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Northern India Chartered Accountants Students’ Northern India Chartered Accountants Students’

Association (NICASA) Association (NICASA)

OfOf

NIRC of The ICAI NIRC of The ICAI

Welcomes Welcomes

CA Students for the seminar on Bank AuditCA Students for the seminar on Bank Audit

Statutory Bank Branch AuditStatutory Bank Branch Audit -- OVERVIEWOVERVIEW

CA. S NarayananCA. S [email protected]@gmail.com

0981037327209810373272

Bank Branch Audit 3

Understanding the Banking Understanding the Banking BusinessBusiness

Bank Branch Audit CA. S Narayanan 4

Knowledge of bank businessKnowledge of bank businessBank business Generally Comprise of Bank business Generally Comprise of

Deposits operationsDeposits operations-- savings current term depositssavings current term depositsLending OperationLending Operation--

Funded and Non FundedFunded and Non FundedInvestment/Treasury Operations Investment/Treasury Operations Foreign Exchange OperationsForeign Exchange OperationsTrading operationsTrading operations-- Sale of Gold etcSale of Gold etc

Significant feature of Modern Day Banking Significant feature of Modern Day Banking --Banks Operate in highly computerised environmentBanks Operate in highly computerised environment--Fair Knowledge of the Banking Software is essential Fair Knowledge of the Banking Software is essential Some of Some of the software used by banks are the software used by banks are FinacleFinacle (Infosys), Bancs (TCS), (Infosys), Bancs (TCS), and Flex cube (I Flex)and Flex cube (I Flex)Call for and study System operational ManualCall for and study System operational Manual


Laws applicable to the banking Laws applicable to the banking businessbusiness

1)1) BankingBanking RegulationRegulation Act,Act, 194919492)2) ReserveReserve BankBank ofof IndiaIndia Act,Act,193419343)3) BankingBanking CompaniesCompanies (Acquisition(Acquisition andand TransferTransfer ofof Undertakings)Undertakings) Act,Act,

197019704)4) BankingBanking CompaniesCompanies (Acquisition(Acquisition andand TransferTransfer ofof Undertakings)Undertakings) Act,Act,

198019805)5) StateState BankBank ofof IndiaIndia Act,Act, 195519556)6) StateState BankBank ofof IndiaIndia (Subsidiary(Subsidiary Banks)Banks) Act,Act, 195919597)7) RegionalRegional RuralRural BanksBanks Act,Act, 197619768)8) CompaniesCompanies Act,Act, 201320139)9) CoCo--operativeoperative SocietiesSocieties Act,Act, 19121912 oror thethe relevantrelevant statestate CoCo--operativeoperative

SocietiesSocieties ActAct..


Laws applicable to the banking Laws applicable to the banking businessbusiness

9)9) InformationInformation TechnologyTechnology Act,Act, 2000200010)10) PreventionPrevention ofof MoneyMoney LaunderingLaundering Act,Act, 2002200211)11) CreditCredit InformationInformation CompaniesCompanies RegulationRegulation Act,Act, 2005200512)12) SecuritisationSecuritisation andand ReconstructionReconstruction ofof FinancialFinancial AssetsAssets andand

EnforcementEnforcement ofof SecuritySecurity InterestInterest Act,Act, 2002200214)14) ServiceService TaxTax (Chapter(Chapter VV ofof FinanceFinance Act,Act,19941994))15)15) Income Tax Act ,1961 Income Tax Act ,1961 16)16) Securities Transaction tax (Chapter VII of Finance (No 2) Act , Securities Transaction tax (Chapter VII of Finance (No 2) Act ,

2004 2004


Application of other laws not barredApplication of other laws not barred

AsAs perper thethe sectionsection 22 ofof BankingBanking RegulationRegulation ActAct ,,19491949 thetheprovisionsprovisions ofof thisthis ActAct shallshall bebe inin additionaddition to,to, andand not,not, ininderogationderogation ofof thethe CompaniesCompanies Act,Act,20132013,, andand anyany otherother lawlaw forforthethe timetime beingbeing inin forceforce

