The policy was last approved by the Board vide Agenda Item No.:K-01 on 31 st
July
2013
Appointment of Statutory Auditors (Statutory Central and Statutory Branch Auditors) by our Bank is being done on the basis of guidelines issued by Government of India/
Reserve Bank of India from time to time.
This modified policy of appointment of Statutory Central / Branch Auditor is put in place pursuant to the changes in the guidelines issued by the Govt. of India and
Reserve Bank of India for the year 2014-15 & onward.
1.1 Number of Audit Firms
Government of India has allowed autonomy to the Public Sector Banks to appoint the
Statutory Central Auditors from the year 2014-15 onwards.
The number of SCAs for Public Sector Banks is decided by Government of India /
Reserve Bank of India.
As per the extant guidelines, the number of audit firms to be appointed as SCAs is determined on the basis of Category of the Bank. Public Sector Banks have been classified into 3 categories – Category Ä” (Large Banks), Category “B”( Medium
Banks) and Category “C” (Small Banks)
Bank of Baroda is categorized as Category “A’’ Bank and it shall not have more than
6 SCAs.
Presently, the number of SCAs in our Bank is
– 6 - as advised by Reserve Bank of
India.
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Corporate Accounts & Taxation Department, 2 nd
Floor, Baroda Corporate Centre, Bandra (E), Mumbai 400 051.
Tel No. 022 66985288, 66985280, 66985276 email id : accounts.ho@bankofbaroda.com

1.2 Eligibility of Audit Firms to be appointed as SCA
The Eligibility norms (as advised by Reserve Bank of India) are as under:- i. Minimum 7 full time chartered accountants, of which at least 5 should be full time partners exclusively associated with the firm. The remaining 2 could be either exclusive partners or CA employees with a continuous association with the firm for a period of one year. These partners should have minimum continuous association with the firm i.e. one each should have continuous association with the firm at least for 15 years and 10 years, two with a minimum of 5 years each and one with a minimum of one year. Four of the partners should be FCAs. Also at least two of the partners should have minimum 15 and 10 years experience in practice. In case the paid Chartered Accountant available with the firm without any break was admitted as a partner of the said firm at a future date, his association with the firm as a partner will be counted from the date of his joining the firm as a paid Chartered Accountant. ii. The number of professional staff (excluding typists, stenographers, computer operators, secretary/ies and sub-ordinate staff etc.) consisting of audit and articled clerks with the knowledge in book-keeping and accountancy and are engaged in outdoor audit should be minimum18. iii. The standing of the firm should be of at least 15 years, which would be reckoned from the date of availability of one full time FCA continuously with the firm. iv. The firm should have minimum statutory central audit experience of 15 years of public sector banks (before or after nationalization ) and / or by way of statutory branch Audit thereof or that of statutory audit experience of a private sector bank with deposits resources of not less than Rs. 500 crores. (In case any of the partner of an audit firm is nominated/ elected for a period of at least 3 years or more on the Board of any public sector bank then his/her such experience for a maximum period of three years will be considered as bank audit experience, provided such experience has not been earned by him/her concurrently i.e. when his / her firm was assigned statutory audit of any PSB, select all India financial institutions or RBI). v. The firm should have statutory audit experience of at least 5 years of the public sector undertakings (either Central or State Government Undertaking). (While calculating such experience, more than one assignment given to a firm during a particular year or more than one year’s statutory audit (audits in arrears) assigned to the firm will be reckoned, as one year experience only, for the purpose of counting such experience).
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Corporate Accounts & Taxation Department, 2 nd
Floor, Baroda Corporate Centre, Bandra (E), Mumbai 400 051.
Tel No. 022 66985288, 66985280, 66985276 email id : accounts.ho@bankofbaroda.com

vi. At least two partners of the firm or its paid Chartered Accountants must possess
CISA / DISA qualification.
Apart from the above, a) The eligible Auditors / Audit Firms should be qualified under provisions of Section
141 of Companies Act, 2013 for appointment as Auditors of the Bank. No adverse remarks / disciplinary proceedings pending / initiated against the Firms / any of its
Partners / Proprietor on record of Institute of Chartered Accountants of India. b) The Auditor / their relatives should not be indebted to the Bank for an amount exceeding Rs 1000/-. c) The Auditors / Audit Firms / their relatives should not be a willful defaulter of any other Bank / Financial Institutions. d) The Auditors / Audit Firms should not carryout any assignment of the internal audit of the Bank. e) The Auditors / Audit Firms should not enter into sub-contract of the Audit assigned to them. f) The Audit firm should have subjected itself to Peer Review System of the Institute of Chartered Accountants of India and hold a valid Peer Review Certificate.
1.3 Procedure of Selection
Selection and appointment of SCAs is now delegated to individual Public Sector
Banks, in terms of the guidelines issued by the Govt. of India from the financial year
2014-15.
The procedure that will be followed for selection of SCAs by the Bank is as under: a) The eligible list of firms furnished by C&AG every year will be examined by RBI. b) RBI will verify that the firm has minimum bank audit experience of 15 years from its records. c) RBI will prepare separate list of rested, continuing and non continuing eligible audit firms after excluding the name of firms who have been denied audit by
RBI/C&AG and the firms who have declined the offer of appointment given by
Public Sector Banks. The list of non continuing eligible audit firms will be further split up into list of experienced audit firms and new audit firms. Reserve bank will be giving Public Sector Banks i) List of Continuing Firms (i.e. the list of audit
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Corporate Accounts & Taxation Department, 2 nd
Floor, Baroda Corporate Centre, Bandra (E), Mumbai 400 051.
Tel No. 022 66985288, 66985280, 66985276 email id : accounts.ho@bankofbaroda.com

