report for the calendar year ended31 December 1995 in terms of section 10 of theBanks Act, 1990, and section 8 of theMutual Banks Act, 1993 PURPOSE OF THE REPORTThe purpose of this report is to present an overview of the objectives and activities of the Bank Supervision Department of the South African Reserve Bank, with particular reference to the period 1 January 1995 to 31 December 1995.