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Sr.
No.
Area Sub-area Bud.
Time
Act.
Time
Name Remar
1 Legalrequirements
as toappointment
1. Acceptance of Appointment2. Communication with previous auditors in case of 1st year of audit.
2 Briefing by
PC
! "eview of last
year#s file
1. Business process
2. $eneral observations
!. Critical issues of P%
& "eview of
'(P system
INTERNAL CONTROL & INTERNAL CHECKS
a) *nderstand the accounting software
b) *nderstand code assigned for various nature of transaction andchec+ that it is followed by the Branch during the period under
Audit.
c) ,erify ' ( P chec+s for the following-i. imely recording of transactions
ii. /atching the balances with the control ledger and general
ledger.iii. ransaction in foreign currency should be recorded as per the
guidelines issued by "B 0 '(A
d) List out the control register generated by the system
e) Chec+ how often it is balanced. dentify the person responsible for
balancing.
f) ee that subsidiary register generated by the system are balance bythe system and recorded properly in the boo+s of account. Also
note the period by which the subsidiary register is balanced.
3 "eview of
internalcontrol
STRUCTURE O BRANCH
a) 4btain the 5etwor+ of the Ban+0Branch along with list of offices.b) dentify the 6ead and audit co7ordinator at each branch 8Along
with address and contact 5o etc.)
c) 4btain organisation structure along with 5ature of responsibility
and authority given to each /anager 0 officer with sanction limit.
i. A brief 9ob7profile of +ey officers: if available: should be
obtained from the ban+
ii. eam member should see that +ey officers and manager have
functioned according to authorities granted by the
management
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RE!IE" O !ARIOUS RE#ORTS
/a+e note of important issues and stand ta+en by ban+ during the
relevant period for the observation made from the following-
. nternal audit report
. ncome ; 'eigh if necessary.!) "eceipts Cash Boo+-
est chec+ total for the last two days.
&) Payment Cash Boo+-
est Chec+ total for the last day. ee voucher for any big payment.
3) Chec+ the totals of cost counted with -
. Cash Boo+
. $eneral ledger Balance.
. Cash Balance Boo+?) oreign Currency 5otes to be verified by actual inspection. ee
that these currencies are translated at '(A rate at year7end.=) @eep on record a statement of cash ,erification.
) Chec+ any petty Cash mprest +ept at the Branch.
) >hat is the chec+ on Cash (ouble loc+: arrangements for
custody etc. 8 s it in the 9oint custody of two or more person
1D) ee that no private cash is lying in the safe.
11) ee that cash is being chec+ed daily by Cashier. Periodically thisshould be chec+ed by an authoriEed officer. his would be duly
evidenced in the "egisters. f not done report.
12) "eview the procedures for duplicate +eys and see whether it is
adequate.
1!) '
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&) 'nsure that there are no old reconciliation items.
!ERIICATION O CASH IN TRANSIT$
Chec+ with relevant advice#s available at branch.
=.! Ban+ Balance !ERIICATION O BALANCES "ITH OTHER BANKS$
1) ee the balance confirmation certificates.2) est Chec+ "econciliation entries for the last day.
!) 'nsure that there are on old reconciliation items.!ERIICATION O BALANCE "ITH RBI SBI.
1) ee the balance confirmation statement at the year7end.
2) ee the reconciliation statement and report as under-
a) Cash transaction remaining unresponded by Ban+.
b) "evenue item requiring write off 0 Ad9ustment
c) 4ld une
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branch is opened it has to record the capital ehere hard care entries persist: consider need for write off0write bac+.
INTER BRANCH RECONCILIATION$
nter7branch reconciliation is done in two stages 7 branches within a
local center and for other branches. wo accounts are queries or
pending unreconciled items are promptly attended. 4btain agecomposition of unreconciled inter 7 branch items. 'nsure that
appropriate and timely action is ta+en to trace causes of outstanding
entries. /onitor progress achieved in ad9ustments.
=.= (eposits he above fall broadly into the following categories-
A. avings Accounts 0 "ecurring (eposits etc.
B. Current Accounts and Contingency Accounts.
C. i
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customers about mista+es in the same dealt with. f any file is
+ept for complaints: e
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particulars of security: if any: possibility of the ban+ having to
meet the obligation provision necessary in your option in regard
to the same 8if any) etc.
