1 Guidance Note on Bank Gaurav Dhamija. 2 Index S. No.ContentsPage No. 1. Objective 4 - 5 2. Authorized Signatories 6 - 8 3. Vouching 9 - 10 4. Control.

1

Guidance Note on

Bank

Gaurav Dhamija

2

Index

S. No. Contents Page

No.

1. Objective 4

- 5

2. Authorized Signatories 6

- 8

3. Vouching 9 -

10

4. Control over Cheque Books 11 -

12

5. Bank Reconciliation Statement 13 -

15

6. Bank Interest & Fund Utilization 16 -

18

Gaurav Dhamija

3

Index

S. No. Contents Page

No.

7. Bank Guarantee & Letter of Credit 19 -

20

8. Packing Credit / Bill Discounted /

Margin Money

21 - 23

9. Control over Fixed Deposits 24 -

26 Gaurav Dhamija

4

1. Objective

Ensure

• All systems & procedures for making the

transactions with the bank are being

adhered to.

• Optimum Utilization & control of funds lying

in bank

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5

Objective Summary

• How much value addition we can

contribute to assure the management

that the system is full proof with remote

possibility of leakages and frauds.

Gaurav Dhamija

6

2. Authorized Signatories

• Obtain the list of authorized signatories

along with financial limits.

• Ensure list is approved by higher authority

and same has been updated at periodic

intervals.

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• Take the list of all bank accounts with their

- Nature and Limits

- Rate of interest

• In case any new bank account has been

opened / any bank account has been closed,

check the board resolution authorizing the

same. And ensure that closed bank

accounts

cheque books have been surrendered.

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8

• Ensure, in case an Authorized

signatory has left the organization, that

his name has been deleted and proper

information has been given to Bank.

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9

3. Vouching

Ensure

• All payments are authorized and are

within the authorization limits.

• All payments are duly supported and

marked “PAID” along with cheque no.

and date.

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10

• Cancelled Cheques are marked

“CANCELLED” and retained along with

the voucher.

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11

4.Control over Cheque

Books

Ensure

• All the cheque books are kept in safe

custody.

• Proper control is maintained for all

receipt

and issue of cheque books. Gaurav Dhamija

12

• On all cheques “A/c Payee” stamp has

been affixed.

• Blank cheques are not signed.

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13

5.Bank Reconciliation

Statement

Ensure

• Bank Reconciliation Statement is prepared for

all banks on monthly basis.

• Balance shown in Bank Reconciliation

Statement is tallied with the balance as per

books.

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14

• Original Bank Statement is available in

all cases.

• Entries from bank statement to bank

book [names] especially contra entries

and cash withdrawl and deposit entries.

• Cheques issued/ cheques issued but not

yet presented for payment against which

6 months has been passed has been

reversed/ transferred to Stale cheques

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account.

• No entries are outstanding in Bank

Reconciliation Statement for more than

2 months.

• Person, doing Bank Reconciliation should

not make Cheque. And signatures are

taken on Bank Reconciliation Statement.

• Bank certificate is taken for closing balance

at end of financial year for all bank

accounts.Gaurav Dhamija

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6.Bank Interest & Fund

Utilization

Obtain

• List of all bank accounts and ensure

whether there are any idle balances

lying in bank accounts.

• List of limits available in all banks and

ensure the utilization there of.

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• Ensure that procedure of quickest

crediting of realization / receipts into

company Cash Credit account where

interest is being borne on daily balances.

• The list of bank charges and Bill / Hundi.

And ensure that whether they were

properly charged in Bill Discounting,

Demand Drafts, Bank Guarantee,letter of

credit etc.

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• List of interest rate on

- Cash Credit,

- Working Capital Demand Loan,

- Term loan and other loan

And ensure that interest is being borne by the

company according to agreement / standard

norms.

[Obtain and file sanction letters of all banks

along with date of sanction]

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7. Bank Guarantee &

Letter of Credit

Ensure

• Obtain the detail of Bank guarantees given by

the company.

• All guarantees are within the validity period

and were given only against requirement.

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• Expired bank guarantees have been taken

back.

• Letter of Credit were opened only as per

requirement and ensure that all terms and

conditions were taken care of. The

utilization of Letter of Credit along with the

amount for which it was taken should be

analyzed. And Scrutinize the Letter of

Credit amendment charges paid by the

company.

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8. Packing Credit / Bill

Discounting / Margin

Money

Ensure

• No Pendency.

• Periodicity of realization of Bill by the bank

with due dates.

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• Analyze the Overdue Interest charged by

bank on late realization of Bills and

reason

for non-charging of same from the

customers.

• Promptness in discounting of Bills.

• Analysis can be made from date of Bill of

Lading.

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• System of crediting and control over Post

dated Cheques issued by the division. Same

should be credited on date of payment only.

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9. Control over Fixed

Deposits

Ensure

• All Fixed Deposits are valid and in

possession of the division and is in name of

the company except where same is given as

security.

• Calculation of Interest is correct

• Provision has been taken on quarterly basis.

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• Control register of Fixed Deposits is being

maintained & updated on regular basis.

• Fixed Deposits are made to utilize the

excess funds and analyze the cost paid in

Interest in Cash Credit account and Bill

discounting Account in comparison to

interest received on Fixed Deposit.

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26

• System of collection of Outstation

Cheques along with charges charged by

Bank.

• Fast Collection scheme offered by various

banks have been availed by the division.

• Transfer of Funds into bank account are

within time.

Gaurav Dhamija