seminar on statutory audit of bank branches
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SEMINAR ON STATUTORY AUDIT OF BANK BRANCHES. Audit Planning and Long Form Audit Report PRESENTATION BY CA ATUL C. BHEDA B.COM, FCA, LLB(GEN), DISA(ICA). Importance of Audit Planning and reporting. Well planned is half done One should know destination to plan well - PowerPoint PPT PresentationTRANSCRIPT
SEMINAR ON STATUTORY AUDIT OF BANK SEMINAR ON STATUTORY AUDIT OF BANK BRANCHESBRANCHES
Audit Planning and Audit Planning and Long Form Audit Long Form Audit
Report Report
PRESENTATION BYPRESENTATION BY
CA ATUL C. BHEDA CA ATUL C. BHEDA B.COM, FCA, LLB(GEN), DISA(ICA)B.COM, FCA, LLB(GEN), DISA(ICA)
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 2204/21/2304/21/23
Importance of Audit Planning Importance of Audit Planning and reporting and reporting
• Well planned is half doneWell planned is half done• One should know destination to plan well One should know destination to plan well • Good planning leads to effective reporting Good planning leads to effective reporting • Audit destination is report ( to express Audit destination is report ( to express
opinion on financial statements)opinion on financial statements)• Audit planning and reporting are two Audit planning and reporting are two
important stages important stages • Audit planning is before beginning of field Audit planning is before beginning of field
work and reporting is last stage in every work and reporting is last stage in every audit audit
• Audit planning helps in controlling audit Audit planning helps in controlling audit risks (inherent,control & detection) risks (inherent,control & detection)
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 3304/21/2304/21/23
Stages in Bank Audit Stages in Bank Audit
Study of appointment letterStudy of appointment letterPreliminary workPreliminary workRisk AssessmentRisk Assessment Internal Control EvaluationInternal Control EvaluationConduct of auditConduct of auditSubmission of Audit Reports, Submission of Audit Reports,
Certificates and ReturnsCertificates and Returns
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 4404/21/2304/21/23
Study of appointments letterStudy of appointments letter
Noting of relevant contentsNoting of relevant contentsAssessment of disqualification of the Assessment of disqualification of the
auditorauditorLetter to the previous auditor of NOCLetter to the previous auditor of NOCPreparation of Acceptance letter and Preparation of Acceptance letter and
declarationsdeclarationsAssessment of reporting Assessment of reporting
requirements (Time and contents)requirements (Time and contents)
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 5504/21/2304/21/23
Preliminary workPreliminary work
Knowledge of the businessKnowledge of the businessAcquiring the knowledge for effective Acquiring the knowledge for effective
conduct if Auditconduct if AuditStaff TrainingStaff TrainingRisk assessment and evaluation of Risk assessment and evaluation of
internal controlinternal controlKnowledge about the branch Knowledge about the branch
operationsoperations
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 6604/21/2304/21/23
Knowledge of BusinessKnowledge of Business
Acquire Information of the banking Acquire Information of the banking industryindustry
Information of past events and progress of Information of past events and progress of the bankthe bank
Study of Annual reports of the earlier Study of Annual reports of the earlier yearsyears
Banking JournalsBanking Journals Laws & Regulations applicableLaws & Regulations applicable
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 7704/21/2304/21/23
Laws and Regulations applicableLaws and Regulations applicable
The banking regulation Act, 1949The banking regulation Act, 1949Master Circulars and other circulars Master Circulars and other circulars
issued by the RBIissued by the RBIThe Companies Act, 1956The Companies Act, 1956Guidance Note on Audit of Banks Guidance Note on Audit of Banks
issued by ICAIissued by ICAI
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 8804/21/2304/21/23
Important Auditing and Assurance StandardsImportant Auditing and Assurance Standards
• SA200 AAS 1 - Basic Principles Governing an Audit
• SA 230 AAS 3 – Documentation
• SA 315AAS 6 – Risk Assessment and Internal Control
• SA 610 AAS 7 – Relying upon the work of an Internal Auditor
• SA 300 AAS 8 – Audit Planning
• SA 580 AAS 11 – Representation by the Management
• SA 320 AAS 13 – Materiality
• SA 210 AAS 26 – Terms of Audit Engagement
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 9904/21/2304/21/23
Risks in Bank Branch AuditRisks in Bank Branch Audit•Effect of the statutory and regulatory requirements
•The scale of banking operations and the resultant significant exposures
•Extensive dependence on IT to process transactions
•Continuing development of new services and banking practices
•Particular nature of risks associated with the transactions undertaken by banks
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 101004/21/2304/21/23
Risk Assessment and Risk Assessment and Evaluation of internal controlEvaluation of internal control
Branch Manager meetingBranch Manager meeting Initial review of systemInitial review of systemReview of other Audit observationsReview of other Audit observations
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 111104/21/2304/21/23
Branch Manager meetingBranch Manager meeting
Review of the Organization chartReview of the Organization chart Accounting policiesAccounting policies Composition of Deposits & AdvancesComposition of Deposits & Advances Staff Strength & Average ageStaff Strength & Average age Shifts & Duty timingsShifts & Duty timings Positive and grey areas of the branch : Positive and grey areas of the branch :
Branch manager’s concernsBranch manager’s concerns
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 121204/21/2304/21/23