TheThe provisionsprovisions ofof thethe otherother lawslaws shallshall applyapply toto allall proceedingsproceedingsunlessunless theythey areare inconsistentinconsistent withwith thethe BankingBanking RegulationRegulationact,act,19491949


Non applicability of CARO, 2015Non applicability of CARO, 2015

StatementStatement ofof CompaniesCompanies (Auditor’s(Auditor’s ReportReport )) orderorder 20152015 isis notnotapplicableapplicable toto bankingbanking companycompany asas defineddefined inin clauseclause (c)(c) ofofsectionsection 55 ofof BankingBanking regulationregulation actact..19491949BankingBanking companycompany meansmeans anyany company,company, whichwhich transactstransacts thethebusinessbusiness ofof bankingbanking inin IndiaIndia;;

Any company which is engaged in the manufacture of goods Any company which is engaged in the manufacture of goods or carries on any trade and which accepts deposits of money or carries on any trade and which accepts deposits of money from the public merely for the purpose of financing its from the public merely for the purpose of financing its business as such manufacturer or trader shall not be deemed to business as such manufacturer or trader shall not be deemed to transact the business of bankingtransact the business of banking

Steps before Commencement Steps before Commencement

1 Attend seminar if any organised by the bank2 Go through the Annual report of the bank of

the preceding year3 A reading of Guidance note on audit of banks

by ICAI would provide valuable guidance.4 Go through the closing Instruction given to the

branches

5 Go through the Accounting Policy of the Bankthoroughly and Changes in them


Scope of WorkScope of Work

1.1. Finding out Scope of work Finding out Scope of work

GeneralGeneral UnderstandingUnderstanding BranchBranch advances,advances, deposits,deposits, ProfitProfit && Loss,Loss,NumberNumber ofof depositsdeposits && AdvancesAdvances account,account, LevelLevel ofof NPA,NPA, BankBank exposureexposureinin NonNon FundedFunded AreasAreas NumberNumber ofof ExtensionExtension counters,counters, ATMsATMs

2.2. CopyCopy ofof allall circularscirculars ofof RBIRBI applicableapplicable toto accountsaccounts && AuditAudit havehave toto bebeobtainedobtained andand keptkept readyready forfor referencereference..

33 ObtainObtain CopyCopy ofof PreviousPrevious StatutoryStatutory AuditAudit (MOCs),(MOCs), TaxTax Audit,Audit, revenuerevenueAudit,Audit, InspectionInspection Audit,Audit, SystemSystem audit,audit, stockstock auditaudit AnnualAnnual FinancialFinancialInspectionInspection reportsreports ifif anyany andand readread throughthrough ITIT ManualManual ifif anyany

44 StudyStudy AccountingAccounting PoliciesPolicies ofof thethe BankBank andand ClosingClosing InstructionsInstructions issuedissuedbyby HeadHead officeoffice andand formatsformats ofof MOCsMOCs

55 ComplyComply withwith QualityQuality controlcontrol StandardsStandards issuedissued byby ICAIICAI

Bank Branch Audit CA.S Narayanan 11

Letter seeking informationLetter seeking informationBBefore commencement of audit a letter may be written to the bank asking for efore commencement of audit a letter may be written to the bank asking for following informationfollowing information--

1.1. List of departments in the bank branch with name of head of List of departments in the bank branch with name of head of department. department.

