Key Deliverables Balance Sheet & Profit & Loss Book Debt Statement / Summary LFAR Tax Audit Report MOC Capital Adequacy Other Certificates Audit Report

Auditing Standards: Following auditing standards are more relevant: SA 210 – Terms of Audit Engagement SA 310 – Knowledge of Business SA 400 – Risk Assessment and Internal Control SA 320 – Materiality SA 530 – Audit sampling SA 300 – Audit Planning SA 220 – Quality Control for Audit Work SA 500 – Audit Evidence SA 230 – Audit Documentation SA 580 – Representation by Management

Areas to be covered: Physical verification - Cash, security papers, valuable, Investments, securities etc.  Deposits - Compliance of KYC Norms / Dormant & closed Accounts / RBI Guidelines in case of NRE-NRO Accounts / FCNR Deposits / Overdue-Matured Deposits etc. Advances - Test check basis depending on limits. Adversely commented by previous /Concurrent auditors, inspection team etc. List of SMA 0/1/2 advances must referred. Sundry / Suspense Accounts – Pending entries, Fraud prone area, Devolvement of LC, Provisions may be required to be created.

Areas to be covered: Fixed Assets – Physical verification, Discarded assets Contingent Liabilities. – IBC / OBC, Bank guarantees / LCs, TDS (Traces), Contracts Pending, Advances for capital assets  Income Heads – Test check Rate of Interest, Penal interest, commitment charges, processing fees, Interest on loan against FDRs, Locker rent, Forex business etc. on test check basis.  Expenditure Heads – Authorisation, revenue & capital expenditure, TDS, Input tax credit.

Areas to be covered: Fraud – Diversion of Funds, frequent changes in Scope / projections, Bills discounted, FBD-long outstanding, Title of properties, Abnormal change in inventory / debtors, invocation of BG/ Devolvement of LC, transections with associate companies, change in key managerial persons, funding of interest by sanctioning additional facilities, substantial related party transections, huge cash or cash equivalents, intercompany transactions etc.

Areas to be covered: Demonetisation – Compliance of Guidelines and processes, Reporting to CO/HO, Report of Concurrent / Internal auditors, Suspicious transections / RTGS, Business Correspondents accounts. Capital Adequacy: system & Process, Classification of advances, BG expired and reversed but not closed, Ghose / Jhalani Reports: Questionnaire to be completed based on records and observations

Inputs Available/ Required: Knowledge of Finacle / Assistance by branch official Balance Sheet & Profit & Loss, Capital Adequacy, Other Certificates, Book Debt Statement LFAR, Tax Audit, MOC, Audit Report Formats GLB (General Ledger Balance / Trail Balance) List of SMA1 / SMA2 / SMA3 Advances Last Year / Half Yearly Balance Sheet Concurrent Audit Reports (At least three months) Internal Inspection Report Returns submitted to the Circle / Head Office.

Inputs Available/ Required: Report of any Special Audit /Inspection Closing Circulars RBI Master Circulars, Master Directions, General Circulars Various Policies (Credit, Investment, Recovery etc.) Balance Confirmation / Reconciliation with other banks. Book Debt Statement, NPA, Loan Files, Documents file List of Statements Generated / Registers maintained

How to Execute: Planning -Timing, Manpower, Audit Program, working paper Division of Team-BS, TA, LFAR, Certifications etc., Advances, NPA, LFAR(Advances) Collect Complete Set of Final Documents to be signed Review Complete set for primacies deficiency Review of Balance Sheet / PL/ GLB (Trail Balance) Review of Latest available inspection reports of Internal / Concurrent / RBI / Statutory Auditors and compliance thereof

How to Execute: Review of Closing Circular issued by Head Office. Study of Significant accounting policies, computer system /software. Study of Business mix of the Branch & determination of the sample size, area. Working Papers-All documents signed, GLB, Book debts, Records of test checks done, Audit program

Verification(s): Checking of opening Balance Sheet & P & L with L/Y signed Balance Sheet. Verification of Balance Sheet, P & L as on 31st March with GL Investments Security Documents – Cheque Book, PO, DD, Stamp Papers etc. (Fraud Prone Area) Verification of returns submitted to RBI / HO / ZO (periodically) Verification of Annual Closing Returns Verification of HO / Branches / Other Banks Reconciliation Verification of Statement of Fraud

Review: Balance Sheet, P & L, GLB (General Ledger Balance / Trail Balance) Concurrent Audit Reports (At least three months) Internal Inspection Report Returns submitted by the branch to the Circle / Head Office. Report of any Special Audit /Inspection Interest paid on Deposits-Comparison of ratios. Interest on Loans-Comparison of ratios Provision of interest on overdue deposits.

Review: Verification of post 31st March Vouchers. Comparison of expenses with previous year & see abnormal moment /prior period etc. Clearing Adjustment, Branch Adjustment, Sundry, Suspense account etc. Sundry Credits, Bills Payable, Contingent Liabilities-IBC/ OBC, BG-LC, Contracts given, Legal Cases, TDS (Traces), Rent dispute Expenses-Sundry Expenses, Rent, Legal & Professional, Advertisement (claim of Service Tax) Provisions-Rent, electricity, clearing house, currency chest,

Review: Debit in Income / Credit in Expenses Non-Routine entry in Interest paid Detailed checking of instances of exceeding DAP / DLP. Compliance of Mandatory Accounting Standards / Auditing Standards and RBI circulars/guidelines. Review of Advance Portfolio Review of Upgradation and degradation of advances and compliance of RBI guidelines for the same. Demonetisation- Instructions /Guidelines of bank, Internal controls system followed, Report of Concurrent / Internal Audit, Checking of few transections

THANK YOU CA. Pramod Maheshwari M. Com., FCA, LLB, DISA (ICAI) Managing Partner SPMR & Associates New Delhi, India