nbs presentation-march 2013 new

7/28/2019 NBS Presentation-March 2013 New

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NBS & CO.

Chartered Accountants

Mumbai

Statutory Audit 2012-13

Audit Presentation


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Flow of Data:

Finacle

(Routine operationstakes place) & Return

6A & 6B

CLORET

(for generating

financials

Return 1 &

2

All other non

advancesrelated returns

ASCROM

(For Asset

classification &Provisioning

All other

advances related

returns


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Features:

Finacle

Revenue

Recognition

Operations

ASCROM

Asset

Classification

Provisioning

CLORET

Financial

Statements


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ASCROM:

1. Operations and drawing powers are captured from

the finacle. All other fields in the master are

manually feeded. Like value of security, repayment

schedules, etc. It has to be checked properly.

2. Branch auditors are advised to check the audit trail

of ASCROM to identify the changes made by the

branches in master.


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ASCROM:

3. Auditors should also verify whether restructuringcodes (71/72/74/92) are marked in ASCROM.

4. Incase of Advance Bill (LC Devolvement) and Bill Past

Due (Guarantee Invocation) devolvement and

invocation dates and outstanding are not flowing

from finacle. It has to be punched manually.

Correctness of date to be checked at branch level.

5. If Interest to be serviced field in ASCROM is leftblank/No, system will not capture the interest

portion debited to the loan accounts as overdue,

even though it is not serviced by the borrower. Field

can be checked by the auditors.


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ASCROM

6. All the fraud accounts need to be marked under specialcategory code 87.

7. External credit rating wherever necessary to be updated

in ASCROM for correct risk weightage for capital

adequacy.


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IRAC Norms:1. If debits arising out of devolvement of LC or invoked

guarantees are parked in a separate account, thebalance outstanding in that account also should be

treated as a part of the borrowers principal

operating account for the purpose of application of

prudential norms on income recognition, assetclassification and provisioning. (para 4.2.7.ii of IRAC

norms of RBI)

2. Provision Requirement:

Sub-standard: Secured 15%, Unsecured 25%

However Bank is making the provision of 20% on

secured advances.


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Restructuring Guidelines:

1. Mere extension of DCCO will also be treated as

restructuring. ( para 4.2.15.3.(v) (4.2.15.4.(iv)). Branchauditors are advised to check the necessary marking ofspecial code in ASCROM and verify and tally with thecertificate for restructured Assets with that of ASCROM.

2. A loan for an infrastructure project and Non Infrastructureprojects will be classified as NPA if it fails to commencecommercial operations within two years(Infrastructure) andsix month (non infrastructure) from the original DCCO, evenif it is regular as per record of recovery. (para 4.2.15.3.(ii) &

4.2.15.4.(ii)).3. Bank cannot reschedule/restructure/renegotiate borrowal

accounts with retrospective effect. While a restructuringproposal is under consideration, the usual asset classificationnorms would continue to apply. (para 11.1.2).


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4. All restructured accounts which have been classified

as non-performing assets upon restructuring, wouldbe eligible for up-gradation to the standard category

after observation of satisfactory performance during

the specified period. (i.e specified period means a

period of one year from the date when the firstpayment of interest or installment of principal falls

due under the terms of restructuring package). (para

11.2.3).

5. In case of restructured asset, which is a standard

asset on restructuring, is subjected to restructuring

on a subsequent occasion, it should be classified as

substandard. (para 11.2.6).


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Recent RBI circular on CDR guidelines on Second

Restructuring/ Re-work out:(DBOD.No.BP.11730/21.04.132/2012-13 dated

18.02.2013)

All the cases of reschedulement/ rephasement during

the concession period of a first time restructured

account should be treated as repeated restructuringand should be classified as NPA.


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Key Points to be considered: Drawing Power:

1. Analytical review of stock statements and debtors

statements submitted by the borrower should be

carried out to arrive at correct drawing power (DP).

Slow moving and absolute stocks to be reduced.

2. Comparison of stock and book debt statement

with that of audited balance sheet as on 31.03.2012.

3. Drawing power calculated by the stock auditors

should be considered.

4. Regular up-dation of drawing power in finacle to

be made. Branches are not updating the DP regularly.

Old DP is carried forward. Timely receipt of StockStatements to be checked.


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Key Points to be considered:

5. Stock Statement Date in ASCROM to bechecked.


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Other Points for consideration: Auditors are requested to give proper details in the

branch LFAR and wherever MOC s are suggested in

the LFAR, MOC to be given in 14 and 14D.

MOC to be passed only for the amount exceeding

Rs.50000. MOC in respect of subvention claim &

interest reversals in case of fresh NPAs to be passedirrespective of the amount.

Finacle is not calculating the interest on overdue

bills. Necessary entries to be passed at branch level

to recognize the income from due date to closingdate i.e 31st March 2013. Auditors to check the

same.


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Other Points for consideration:

Branches are to open PC disbursement/offset

through menu RPCTM. But branches are openingunder TM, menu. Such circumstances system will

not charge interest. Interest application in such

accounts to be done before closing. (Annexure 13).


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Movement of Restructured Advances to be certified

at branch level as per the recent circular of RBI onDisclosure requirements on restructured advances

(DBOD.BP.BC.No.80/21.04.132/2012-13 dated

31.01.2013.

RBI AFI commented accounts to be properly

verified.

Reversal of unrealised interest in case ofNPAs.


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Data cleaning exercise of ASCROM is carried out by

the bank during the year. Auditors to check all

discrepancies reported are been rectified by the

branch.

Branches are making mistakes while calculating thesacrifice amount of restructured loans. Auditors are

advised to check correctness of the credit ratings

and discounting rate applied by the branches. (Refer

circular No: BCC: BR: 95/59 dated 18.02.2003).


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Closing Returns:

Closing Return no.1- Balance Sheet.

Closing Return no.2 Profit & Loss Account.

Closing Return no.3- Return on inward/outward Billsfor collection.

Closing Return no.4- Return on Claims against Banknot Acknowledged as debt.

Closing Return no.6 (A)- Return on Gross Block of

fixed Assets

Closing Return no.6 (B)- Return on Block ofDepreciation.


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Closing Returns:

Closing Return no.7- Return on outstanding

balances and doubtful amount in accounts otherthan Advances and Suspense.

Closing Return no.8- Break-up of outstanding in

suspense account.

Closing Return no.9- Certificate of Confirmation oncash, Security forms etc (Not to be Audited)

Closing Return no.10- Important data for adjustment

in Balance Sheet. (Stands Discontinued) Closing Return no.11- Statement of Bad & Doubtful

Debts written off during the period (Annual)

Closing Return no.13- Return on Capital Adequacy

(System generated)


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Closing Returns:

Closing Return no.14- Memorandum of Changes

(Balance Sheet & P&L)

Closing Return no. 14D For change in

Classification of Advances

Closing Return no.15 to 18- Return on classification

of Advances (Std., Sub-std, Doubtful & Loss)

Closing Return no.19- Master summary of

Advances.

Closing Return no.20- Sectoral classification ofAdvances.

Closing Return no-21 Statement of outstandingDeposit & Advances at Rural Branches (Annual)


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***Thank You***

nbs presentation-march 2013 new

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