2.2. Name of the Nodal Officer for AuditName of the Nodal Officer for Audit3.3. Copy of Annual Financial Statement and other banking returns and Copy of Annual Financial Statement and other banking returns and

schedules. schedules. 4.4. Login and Password for operation of the system (Auditors/Clerical Login and Password for operation of the system (Auditors/Clerical

Menu)Menu)5.5. List of deposit accounts under different schemes with Balances as List of deposit accounts under different schemes with Balances as

on Balance sheet on Balance sheet 6.6. List of Advances accounts under different schemes with Balances List of Advances accounts under different schemes with Balances 7.7. Circulars of the Bank relating operations and interest Rates changesCirculars of the Bank relating operations and interest Rates changes8.8. List of Books whichList of Books which are manually Maintainedare manually Maintained


Letter seeking informationLetter seeking information

9.9. RelevantRelevant ReportsReports ofof thethe PreviousPrevious yearyear10.10. InformationInformation ofof toptop 1010 borrowersborrowers forfor eacheach kindkind ofof loanloan11.11. ReportsReports generatedgenerated byby thethe softwaresoftware includingincluding ExceptionException ReportsReports12.12. ClosingClosing InstructionInstruction andand accountingaccounting PolicyPolicy ofof thethe BankBank13.13. CopyCopy ofof TrialTrial BalanceBalance prepre closure,closure, postpost closureclosure andand anyany datedate afterafter BalanceBalance

sheetsheet DateDate14.14. List of NPA Accounts with BalancesList of NPA Accounts with Balances15.15. List of NPA Accounts upgraded during the year with reason List of NPA Accounts upgraded during the year with reason 16.16. List of Accounts Restructured during the yearList of Accounts Restructured during the year17.17. Bank’sBank’s Procedural,Procedural, systemsystem andand documentationdocumentation ManualManual18.18. IrregularityIrregularity ReportReport ofof DecDec 20142014 andand MarchMarch 20152015gg19.19. AuditAudit EngagementEngagement LetterLetter –– SASA 21021020.20. MnagementMnagement RepresentationRepresentation LetterLetter-- SASA 580580


Audit in an Computerised EnvironmentAudit in an Computerised Environment1.1. The Auditor has to conversant with system environmentThe Auditor has to conversant with system environment2.2. The Auditor has to examine the reports generated at the day end, week The Auditor has to examine the reports generated at the day end, week

end month end and half year end.end month end and half year end.3.3. The interest applications are generally automated and they apply interest The interest applications are generally automated and they apply interest

at the specified periodicityat the specified periodicity4.4. The interest parameters are generally modified by the head office The interest parameters are generally modified by the head office

through system.through system.5.5. The auditors to take print out of rates parameters in the system and The auditors to take print out of rates parameters in the system and

compare with changes with relevant circulars.compare with changes with relevant circulars.6.6. The auditor should scrutinise accounts subject facility to edit interest The auditor should scrutinise accounts subject facility to edit interest

parametersparameters7.7. The auditor should call for exception reports like no interest flag The auditor should call for exception reports like no interest flag

accounts both from revenue and application of interest on non accounts both from revenue and application of interest on non performing accounts performing accounts


Accounts and balanceAccounts and balance--sheet sheet SubSub--sectionsection ((11)) ofof sectionsection 2929 ofof thethe BankingBanking RegulationRegulation Act,Act, 19491949 requiresrequires

everyevery bankingbanking companycompany toto prepareprepare aa balancebalance sheetsheet andand aa profitprofit andand losslossaccountaccount inin thethe formsforms setset outout inin thethe ThirdThird ScheduleSchedule toto thethe ActAct oror asas nearneartheretothereto asas thethe circumstancescircumstances admitadmit..

Form A of the Third Schedule to the Banking Regulation Act, 1949, Form A of the Third Schedule to the Banking Regulation Act, 1949, contains the form of Balance Sheetcontains the form of Balance Sheet

Form B contains the form of Profit and Loss account Form B contains the form of Profit and Loss account


Classification of Advances as per Classification of Advances as per schedule 9schedule 9

Three ways of classification of advances in balance Three ways of classification of advances in balance sheet as schedule 9 of banking regulation act ,1949sheet as schedule 9 of banking regulation act ,1949