Firms who have not completed three years of audit ii) List of firms who are undergoing rest/cooling iii) List of eligible, non continuing audit firms in two parts viz. experienced audit firms and new audit firms. d) The audit firms applying for empanelment as SCAs in PSBs will be required to give an undertaking that, in case of selection in PSBs, they would give up the existing assignment, if any, in Private Banks / Foreign Banks / RBI / Financial
Institutions such as National Housing Bank, EXIM Bank etc. and they cannot refuse appointment of PSBs once selected. e) The allotment of vacancies of SCA's shall be in the ratio of 60:40 between
'Experienced ' and 'New' audit firms. As regards ratio of 60:40, bank will round the number to the nearest round number and choose auditors from the Experienced'” and 'New' firm list. For this purpose, an 'Experienced' firm is one which has a
Statutory Central Audit experience of any of the Public Sector Banks and 'New
Firm' is one who does not have such experience. f) While making final selection, the Bank will take into consideration the following:-

To the extent possible, at least two audit firms having their Head Office from the same place where the banks' Head office / Central Office is located, to be allocated.
 Audit firms will not be selected if they have retired from the Bank of Baroda before going under rest.
 The firms whose partner/s are on the Board of our Bank (Bank of Baroda) are not appointed as auditors for the Bank.
 An audit firm is eligible to be appointed as a Central or Branch auditor of the
Bank during a particular year i.e. a firm cannot be the Central / Branch auditor of other PSB both at the same time.

Audit firm(s) selected by the Bank after obtaining consent in writing from the audit firm, will be debarred for a period of 3 years for selection, if the firm refuses to accept the appointment without a reasonable ground, that is ground not to the satisfaction of RBI.
 After selection, as per the statutory requirement, banks, in turn, are required to forward the names of the selected SCAs to RBI for its prior approval before their actual appointment.
 A feedback on the quality of audit of SCAs may be given by PSBs to RBI after the annual audit of banks.
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Corporate Accounts & Taxation Department, 2 nd
Floor, Baroda Corporate Centre, Bandra (E), Mumbai 400 051.
Tel No. 022 66985288, 66985280, 66985276 email id : accounts.ho@bankofbaroda.com


Other guidelines i. In order to protect the independence of the auditors/audit firms, bank will make the appointments of SCA for a continuous period of three years subject to the firms satisfying the eligibility norms each year. Banks cannot remove the audit firms during the above period without the prior approval of the Reserve Bank of
India. ii. The cooling off period after completing the term of three years as SCA will be of three years.
1.4 Procedure for appointment

Bank to obtain list of eligible Audit firms from the office of RBI..

To select suitable Audit firm/s from the list of experienced / new eligible firms provided by RBI based on vacancy/ies created due to retirement and keeping in view the required proportion amongst experienced and new firms as per RBI norms. (The required proportion is 60: 40 at present)
A team of three Executives from Corporate Accounts & Taxation Department under the guidance of General Manager (Corporate Accounts & Taxation) and
CFO, will shortlist the names from the list of Audit firms received from RBI.

To obtain an irrevocable consent of the audit firm in writing for considering their name for appointment as SCA in the Bank.

To forward the names of the SCA firms so selected to RBI for prior approval with the concurrence of Audit Committee of Board.

To recommend the names of SCAs (after obtaining concurrence of RBI) to ACB /
Board of Directors for their approval.

To issue appointment letters to SCAs, after approval from RBI / Board.
1.5 Tenure of Appointment
The tenure of the audit firm will be for 3 years, subject to annual approval by the
Board and Reserve Bank of India.
1.6 Fees payable to Statutory Central Auditors
The fees payable to Statutory Central Auditors will be as per Reserve Bank of India guidelines
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Corporate Accounts & Taxation Department, 2 nd
Floor, Baroda Corporate Centre, Bandra (E), Mumbai 400 051.
Tel No. 022 66985288, 66985280, 66985276 email id : accounts.ho@bankofbaroda.com

2.0 Appointment of Statutory Branch Auditors (SBAs):
2.1 No of Audit Firms
No. of audit firms depends on number of branches to be covered under audit as per the RBI policy and the allotment criteria advised by RBI from time to time.
As per the extant guidelines of RBI, not more than 3 branches may be allotted to each of the Statutory Branch Auditors. The Statutory Central Auditors to be assigned top 20 branches of the Bank for the purpose of Statutory Audit with a maximum of 5 branches to any of the SCA firm.
2.2 Eligibility of Audit Firms
The eligibility norms for the audit firms will be as advised by Reserve Bank of India from time to time.
The selected audit firms should also satisfy the following conditions:

Eligible Auditors / Audit Firms should be qualified under provisions of Section 141 of Companies Act, 2013 for appointment as Auditors of the Bank. No adverse remarks / disciplinary proceedings pending / initiated against the Firms / any of its
Partners / Proprietor on record of Institute of Chartered Accountants of India.

