Suggestion to members who have been alloted Stat Bank Audit

Posted on    30 March 2009

Timely and Quality completion of bank audit assignments has always been a challenging task for all the auditors. Standards have to be followed and deadlines are to be set. I am sure, by this time of the year you have already planned to undertake bank branch audit assignments more efficiently and diligently.

Banking Industry works under various constraints and limitations like NPA’s & other irregularities etc. Therefore, the role of auditors becomes even more crucial and all the more important. The auditors are always under pressure to meet the set deadlines, while countering the constraints like staff strength, different level of knowledge of staff, pressure from bankers etc. along with the pressure of meeting with all the existing Standards on Auditing relating to the bank branch audit, coupled with the responsibility to meet the expectations of the users of these financial statements i.e. the public and the regulators.

Under the flagship of Hon’ble President, CA. Uttam Prakash Agarwal and Hon’ble Vice President, CA. Amarjit Chopra and as Chairman of the Peer Review Board of the Institute of Chartered Accountants of India, we may like to provide the following suggestions to be focused upon by all the members who have been allotted Statutory Audit of Public Sector Banks for the year 2008-09, for their ready reference while planning the bank branch audit assignments/reviewing the existing plan formulated:

    * Refer to the guidance note on audit of banks issued by ICAI, and all the relevant study material published by ICAI.
    * Refer the provisions of RBI Act 1934 and Banking Regulation Act 1949, relevant to bank branch audit.
    * This year in particular refer RBI Circulars related to Restructuring of Advances, Agriculture Debt Relief & Waiver as applicable. You should also have basic knowledge of BASEL II applications.
    * Plan your audit meticulously, considering checklists for:
          o Pre visit work to be done to the Branch of Bank allotted
          o Work to be done during the course of audit
          o Work to be done after completion of audit
    * Ensure that the Team members allocated for the audit are properly trained and updated on all aspects relating to the audit of bank branches, either by giving them In-House Training or by way of ensuring that they attend programmes conducted by the Institute or its branches on Bank Branch Audit.
    * Maintain proper working papers and retain them for the purpose of peer review/quality review. These working papers would serve the purpose to justify that the audit has been conducted with due care and diligence. For this you may also refer the Peer Review Manual, which provides extensive detail on importance of Documentation. Documentation is the only way an auditor can prove to outsiders that he planned and performed an audit effectively, however good he might himself consider the audit to have been.

Further, it is requested to ensure that Standard on Auditing* (SA) 230 on Documentation is also complied with. Members are requested to note that the Standards on Auditing are mandatory in nature, which implies that while discharging their attest functions it is duty of the member of the Institute to ensure that the Standards on Auditing are followed in the Audit of financial information covered by their audit reports. However, if for any reason a member has not been able to perform an audit in accordance with the Standards on Auditing, his report should draw attention to the material departure therefrom.

I hope that all of you will conduct your respective bank branch audit assignments with total dedication, comprehensiveness, cohesiveness and diligently to further enhance the confidence of the clients, customers and society as a whole, in our profession.

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