?) '
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=.12 4ther Assets AU%IT O STA CUSTO%3 TRANSACTIONS$
*nder this head: the shares: bends: $overnment papers: parcels:
pac+ages: etc. are +ept by the customers with the ban+ for safe custody
against a nominal charges. he contents of such pac+ages are entered
in the safe custody "egister customer wise against which a receipt is
issued to the customer in the articles received: whenever the articles
are delivered bac+ safe custody "egister is issued to the customer inac+nowledgement of the articles received whenever the articles are
delivered bac+ to the customer. A mention thereof made in the safe
custody "egister. est chec+ a few items.a) afe Custody register: the pac+age etc. received from the customer.
b) or items covered in test chec+7where the sealed parcels 0 envelops:
etc. are received from the customers: see that the customers seal is
intact. he seal: in such case should not be bro+en to verify the
contents of the pac+ages. But where the seal is put by the safe
Custody "egister by brea+ing open the seal in a few cases.
c) ee that the collection of charges from the customers for +eeping
the securities in safe custody with the ban+ is made regularly and isfully accounted for in the boo+s.
ollowing types of transactions are also monitored by the branch-
i) Audit of PP transactions
ii) Audit of other government business
iii) Audit of nterest a< returns
) 5AL "','> 4 B"A5C6 BALA5C' 6'' ; $55$
) P"'PA"A45 4 4B'",A45 "'P4") '5*"' ALL A'/'5 A"' P"4P'"L% LL'( 5-
1) Long form I Audit "eport
2) Anne
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=.1! (ocumentatio
n
A%!ANCES$
,erify documents and securities for advances granted during the year.
1) ee that documents mentioned in the sanction letter are obtained
duly signed by the borrowers: guarantors or as the case may be.
2) ecurities as stipulated are obtained along with the related
documents.
or '
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value of security and outstanding balance not recovered by the
security value.
?) List of suit filed cases with value should be obtained to see that
the amounts for which suits are filed are not less than those
appearing in the accounts.
=) 'ach case where decree has been obtained should be e
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responded by credit to mirror account and the contra debit is to the
appropriate account
?. hat interest is collected in accordance with '(A "ules from
the date of debit to the 5ostro Account
=. hat the letter of credit liability is reversed on retirement of bill
#RE-SHI#5ENT INANCE$
1) hat pac+ing credit facility is allowed against lodgment ofirrevocable letters of credit or firm e
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negotiation 0 collection with the stipulated period of 21 days from
the date of the shipment.
&) hat the usance bill are being properly stamped before leaving
ndia and are for periods permissible under '(A "ules and
'
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Verify Advances granted / disbursed during the year on the following
lines:
'
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power or are against unapproved securities or the insurance cover
is inadequate or are otherwise irregular should be noted and
reported.
h) ee that periodic statements are in line with "B06.4
requirements.
i) ee that the toc+ 0 Boo+ debts: /4( statements etc. are
obtained by the branch periodically .he Limits of the borrowerhas to be revised based on the figures submitted in above periodic
statement.
9) n case of Advance0limits of "s are 1D07 Lacs and above is grantedto non7corporate entities: ee that "B guidelines regarding
compulsory audit is complied with.
+) ,erify the calculation of (C$C 0 'C$C claim lodged by the
ban+.S1ecia) 1oi'ts o' ,eriicatio' o Bi))s 1urcased a'd discou'ted.
1) ,erify all documents of title which are assigned to Ban+
2) ,erify the percentage of margin +ept by the ban+. he margin
+ept by the ban+ should be predetermined and should not bechanged from borrower to borrower.
!) ee that immediate steps are ta+en to recover the amounts if Ban+
could not collect the bills on due dates.
&) ee that the discount received on bill purchased is amortised over
the period of bill
3) All irregular accounts should be reported.
?) >here the bills are accompanied with: the documents and the
same are to be parted with the bills to be considered a clean bill.hese types of bills are shown as unsecured 8>hen bills are
accompanied with documents of title: they are called documentary
bills.
=) he Bills purchased and discounted being part of advances it
should be classified along with schedule of advances.
BILLS OR COLLECTION$
1. ee that documents accompanying bills should be received and
are duly entered in the register.2. he parties account should be credited only after proper collection
of bills or an advice to that effect is received from the branch.!. n case where bill is sent for collection by one branch to another
branch: at the time of consolidation: see that the receiving branch
reverse the entry regarding such inter branch bills.
,erify the Balance of the final statement of Bills discounted
with relevant ledgers and Balance Boo+s.
Count the Bills on the date of visit. ,erify the clearance of the
bills outstanding on !1st /arch but cleared in the current year
before the date of the audit by chec+ing the "egister.
ee whether Bills are cleared on due dates. f Bills are
dishonoured frequently by any party the reasons should be
investigated.
"evise carefully all overdue Bills and get e
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=.1& 5on7
Performing
Advances
CLASSIICATION O ASSETS
he assets are classified in the following broad groups-
1) tandard Assets
2) ub7tandard Assets
!) (oubtful Assets
&) Loss Assets
) Sta'dard Assets$tandard asset is one which does not disclose any problems and
does not carry more than normal ris+ attached to the business.
) Sub-Sta'dard Assets$
ub7tandard asset is one with has been classified as 5PA for a
period upto twelve months. n other words: such an asset has well
defined credit wea+nesses that 9eopardise the liquidation of a debt
and is characterised by the distinct possibility that the ban+ will
sustain some loss if deficiencies
6owever in respect of accounts where there are potential threats
of recovery on account of erosion in the value of security or non
available of security and e
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