The Auditor / their relatives should not be indebted to the Bank for an amount exceeding Rs 1000/-.
 The Auditors / Audit Firms or relatives should not be a willful defaulter of any other
Bank / Financial Institutions.
 The Auditors / Audit Firms should not carryout any assignment of the internal audit of the Bank.

The Auditors / Audit Firms should not enter into sub-contract of the Audit assigned to them.
 Associate firm / sister concerns of Statutory Audit firms are disqualified for special assignment when the main firm / partners are allotted statutory audit in a particular year.
 An audit firm is eligible to be appointed as a Central or Branch auditor of one
Bank during a particular year i.e. a firm cannot be the Central / Branch auditor of other PSB at the same time.
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Corporate Accounts & Taxation Department, 2 nd
Floor, Baroda Corporate Centre, Bandra (E), Mumbai 400 051.
Tel No. 022 66985288, 66985280, 66985276 email id : accounts.ho@bankofbaroda.com

2.3 Procedure for selection / appointment: o Corporate Accounts & Taxation Department will finalise the zone wise / category wise number of vacancies of SBAs for the bank as a whole, taking into account the RBI guidelines for the Branches to be audited. While determining the category wise requirement of SBA for each zone, the size of the branch and the category of audit firm will be taken into consideration in such a way that there is proper mix of audit firms from all the categories and bigger branches are allotted to higher category of audit firms.
 The audit firms will be selected from the list of eligible firms given by RBI. RBI gives the list of eligible firms under two categories – i) continuing firms and ii) recommended firms (i.e. the list from which the new firms will be selected).


Corporate Accounts & Taxation Department to segregate the list of continuing
SBAs, zone wise / statewise, and then finalise the additional number of SBAs (i.e. new SBAs) required in each Zone to meet the Bank’s total requirement.
The required number of new audit firms will be selected from the List of recommended audit firms (non continuing firms) given by RBI. The audit firms which are eligible for continuation will be selected from the list of continuing auditors given by RBI.
 Corporate Accounts & Taxation Department to provide list of new SBAs received from RBI to the Zones, having office in their respective Zone along with category wise new SBAs required to be appointed with a request to select the firms based on geographical area and obtain irrevocable consent from such identified firms. o Dy General Manager (Corporate Accounts & Taxation) at BCC, Dy Zonal Head of the respective zones is authorized to obtain such consents / undertaking from the audit firms shortlisted.
 Zonal Offices to select / finalise the SBAs by constituting a Committee consisting of Deputy Zonal Head and one Executive/ Senior Officer. The Committee while finalizing the SBAs should ensure that out of the list of Auditors provided by RBI,
Local Auditors' firm are preferred to contain the cost.
 In case sufficient number of local audit firms is not available, auditors from nearby place within the state / adjoining state / other state should be considered.
 Zones to submit the list of Audit firms selected by them to Corporate Accounts &
Taxation Department for its concurrence after taking irrevocable consent from selected SBAs. The list comprises of the new audit firms selected and the continuing audit firms of that respective Zone.
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Corporate Accounts & Taxation Department, 2 nd
Floor, Baroda Corporate Centre, Bandra (E), Mumbai 400 051.
Tel No. 022 66985288, 66985280, 66985276 email id : accounts.ho@bankofbaroda.com

 Corporate Accounts & Taxation Department, after scrutinizing the names of audit firms so selected / identified to submit them to Reserve Bank of India for approval.
On receipt of approval from RBI, Corporate Accounts & Taxation Department to place a Note before ACB / Board for approval of names and number of SBAs. After obtaining the approval from ACB / Board, same to be communicated to the Zones for issue of appointment letters to SBAs and completion of other formalities
2.4 Fees payable to Statutory Branch Auditors
The fees payable to Statutory Branch Auditors will be as per Reserve Bank of India guidelines
3.1 Redressal of grievances :
General Manager (Corporate Accounts and Taxation & CFO) will dispose off grievances/ complaints (if any) with regard to the selection of Statutory Central
Auditors or Statutory Branch Auditors and allotment of Branches to them.
The subsequent guidelines / directives issued by the Reserve Bank of India / Govt. of
India from time to time, on selection / appointment of SCAs and SBAs will be made applicable by the Bank.
The Bank reserves the right to amend the policy from time to time.
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Corporate Accounts & Taxation Department, 2 nd
Floor, Baroda Corporate Centre, Bandra (E), Mumbai 400 051.
Tel No. 022 66985288, 66985280, 66985276 email id : accounts.ho@bankofbaroda.com