Initial review of the systemInitial review of the system
Meeting with departmental headsMeeting with departmental headsDivision of work and area of Division of work and area of
operationsoperationsLogistic support expectedLogistic support expectedTentative time schedule of closing Tentative time schedule of closing
work and auditwork and auditComputerization and software used Computerization and software used List of top ten borrowersList of top ten borrowersList of top ten NPAList of top ten NPA
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 131304/21/2304/21/23
Review of other audit Review of other audit observationsobservations
Reporting process between the Head Reporting process between the Head Office & BranchesOffice & Branches
Review of Concurrent Audit ReportsReview of Concurrent Audit Reports Review of Internal Audit ReportsReview of Internal Audit Reports Review of RBI Inspection ReportsReview of RBI Inspection Reports Review of RBI circulars Review of RBI circulars Review of Circular issued by Head officeReview of Circular issued by Head office Review of periodical returns from BranchReview of periodical returns from Branch Review of previous years LFARReview of previous years LFAR
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 141404/21/2304/21/23
Planning for conduct of auditPlanning for conduct of audit
Audit TeamAudit Team Audit scheduleAudit schedule Audit ProgramAudit Program Physical aspects: Travel, boarding etc.Physical aspects: Travel, boarding etc. Reporting requirementsReporting requirements
Audit facilities, computers, software, etc.Audit facilities, computers, software, etc. FormatsFormats Timings for submissionTimings for submission Alternative plan for contingenciesAlternative plan for contingencies
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 151504/21/2304/21/23
The Audit can be conducted in either The Audit can be conducted in either of the following waysof the following ways
• Inspection and Observation
• Inquiry and Conformation
• Computation
• Analytical Procedures
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 161604/21/2304/21/23
Staff TrainingStaff Training
Familiarity with banking operations in Familiarity with banking operations in different areas (deposits, loans, different areas (deposits, loans, investments, NPA norms, etc.)investments, NPA norms, etc.)
Deliverables: Audit reports, Deliverables: Audit reports, certificates and returnscertificates and returns
Audit techniques (enquiry, Audit techniques (enquiry, explanations, verifications, sample explanations, verifications, sample checks, objective evidence, etc.)checks, objective evidence, etc.)
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 171704/21/2304/21/23
GeneralGeneral
Audit Team should carry :--Audit Team should carry :--Copy of appointment letterCopy of appointment letterAuthorization letter for the staff memberAuthorization letter for the staff memberStationery : pen, pencil, letterheads, Stationery : pen, pencil, letterheads,
worksheets, rubber stamps etc.worksheets, rubber stamps etc.Copy of norms for reimbursement of Copy of norms for reimbursement of
expenses such as lodging, boarding, expenses such as lodging, boarding, Traveling and local conveyance.Traveling and local conveyance.
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 181804/21/2304/21/23
Essential of good PlanningEssential of good Planning
Knowledge of situationKnowledge of situationKnowledge of resourcesKnowledge of resourcesKnowledge of Audit expectationsKnowledge of Audit expectationsPlan to deliver more than expected.Plan to deliver more than expected.
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 191904/21/2304/21/23
Audit Report and certificationAudit Report and certification
Branch Returns : correctness of Branch Returns : correctness of branch returnsbranch returns
Audit Report : True and fair viewAudit Report : True and fair viewMemorandum of Changes (MOC)Memorandum of Changes (MOC)LFARLFARTax Audit ReportTax Audit ReportCertificatesCertificates
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 202004/21/2304/21/23
Branch ReturnsBranch Returns
All returns should be certifiedAll returns should be certified Correctness of returns should be ensuredCorrectness of returns should be ensured No changes are to be made in returnsNo changes are to be made in returns The changes are to be reported through The changes are to be reported through
MOCMOC Corrections, overwriting, deletions etc. Corrections, overwriting, deletions etc.
Care should be taken about correct Care should be taken about correct preparation and correct reportingpreparation and correct reporting
Even NIL return should be certifiedEven NIL return should be certified
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 212104/21/2304/21/23
Audit reportsAudit reports
Exceptions should be noted specifically Exceptions should be noted specifically (e.g. Provision for taxation, bonus, (e.g. Provision for taxation, bonus, NPA)NPA)
Auditor’s name and membership Auditor’s name and membership number should be mentionednumber should be mentioned
Date of Audit Report and place of Date of Audit Report and place of execution should be mentionedexecution should be mentioned
The report should be on the letterheadThe report should be on the letterhead
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 222204/21/2304/21/23
Memorandum of Memorandum of changes(MOC)changes(MOC)
Memorandum of changes for :Memorandum of changes for :Assets and liabililitiesAssets and liabililitiesIncome and ExpenditureIncome and ExpenditureChanges in Asset classificationChanges in Asset classification
In case there is no change…MOC In case there is no change…MOC with NIL remark should be submittedwith NIL remark should be submitted
MOC is a part and parcel of the Audit MOC is a part and parcel of the Audit report…Audit report without MOC is report…Audit report without MOC is an incomplete report.an incomplete report.
