Documentation, Reporting and Various Certification in Bank Branch Audits Presented by CA. Prashant Tidke, P.G. JOSHI & CO

Documentation * Pre Audit Documentation - Sending Acceptance Letter along with necessary Declarations and Confirmations. - Communication with the Previous Branch Auditors. - Audit Plan and Checklists based on Letter of appointment, terms of reference and time deadlines. - Team Composition and Execution Planning.

Pre Audit Documentation : Closing Circular of the Bank for the Year Checklist of Various Reports and Certifications. Documented Audit Program with Work Allocation. Compilation of Important and latest RBI Master Circulars. Latest available Bank Circulars having Bearing on Branch Audit. Documentation

During Audit Documentation : a) Obtaining Letter of Representation from the Branch Manager. b) Obtaining and filing of Documents Certified by the audit staff duly initialed and dated and marking the same in the Checklist along with the name of the team member. c) Obtaining and filing of various other supporting documents taken from the System and/or the Branch Management. Documentation

During Audit Documentation: System Generated Print outs, supporting the Returns. LFAR and Annexure to LFAR (advances for more than Rs. 2 crore.) Minutes of the Meeting with the Branch Manager. Compilation of Points to be discussed with the Branch Management before the closure of audit and finalization of audit report. Documentation

Post Audit Documentation :  Office copy of the All the Certificates and Returns duly countersigned by the Branch Manager.  Attendance Certificate issued by the Branch Manager.  Compilation of Working Papers file separately along with the Reports and Certificates file. (For Peer Review – very important).  Documentation regarding dispatch of Reports and Certificates to various Offices as per Checklist. Documentation

Important Reports :  Branch Auditors Report. - Addressed to Statutory Central Auditors. - Materiality and Qualification. - Reference to MOCs - Reference to LFAR  Long Form Audit Report.  Tax Audit Report.  Memorandum of Changes ( MOCs) Reporting

Returns certified by the Branch Auditors Balance Sheet and Profit and Loss Account Set at the year end. Subsidiary Returns to Final accounts. Cash Certificate. ATM Cash Balance Certificate. Bank Balance Certificate and BRS. Sundry Assets/Suspense Accounts. Sundry Deposit Accounts/Bills PayableAccount.

Returns Certified by Branch Auditors Fixed Assets and Depreciation.(including that for the purpose of Tax Audit). Certification for Capital Subsidies- (SSI sector) Statement of Interest Subvention in respect of short term agriculture loans/housing loan/Export credit. Payment of premium to DICGC. Payment of Interest subsidy on Educational Loans

Returns certified by Branch Auditors. Most Important Certifications :- Capital Adequacy Statement- Basel II and III. Statement of Classification of Advances NPAs and Provisioning. Movement of NPA and Movement of Provision of NPA. Memorandum of Changes (MOC) Certificate about compliance of IRAC Norms.

Returns Certified by Branch Auditors Certificate regarding Fraud Assets. Branch Stationary – Numbered as well as others. Opening Balance +Receipts – Consumption – Old destruction = Closing balance. Certification regarding DFV – Diminishing Fair Value in respect of Restructured advances. Return regarding Advances Under Collection. (AUC)

Returns certified by the Branch Auditors Certificate regarding Exposure to Capital Market. Certificate regarding Ghosh Committee- Frauds and Malpractices and implementation of steps taken by the Bank (Branch). Certificate regarding Prior Period Income and Expenses. Certificate regarding Jilani Committee – Relating to Internal controls and Inspection/ Internal audit of Bank (branches)

Returns certified by the Branch Auditors Certificate regarding Provision on Standard Advances. Certificate regarding LOCs Issued during the year and outstanding as at the Year end- Letters of Comfort. (Currency wise) Certificate regarding Outstanding BG s and LCs (Inland and Foreign). Certificate regarding Contingent Liabilities and Provisions- Court cases and litigations.

Returns certified by the Branch Auditors Most Important Certifications :- Compliance of SLR/CRR requirements on 12 odd dates. Statement of Contingent Liabilities and Margins held. Country-wise risk and Exposure. Exposure to Sensitive Sectors. Certification in respect of Restructured Advances & Reversal of Interest.

Returns certified by Branch Auditors Certificate regarding pending claims with ECGC. BASEL Consolidation Sheet – (Total fund based, non fund based and NPAs) Pre-MOC and Post-MOC. Statement of LCs Invoked and BGs Devolved during the FY Certificate regarding Foreign Notes held at the Branch (AD branches)

Returns certified by Branch Auditors Consolidation of LFAR- Long Form Audit Report. Consolidation of Tax Audit Report. Compliance of GHOSH AND JILANI Committee recommendations. Qualification/Comments in the Branch Statutory Auditors Report.

Most Important Pointers. Memorandum of Changes – - Go through the circular of the Bank. - Thresh hold limit for passing MOC. - Discussion and concurrence of the Branch Manager. - Contact Regional Authority or CSA in case of dispute. - CSA s do not ignore or change MOC without Branch Auditors Concurrence

Expectations … Branch Auditors Report – In case of a Qualification in the Branch Audit report, please furnish exact issue which has led to the qualification. Use of Professional judgment to draw a line between an Adverse comment and a Qualification.

General Points Identification of additional NPAs, not already identified. Timely completion of Branch audit. Future consolidation is held up. Valuation of Securities, Correct Classification and Provisioning. Certification of Maturity Pattern of Assets and Liabilities (ALM statements) Comments to be self explanatory and with proper instances and justifications.

T H A N K Y OU CA. Prashant Tidke