A)Classification by nature A)Classification by nature ii)Bills purchased and discounted)Bills purchased and discountedii)Cash credits, overdrafts and loans repayable on ii)Cash credits, overdrafts and loans repayable on demanddemandiii)Term loansiii)Term loans

B) Classification by security B) Classification by security ii)Secured by tangible assets)Secured by tangible assets


Classification of AdvancesClassification of Advancesii)Covered by bank/ government guaranteesii)Covered by bank/ government guaranteesiii) Unsecurediii) Unsecured

C) Classification by location C) Classification by location I. Advance in IndiaI. Advance in India

((ii) Priority sector) Priority sector(ii) Public sector(ii) Public sector(iii) Banks(iii) Banks(iv) Others(iv) Others

Bank Branch Audit CA S Narayanan. 17

Classification of AdvancesClassification of Advances

II. II. Advances outside IndiaAdvances outside India((ii) Due from banks) Due from banks(ii) Due from others(ii) Due from others

(a) Bills purchased and discounted(a) Bills purchased and discounted(b) Syndicated loans(b) Syndicated loans(c) Others(c) Others


Some disclosure items in balance Some disclosure items in balance sheetsheet

1.1. Capital Adequacy Ratio Capital Adequacy Ratio 2.2. Movements in NPAs Movements in NPAs 3.3. Movement of provisions held towards NPAs Movement of provisions held towards NPAs 4.4. Business (deposits plus advances) per employee Business (deposits plus advances) per employee 5.5. Maturity Patterns of deposits, borrowings, loans and Maturity Patterns of deposits, borrowings, loans and

advances advances 6.6. Exposures to real estate sector, Capital market Exposures to real estate sector, Capital market 7.7. DisclosureDisclosure ofof PenaltiesPenalties imposedimposed byby RBIRBI8.8. DetailsDetails ofof SingleSingle Borrower/GroupBorrower/Group BorrowerBorrower LimitLimit exceededexceeded

byby thethe bankbank9.9. SegmentSegment ReportingReporting informationinformation UnitsUnits ofof 55 crorecrore oror turnoverturnover

ofof 5050 CroresCrores (( LastLast threethree YearsYears CoporateCoporate Sector)Sector)

Additional Disclosures Additional Disclosures

I. Concentration of Deposits, Advances, Exposures and I. Concentration of Deposits, Advances, Exposures and NPAs NPAs

II. SectorII. Sector--wise NPAs wise NPAs

III. Movement of NPAs III. Movement of NPAs

IV. Overseas assets, NPAs and revenue IV. Overseas assets, NPAs and revenue

V. OffV. Off--balance sheet SPVs sponsored by banksbalance sheet SPVs sponsored by banks

Bank Branch Audit 19CA. S Narayanan

List of Relevant Masters circulars issued by Reserve Bank List of Relevant Masters circulars issued by Reserve Bank

Master Circular Master Circular –– 'Know Your Customer' (KYC) Guidelines 'Know Your Customer' (KYC) Guidelines –– Anti Money Anti Money Laundering StandardsLaundering Standards

Master Circular Master Circular -- Prudential Guidelines on Capital Adequacy and Market Prudential Guidelines on Capital Adequacy and Market Discipline Discipline -- Implementation of the New Capital Adequacy Framework Implementation of the New Capital Adequacy Framework (NCAF)(NCAF)

Master Circular Master Circular -- Prudential Norms on Capital AdequacyPrudential Norms on Capital Adequacy--Basel I FrameworkBasel I FrameworkMsterMster Circular Circular -- Disclosure in Financial Statements Disclosure in Financial Statements -- Notes to AccountsNotes to AccountsMaster Circular Master Circular -- ParaPara--banking Activitiesbanking ActivitiesMaster CircularMaster Circular-- Loans and Advances Loans and Advances –– Statutory and Other RestrictionsStatutory and Other RestrictionsMaster Circular on Import of Goods and ServicesMaster Circular on Import of Goods and ServicesMsterMster Circular on Export of Goods and ServicesCircular on Export of Goods and ServicesMaster Circular Master Circular –– Exposure NormsExposure NormsMaster Circular Master Circular -- Guarantees and CoGuarantees and Co--acceptancesacceptancesMaster Circular on Rupee/Foreign Currency Export Credit & Customer Master Circular on Rupee/Foreign Currency Export Credit & Customer

