File - CA Kumar Gaurav (ACA, CS, CAIIB, B. Com(H

[email protected]/9350514064
Appointment Letter
 What the appointing authority expects
from us, say for example some of the
banks like Bank of Maharashtra doesn’t
expect the Concurrent Auditors to perform
Unit Visit while most of the other banks
require the same.
Composition of the Audit Team
Days of Attendance of the Audit team
Minimum visits of the Partners
 Report to be submitted to whom and when
Other Compliances
 Peer Review Board compliance: What
the Institute expects from us considering
functions and compliance with Standards
on Auditing while performing Audit.
 Documents which needs to be kept in
Working Paper File.
 Compliance with RBI’s Master Circulars
Know Your Branch
 Whether Branch is doing Forex
business, Government Business?
 Power of Branch Head in terms of
 Targets of the Branch in terms of
Advances, Deposits, NPA Recovery,
Priority Sector Lending etc.
One of the major Focal Point of
 Why the KYC: RBI (principal Regulator) is
focusing heavily on KYC compliance as it is
required to be complied with and is in
consonance with Prevention of Money
Laundering Act’2002 and Anti Money
Laundering measures.
 RBI Policy requirements:
Customer Acceptance Policy
Customer Identification Procedures
Monitoring of Transactions
Risk Management
Bank’s Policy with KYC
Latest Photograph
ID Proof
Address Proof
PAN/Form 60
Account Opening Form properly authorized
Risk Classification
Fixing Threshold limit for new accounts as per
Risk classification and feeding the same into
Monitoring of Transactions as per RBI
Guidelines like ` 10 Lacs cash transaction limit,
breach of threshold limit or series of
transactions together
Nature of Returns Submitted
Flash Report
Advances Sanction List
TOD/EOD Statement
B.P/B.D Statement
B.P/B.D Returned Unpaid Statement
Compliance of Audit reports like Statutory
Audit, Internal Inspection,
Inspection, RBI Inspection, Credit Audit,
FOREX Audit or
Concurrent Audit
 TDS Return
 Service Tax Return
Registers to be maintained
Register of adhoc/temporary sanction
Register of suit filed accounts
Guarantee issued register
Proposal sanctioned register
Irregularities pointed out in previous
RBI/LFAR/Inspection reports are not
 Poor follow up of NPA / suit filed /
decreed accounts
Management Representation
 As some of the banks require some certificates
from the Auditors and everything cannot be
checked by us, so safeguard yourselves by
obtaining a MR in relation to that which could
relate to the following:
We hereby certify that no fraud, irregularities or
serious fraud has occurred during the current month
Only clean and unstapled notes are issued to the
public and accepted as well
No writing is done on the watermark portion of the
Staples, Adhesives are not used to secure notes
We certify that we do exchange the soiled and
mutilated notes when customer asks for the same
We accept Ashoka Pillar notes but do not issue them
to public, instead remit them to RBI
We stamp on the forged notes and impound the
same, issue a receipt to the Customer and then lodge
a FIR with simultaneous forwarding to the nearest
Police station. We also send a report in this regard to
the Forged Notes Vigilance Cell along with a copy of
the FIR.
We have the Ultra Violate Machine for detection of
fake notes and this is used for detection as well.
We have correctly collected service tax on various
customer services and transferred the same to G/L
Service Tax payable
Revenue Leakage
 Possible points of Revenue Leakage could
Process fee for adhoc limit is being levied.
Levying of 1% additional interest above the
applicable rate in case of adhoc sanctions under
BO/RO/HO powers.
Penal Interest for late submission of stock
Inspection charges as per policy of the bank.
Process fee on pro-rata basis is being charged
w.e.f the date of expiry of limit to the date of
Appropriate charging of Commission on LC, BG etc.
Folio Charges at year end.
Processing charges.
Documentation charges.
Cheque returning charges.
Cash handling charges (if applicable).
Non maintenance of minimum balance.
