Bank Branch Audit New

8/16/2019 Bank Branch Audit New

1/36

BANK AUDIT

Robert

Vadapuram


2/36

BankingBanking Regulation Act of India, 1949 defines

Banking as “accepting, for the purpose of lending or of

investment of deposits of money from the public,

repayable on demand or otherise or ithdraable by

che!ue, draft order or otherise"# $he Reserve Bank of

India Act, 19%4 and the Banking Regulation Act, 1949,

govern the banking operations in India"


3/36

Structure of Banks in India


4/36

&ist of commercial banks

'ublic sector bank (tate Bank of India 'un)ab * (ind Bank +ena Bank Bank of aharashtra

Allahabad Bank 'un)ab -ational Bank

Indian Bank .anara Bank

Andhra Bank (yndicate Bank

Indian /verseas Bank .entral Bank of India

Bank of Baroda 0nion Bank of India

/riental Bank of .ommerce .orporation Bank

Bank of India 0nited Bank of India

I+BI Bank 0./ Bank

i)aya Bank


5/36

Indian private banks2A3is Bank 2IndusInd Bank

2Bank of Ra)asthan 2I- ysya Bank

2Bharat /verseas Bank 25ammu * 6ashmir Bank

2.atholic (yrian Bank 26arnataka Bank &imited

2.enturion Bank of 'un)ab 26arur ysya Bank

2.ity 0nion Bank 26otak ahindra Bank

2+evelopment .redit Bank 2&akshmi ilas Bank

2+hanalakshmi Bank 2-ainital Bank

27ederal Bank 2Ratnakar Bank

2anesh Bank of 6urundad2(BI .ommercial and International Bank

28+7. Bank 2(outh Indian Bank

2I.I.I Bank 2$amilnad ercantile Bank &td"

2:( Bank


6/36

&ist of 7oreign banks in India

AB-;AR/ Bank

Abu +habi .ommercial Bank &td

American :3press Bank &td

.itibank

+B( Bank &td

+eutsche Bank

8(B. &td

(tandard .hartered Bank


7/36

Bank audit

general guidelinesBank Audit NPAidentifcation

Year closing manualRBI master circulars

IAI !uidance noteAudit reports at branc"

Anal#sis o$ fnancial statement


8/36

Importance o$

%ong &orm audit report'tandardisation o$ reports

o(erageInternal control e(aluation

Read# Audit program


9/36

'tructure o$

%ong &orm audit reportDoes t"e branc" generall# carr# orcompl#)

In t"e cases e*amined b# #ou)

Verifcation on test c"eck basis)


10/36

'TRUTUR+ ,&

%,N! &,R- AUDIT R+P,RT


11/36

Important clausesas" and Bank balancesAd(ances

,t"er Assets

Deposits and ot"er liabilities

Proft and %oss!eneral


12/36

as" balancesas" balance being maintained

Reporting o$ e*cess cas"

Insurance co(erage

.oint ustod#

P"#sical (erifcation


13/36

Bank balances,btain Balance confrmation

Veri$# reconciliation entries,ld pending entries

Un/responded cas"

transactionsBooking o$ e*penses

Report di0erences


14/36


15/36

Ad(ances / AppraisalAppropriate $orms

ompletel# fled and signed

&unctioning normall#

Ade1uate securities

+nd use o$ $undsDi0erence in Audited and

Pro2ected


16/36

Ad(ances / 'anctioning'anctioning limits

%oan 'anctioned Temporar# o(erdra$t3it"dra4al against pending

c"e1uesDisbursement o$ loan 4it"out+-

Disbursement o$ loan 4it"out


17/36

Ad(ances / Documentation,btain a sample c"ecklist $orre$erence

Non registration o$ c"arges

Non obtaining o$ guarantee

-arking o$ %ien 5,6ine and,nline7


18/36

Ad(ances / Re(ie4Identi$# accounts o(erdue and report

'ubmission o$ fnancial statements

'ubmission o$ ot"er in$ormation,btain and anal#se re(ie4 note

,(erdue more t"an 89: da#s ; NPA5Para =< 5ii7 -aster circular on Prudential norms .ul#? >:8@7