Services to ExportersServices to ExportersMaster Circular Master Circular -- Prudential norms on Income Recognition, Asset Prudential norms on Income Recognition, Asset

Classification and Provisioning pertaining to AdvancesClassification and Provisioning pertaining to AdvancesMaster Circular Master Circular -- Lending to Priority SectorLending to Priority Sector

Audit ProceduresAudit Procedures Audit Procedures Audit Procedures ––Following PartsFollowing Parts Audit of the Financial Statements and Expression of Opinion Audit of the Financial Statements and Expression of Opinion

of True and fair view of Profit or Loss and state of affairs on of True and fair view of Profit or Loss and state of affairs on Balance sheet dateBalance sheet date

Long Form Audit ReportLong Form Audit Report Audit of Additional information given in notes to accounts and Audit of Additional information given in notes to accounts and

other Balance sheet disclosuresother Balance sheet disclosures Certifications required by Head officeCertifications required by Head office Tax AuditTax Audit Audit Evidence and documentations and Peer ReviewAudit Evidence and documentations and Peer Review

Application of Accounting StandardsApplication of Accounting Standards

All standards are applicable Except All standards are applicable Except Accounting Standard 7 Accounting Standard 7 ––Construction ContractsConstruction Contracts Accounting for Amalgamations AS 14Accounting for Amalgamations AS 14 AS 16 Borrowing Cost Accounted at H OAS 16 Borrowing Cost Accounted at H O AS 20 EPS Disclosed by H OAS 20 EPS Disclosed by H O

AS 21AS 21 Consolidated Fin Statements at HoConsolidated Fin Statements at Ho AS 21 Discounting Operation, AS 25 Interim Financial AS 21 Discounting Operation, AS 25 Interim Financial

Reporting, AS 26 Intangible Asset. AS 27 Financial Reporting Reporting, AS 26 Intangible Asset. AS 27 Financial Reporting Joint Ventures at Head OfficeJoint Ventures at Head Office

ASAS--2 Inventory Valuation 2 Inventory Valuation ––Stationery, Precious Metals etcStationery, Precious Metals etc AS 11 AS 11 ––The effects of Changes in Foreign Exchange Rates as The effects of Changes in Foreign Exchange Rates as

per circular dated 15/03/2005 per circular dated 15/03/2005

Verifications of Items of Balance Sheet & Profit & Loss Verifications of Items of Balance Sheet & Profit & Loss AccountAccount

Cash Cash VerifyVerify thethe CashCash atat branchbranch eithereither openingopening oror closingclosing includingincluding

ForeignForeign CurrencyCurrency Notes,Notes, ATMATM Cash,Cash, CashCash atat extensionextension countercounter atatthethe timetime ofof VisitVisit forfor auditaudit

ObtainObtain CashCash BalanceBalance certificatecertificate atat thethe datedate ofof VerificationVerification andand thethe cashcash ononthethe BalanceBalance sheetsheet datedate ensureensure thatthat allall cashcash includingincluding ATMsATMs cashcash hashas beenbeenproperlyproperly accountedaccounted forfor.. MayMay TakeTake PhotocopyPhotocopy ofof cashcash BalanceBalance BookBook afterafterduedue attestationattestation byby branchbranch andand auditorsauditors

ForeignForeign CurrencyCurrency NotesNotes areare generallygenerally recordedrecorded atat notionalnotional raterate onon thethe datedateofof transactiontransaction andand notnot revaluedrevalued atat branchbranch levellevel..