Against Clearing Charges(If it is the policy of the
TOD/Excess charges
In case of CC/OD A/cs, penal interest for returning of
Cheque must be charged by the bank.
Legal Compliances
 Frauds detected must be reported in Flash report.
 Deduction & Depositing of TDS must be correctly
 TDS returns to be checked.
 Insurance cover of Cash-in-hand and Cash-in-transit.
 Observance of KYC/AML guidelines.
 Whether cash transactions of Rs. 10lacs or above are
noted and reported to Controlling Authority well in
 FBT, TDS, Service Tax, Unit Visit (Important)
 Compliances of Bank Circulars, RBI Notifications &
Guidelines etc.
Unit Visit overview
Before going for unit visit, read all the documents
available with the bank and terms & conditions of
sanction and check whether all the conditions are
complied with.
Management personnel who was available at the
Name Plate of the bank at main gate.
Whether the unit is working?
Whether the stock register is maintained & updated,
if yes take a copy of the same.
Books of accounts updated till which date, a copy of
trial balance is to be obtained.
Whether physical stock is APPARENTLY the same as
what is appearing in the stock register.
Take a receiving of the stock statement and trial
balance supplied by them.
Foreign Exchange
Verify the foreign bills purchased and collection
period thereof.
Check whether calculation of FCNR interest is on
360 day basis and is credited to deposit
In case of forex dealing branches, form A1, A2
and Bill of Entry to be checked thoroughly.
PC is to be adjusted only through export
R return register are to be sent to RBI in time.
Operational Part
Generation of End of day reports/statements,
exceptional reports and authentication of the same
by the branch head.
Matters relating to secrecy of passwords, locking of
passwords on someone’s leave, deleting the user
after his relieving etc...
Whether ATM card & PIN are with two different
personnel to ensure Dual Control Mechanism.
Check Overdue in case of Locker Rent.
Whether Security forms are under Independent Dual
Verify stock of security forms with the physical ones.
Inward/Outward chq returning charges to be debited.
Look for TODs/Excess in case of Saving/Current accounts.
Check whether any difference in clearing has been
adjusted by debit/ credit to an intermediary suspense
account instead of locating the difference.
Suspicious transactions in staff accounts.
Cash Payments of sizeable expenditure are to be
scrutinized thoroughly.
No DD/PO is made in cash of above Rs. 50,000/No payment is made in excess of Rs. 20,000/- in case of
repayment of Demand Deposits.
Proper accounting of Inward/Outward remittances is done
or not?
Income from fund based and non fund based advances are
to be shown separately.
Comments on revenue & Capital expenditure
(vouchers to be signed doubly).
Exceptional transactions in case of sundry charges.
Ensure all transactions which are system generated
must accompany by a corresponding debit & credit
slip and properly initialed by a branch official.
Check for presence of any soiled/mutilated notes.
Complaint register is to be maintained at branch level
and no complaints should be pending.
Non submission of Control returns for more than a
month is to be reported in Flash Report.
Guarantees invoked during the month to be noted.
 Due date diary of following is to be maintained
Drawing Power
 Cheque Purchase register must be there and it must
be within branch powers, Realisation of same must be
made in appropriate time.
General Points
During the opening of branch, was the official key
holders of cash were actually present along with
Branch Head?
While opening of strong room was Guard present and
also the main gate remains locked?
Does the citizens charter is displayed in the bank
Rate of Interest offered on Deposits and Interest on
advances are displayed prominently and also
Name of the Bank’s Ombudsman along with his
contact details are displayed.
Addresses and Contact details of concerned Regional
& Zonal offices are also to be mentioned.
Notice regarding acceptance of old notes and coins to
be displayed near the cash counter.
Cash/Cheque deposit forms are readily available to
List of Service Charges are to be displayed at branch
Latest circulars are to be displayed at branch and
also the concerned department also needs to be
informed with it.
While opening new account, the customer must be
informed with all the service charges.
Persisting Irregularities: Always look for any
irregularity which has not been complied with till the
next report is to be mentioned in the current month.