19/36

Ad(ances / Re(ie4'crutinise t"e stock statement

Non submission o$ stock statement

; NPA5Para =< 5i7 -aster circular on Prudential norms

.ul#? >:8@7

%imits 8: lacs ; Audited &'P"#sical (erifcation o$ 'ecurit#

Inade1uate securit# co(erage


20/36

Ad(ances / Re(ie4lause 5d75i*7

lause 5d75*7


21/36

lause 5d75i*7 and 5*7i*7 Cas t"e branc" identifed and classifed ad(ances into standard substandard doubt$ulloss assets in line 4it" t"e norms prescribed

by the RBI=

*7 3"ere t"e auditor disagrees 4it" t"e branc"classifcation o$ ad(ances into standard

substandard doubt$ul loss assets? t"e details o$suc" ad(ances with reasons s"ould be gi(en=Also indicate 4"et"er suitable c"anges "a(ebeen incorporated suggested in t"e

-emorandum o$ "anges=


22/36

Non Performing Assets• An asset of a bank s guidelines" 0nder these

guidelines, an asset is classified as non;performing if any amount

of interest or principal installments remains overdue for more than

9? days, in respect of term loans" In respect of overdraft or cashcredit, an asset is classified as non;performing if the account

remains out of order for a period of 9? days and in respect of bills

purchased and discounted account, if the bill remains overdue for

a period of more than 9? days=


23/36

.lassification of non;performing Assets•

Standard assets@ (tandard assets service their interest and principal installments on time although they occasionally

default up to a period of 9? days" (tandard assets are also

called performing assets" $hey yield regular interest to the

banks and return the due principal on time and therebyhelp the banks earn profit and recycle the repaid part of

the loans for further lending"

• Sub-standard assets@ (ub;standard assets are those assets

hich have remained -'As


24/36

• Doubtful assets@ An asset becomes doubtful if it remains

a sub;standard asset for a period of 1 months and

recovery of bank dues is of doubtful

• &oss assets@ &oss assets comprise assets here a loss has

been identified by the bank or the RBI" $hese are

generally considered uncollectible" $heir realiable value

is so lo that their continuance as bankable assets is not

arranted" $hey should be entirely ritten off" If this is

not done, provisioning should be made for 1??C of the

amount shon as outstanding


25/36

Identifcation / npaInterest Instalment due E: da#s

F,ut o$ ,rderGontinuousl# in e*cess ORNo credits insuHcient credits $or E: da#s

Bill o(erdue E: da#s

Agricultural ad(ance ,neT4o cropseason5Para =8@ -aster circular on Prudential norms .ul#?

>:8@7


26/36

lassifcation


27/36


28/36

%&AR ,t"er Assets'undries 'uspense AccountVeri$# old entries

amouJaging NPAs or ,lde*penses

Reporting3orking paper 4it" reasons

-,? i$ re1uired

Cig"lig"t in main audit report


29/36


30/36


31/36

Proft L loss / Income-ec"anism to addressdiscrepancies

ompliance to re(enue auditreports

InterestPeriodicit# o$ le(#orrectness o$ le(#

-aster (erifcation

,t"er Incomes 5"arges? &ees etc7


32/36

Proft L loss / +*pensesDiscrepancies 4it" interestorrectness o$ accrued interest

+0ect o$ c"ange o$ interest ondeposits

Polic# on o(erdue deposits

5'a(ings rate interest to be paid RBI7

o/relate interest paid to a(eragedeposits


33/36

!eneral,btain list o$ e*ceptional reportsData securit# measures

No s"aring o$ user pass4ordsDeacti(ate le$t emplo#ees

-ap lea(e to login

Backups 5,0site and ,nsite7

P"#sical restraint to ser(er room


34/36

!eneralReconciliationontrol L 'ubsidiar#

Inter Branc" AccountsRegular reports being s"ared 4it"C, R,

Account 4it" C, R, M,+ntries originating at ot"er branc"es

+*peditious clearing o$ entries


35/36

-iscellaneous3indo4 dressing%arge mo(ement in ad(ances and

depositsDeposits and Ad(ances to same group

Account regularisation near &' date

Under utilised $acilit# into depositsUnsecured s"o4n as secured

Restructuring o$ Accounts


36/36

T"ank#ou

Bank Branch Audit New

Documents