VerifyVerify andand obtainobtain necessarynecessary assuranceassurance andand documentationdocumentation forfor reportingreporting ininLFARLFAR

VerificationVerification ofof highhigh denominationdenomination issuedissued priorprior toto 20052005 notnot containingcontaining yearyear ofofissueissue

Verification of Balance Sheet & P & L Verification of Balance Sheet & P & L ContdContdSecurity ItemsSecurity Items

Physically Verify the security Items in stock Physically Verify the security Items in stock

Verify accounting of Consumption of Security item has been followed as per Verify accounting of Consumption of Security item has been followed as per instructionsinstructionsReporting in LFAR Under the other Assets Reporting in LFAR Under the other Assets ––Stationery and StampsStationery and Stamps

Balancing of BooksBalancing of BooksCheck balances as per General ledger and subsidiary LedgerCheck balances as per General ledger and subsidiary LedgerObtain list of Books maintained manually and check for Balancing.Obtain list of Books maintained manually and check for Balancing.Reporting Under LFAR Reporting Under LFAR

Balance with RBI SBI and other BanksBalance with RBI SBI and other BanksObtain confirmation of Balances check for Charges debited or incomeObtain confirmation of Balances check for Charges debited or incomecredited and give MOC for them.credited and give MOC for them.

Reporting in LFAR in Point No 2 under the head AssetsReporting in LFAR in Point No 2 under the head Assets

Verification of Balance Sheet & P & L Verification of Balance Sheet & P & L ContdContd

Inoperative AccountsInoperative AccountsCheck for debits to inoperative accountsCheck for debits to inoperative accountsCheck for Transfer of Dormant Accounts to in operative AccountsCheck for Transfer of Dormant Accounts to in operative AccountsCheck that Check that InterstInterst has been credited to in operative saving accountshas been credited to in operative saving accountsReporting in Long Form Audit ReportReporting in Long Form Audit Report

Suspense and Sundry AccountSuspense and Sundry AccountCheck that there no items of revenue nature outstanding in sundry suspense account If Check that there no items of revenue nature outstanding in sundry suspense account If yes report through MOCyes report through MOCCheck provisions for expenses normally parked In creditors accountCheck provisions for expenses normally parked In creditors account

Compliance of SLRCompliance of SLR\\CRR on 12 odd DaysCRR on 12 odd DaysOverdue DepositsOverdue Deposits-- Transfer from time to demand Transfer from time to demand liabiliesliabilies

Verification of Balance Sheet Profit & Loss AccountVerification of Balance Sheet Profit & Loss Account

Fixed AssetFixed AssetVerify in the fixed schedule that opening balance tallies with closing Balance as per last audited Verify in the fixed schedule that opening balance tallies with closing Balance as per last audited Balance SheetBalance SheetEnsure that additions and transfer are properly classified under correct heads.Ensure that additions and transfer are properly classified under correct heads.Check Depreciation has been Correctly worked out as per policy of the bank and closing Check Depreciation has been Correctly worked out as per policy of the bank and closing Instructions.Instructions.Check the depreciation and W D V tallies with books and correctly presented in Financial Check the depreciation and W D V tallies with books and correctly presented in Financial Statements.Statements.Status of Physical Verification.Status of Physical Verification.

Guarantees and Letter of CreditGuarantees and Letter of CreditCheck Correct Accounting for Unexpired portion Check Correct Accounting for Unexpired portion

Investments Held at Branch on behalf of Head OfficeInvestments Held at Branch on behalf of Head OfficeDICGCDICGC\\ECGC ClaimsECGC ClaimsDepositsDeposits--Term Deposit, Savings and Current DepositsTerm Deposit, Savings and Current DepositsOverdue Term Deposit Transfer from Time to Demand Overdue Term Deposit Transfer from Time to Demand LiabitiesLiabities

VerificationVerification of Balance Sheet & P & L of Balance Sheet & P & L ContdContd

Income Income Check the accounting policy of the bank as regards accounting for revenueCheck the accounting policy of the bank as regards accounting for revenue Interest Earned on cash credit term loans and bills has to be checkedInterest Earned on cash credit term loans and bills has to be checked Call for few highly value accounts and check the application of interestCall for few highly value accounts and check the application of interest Take the help of exception reportsTake the help of exception reports Scrutinize the P & L Ledger for monthly credits to Income heads for any variation in between the Scrutinize the P & L Ledger for monthly credits to Income heads for any variation in between the

monthsmonths Check whether any income head has debit balance on any day if so then enquire as to nature and how Check whether any income head has debit balance on any day if so then enquire as to nature and how

correctedcorrected In case of Bills discounted check that unexpired of the income has been correctly accounted for Call In case of Bills discounted check that unexpired of the income has been correctly accounted for Call

party wise and period wise list of balance in unexpired discount accountparty wise and period wise list of balance in unexpired discount account Also check for unexpired portion of Commission on LG and LC has been correctly accounted forAlso check for unexpired portion of Commission on LG and LC has been correctly accounted for Check that Income from Check that Income from GovtGovt Business has been correctly accounted for on accrual basis depending Business has been correctly accounted for on accrual basis depending

on accounting policy on accounting policy Income from NPA should not accounted for Income from NPA should not accounted for untilluntill realisedrealised Check that there should not be any reduction in NPA balance if so may that recoveries have not Check that there should not be any reduction in NPA balance if so may that recoveries have not

taken to Income. Compare the balances with P year MOC Balances taken to Income. Compare the balances with P year MOC Balances

Verification of Balance Sheet & P & L Verification of Balance Sheet & P & L ContdContd Verification of ExpenditureVerification of Expenditure Conduct the scrutiny of Profit & Loss Ledger for the year to observe the monthly Conduct the scrutiny of Profit & Loss Ledger for the year to observe the monthly

application of Interest on depositsapplication of Interest on deposits Call for few highly value accounts and check the calculation of Interest of few saving Call for few highly value accounts and check the calculation of Interest of few saving

and time deposit Accountsand time deposit Accounts Check that interest has been provided on inoperative accounts.Check that interest has been provided on inoperative accounts. Check the provision of interest on overdue time deposits.Check the provision of interest on overdue time deposits. Check whether year end provisions have been made (electricity, rent, telephone etc) No Check whether year end provisions have been made (electricity, rent, telephone etc) No

Provision for Bonus, Audit Fees, Employee Benefits & NPAProvision for Bonus, Audit Fees, Employee Benefits & NPA Check the in case advances for tour etc where journey has been completed before close Check the in case advances for tour etc where journey has been completed before close

provision for expenses have been madeprovision for expenses have been made Check the provision of rent for clearing house if anyCheck the provision of rent for clearing house if any Check the reversal of Interest debited but not Check the reversal of Interest debited but not realisedrealised on NPA Account at the year end. on NPA Account at the year end. Examine divergent trends in income and expenditure and take suitable explanation. Examine divergent trends in income and expenditure and take suitable explanation.

Bank Branch Audit 29

Audit ReportsAudit Reports


Various Reports/CertificatesVarious Reports/Certificates

1.1. Tax Audit ReportTax Audit Report2.2. PMRY Audit CertificatePMRY Audit Certificate3.3. DICGC CertificateDICGC Certificate4.4. Certificate for compliance of CRR/SLR for 12 Odd DaysCertificate for compliance of CRR/SLR for 12 Odd Days5.5. Service Tax CertificateService Tax Certificate6.6. Income on Insurance BusinessIncome on Insurance Business7.7. FraudsFrauds8.8. Certificate of Effecting previous year MOCCertificate of Effecting previous year MOC9.9. Interest Subvention CertificateInterest Subvention Certificate10.10. Certificate of Commission on Government BusinessCertificate of Commission on Government Business11.11. Certification as regards DFV Calculations.Certification as regards DFV Calculations.12.12. Certification of Investments held by the branch.Certification of Investments held by the branch.


Various Reports/Certificates(Contd.)Various Reports/Certificates(Contd.)

9.9. GhoshGhosh Committee RecommendationsCommittee Recommendations10.10. JilaniJilani Committee RecommendationsCommittee Recommendations11.11. LFARLFAR12.12. MOCMOC--ClassificationClassification13.13. MOCMOC--Income RecognitionIncome Recognition14.14. Other reportsOther reports15.15. AUDIT REPORTAUDIT REPORT-- U/S 30 OF The Banking Regulation Act,1949 and U/S 30 OF The Banking Regulation Act,1949 and

SA 700SA 700-- Forming Opinion on Financial StatementsForming Opinion on Financial StatementsSASA--705 Modified Opinion705 Modified OpinionSA SA --706 Emphasis Matter and other Matter Paragraph706 Emphasis Matter and other Matter Paragraph


Major Clauses in LFARMajor Clauses in LFAR

IVIV GeneralGeneral1. Books and records 1. Books and records 2. Reconciliation of Control and subsidiary records2. Reconciliation of Control and subsidiary records3. Inter branch accounts3. Inter branch accounts4. Audits/ Inspections4. Audits/ Inspections5. Frauds 5. Frauds 6. Miscellaneous 6. Miscellaneous

Questionnaires Applicable to Specialized BranchesQuestionnaires Applicable to Specialized Branches1.1. For Branches dealing in Foreign Exchange TransactionsFor Branches dealing in Foreign Exchange Transactions2.2. For Branches dealing in very large advances in excess of Rs. 100 For Branches dealing in very large advances in excess of Rs. 100 crorescrores3.3. For Branches dealing in Non Performing Assets such as Asset Recovery For Branches dealing in Non Performing Assets such as Asset Recovery

Management Branches.Management Branches.4.4. For Branches dealing in Clearing House Operations, normally referred to as For Branches dealing in Clearing House Operations, normally referred to as

Service BranchesService Branches


Reporting under Banking Regulation act,1949Reporting under Banking Regulation act,1949

AsAs perper sectionsection 3030((33)) ofof aa bankingbanking regulationregulation actact ,,19491949 anan auditorauditor isis requiredrequired totostatestate inin hishis reportreport ofof aa bankingbanking companycompany incorporatedincorporated inin IndiaIndia thethe followingfollowing::----

(a)(a) whetherwhether oror notnot thethe informationinformation andand explanationsexplanations requiredrequired byby himhim havehave beenbeenfoundfound toto bebe satisfactorysatisfactory;;

(b)(b) whetherwhether oror notnot thethe transactionstransactions ofof thethe companycompany whichwhich havehave comecome toto hishisnoticenotice havehave beenbeen withinwithin thethe powerspowers ofof thethe companycompany;;


Reporting under banking regulation act ,1949Reporting under banking regulation act ,1949((c)c) whetherwhether oror notnot thethe returnsreturns receivedreceived fromfrom branchbranch officersofficers ofof thethe

companycompany havehave beenbeen foundfound adequateadequate forfor thethe purposespurposes ofof hishisauditaudit (not(not applicableapplicable toto bankbank branch)branch)

(d)(d) whetherwhether thethe profitprofit andand lossloss accountaccount showsshows aa truetrue balancebalance ofofprofitprofit oror lossloss forfor thethe periodperiod coveredcovered byby suchsuch accountaccount;;

(e) any other matter, which he considers should be brought to the (e) any other matter, which he considers should be brought to the notice of the shareholders of the company notice of the shareholders of the company

In case of Banking Company In case of Banking Company ––Report under section 143 (3) (Report under section 143 (3) (ii) of the Companies Act) of the Companies Act--opinion on opinion on AdequecyAdequecy and effectiveness of Internal Financial and effectiveness of Internal Financial Controls for Financial Reporting Controls for Financial Reporting –– Refer to Guidance Note of Refer to Guidance Note of ICAIICAI

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