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 232304/21/2304/21/23
MOC ……..contd.MOC ……..contd.
Signature of the Branch Manager (BM) Signature of the Branch Manager (BM) needs to be obtained on MOC as a needs to be obtained on MOC as a token of acceptancetoken of acceptance
In a situation where BM does not accept In a situation where BM does not accept the change suggested by the Auditor, the change suggested by the Auditor, The auditor should issue the MOC, and The auditor should issue the MOC, and A suitable note should be attached A suitable note should be attached
describing the reasons as to why the describing the reasons as to why the auditor feels the change is necessaryauditor feels the change is necessary
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 242404/21/2304/21/23
LFARLFARLONG FORM AUDIT LONG FORM AUDIT
REPORTREPORT
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 252504/21/2304/21/23
BasicsBasics
• LFAR is an internal control evaluation LFAR is an internal control evaluation questionnaire.questionnaire.
• Comprehensive in scope and Comprehensive in scope and coverage.coverage.
• Covers both Balance Sheet and Profit Covers both Balance Sheet and Profit & Loss Account.& Loss Account.
• Serves as an important check list for Serves as an important check list for audit planning. audit planning.
• Make LFAR part of the audit Make LFAR part of the audit programme.programme.
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 262604/21/2304/21/23
Must Do’sMust Do’s
Study the Questionnaire thoroughly.Study the Questionnaire thoroughly.Each answer should be precise Each answer should be precise Data should be original and be Data should be original and be
supported with source document or supported with source document or MRL and just not picked up from MRL and just not picked up from concurrent audit reportconcurrent audit report
Avoid vague or general comment.Avoid vague or general comment.
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 272704/21/2304/21/23
Must Do’sMust Do’s
Give specific instances of Give specific instances of weakness/shortcomings.weakness/shortcomings.
Start preparing in month of march Start preparing in month of march Main Audit Report and LFAR are two Main Audit Report and LFAR are two
separate reports.separate reports.Qualificatory remarks Qualificatory remarks MUSTMUST be part be part
of the main report.of the main report.
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 282804/21/2304/21/23
Must Do’sMust Do’s
Main Report is a self contained Main Report is a self contained document and should not contain document and should not contain any references to LFAR.any references to LFAR.
Should be sufficiently detailed and Should be sufficiently detailed and quantified to enable expeditious quantified to enable expeditious consolidation.consolidation.
Do not make current year’s LFAR Do not make current year’s LFAR a a replicareplica of previous year. of previous year.
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 292904/21/2304/21/23
• LFAR is of utmost importance to LFAR is of utmost importance to the management as well as the the management as well as the Central Auditors.Central Auditors.
• Finalize Statutory Report and Finalize Statutory Report and LFAR simultaneously.LFAR simultaneously.
• Should be well drafted and not Should be well drafted and not loosely worded loosely worded
Must Do’sMust Do’s
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 303004/21/2304/21/23
Must Do’sMust Do’s
• Scope of work carried out should Scope of work carried out should be clearly specified.be clearly specified.
• Extent of verification be stated Extent of verification be stated
• Should create an impact on the Should create an impact on the bank management about the bank management about the quality of work carried out.quality of work carried out.
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 313104/21/2304/21/23
CoverageCoverage
Cash and Bank Balances.Cash and Bank Balances. Money at call and Short Notice.Money at call and Short Notice. Investments.Investments. AdvancesAdvances Other assets.Other assets. Deposits and other liabilities.Deposits and other liabilities. Profit and Loss Account.Profit and Loss Account. General.General. Specialized Branches.Specialized Branches.
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 323204/21/2304/21/23
CashCash
Cash balance which vary significantly from Cash balance which vary significantly from the limit fixed by controlling authorities.the limit fixed by controlling authorities.
Excess balance reported to the controlling Excess balance reported to the controlling authorities.authorities.
Adequate Insurance Cover.Adequate Insurance Cover. Joint custody.Joint custody.
Refer Instructions, Key Movement Register.Refer Instructions, Key Movement Register. Periodic checking of cash balance.Periodic checking of cash balance.
Ascertain procedure and observe during Ascertain procedure and observe during auditaudit
General scrutiny of cash book. General scrutiny of cash book.
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 333304/21/2304/21/23
Balance with RBI, SBI Balance with RBI, SBI and other Banksand other Banks
Balance confirmation.Balance confirmation. Report differences.Report differences. Observation on differences.Observation on differences. Cash transactions remaining Cash transactions remaining
unresponded.unresponded. Revenue items requiring adjustment / Revenue items requiring adjustment /
write offs. (issue MOC / Qualify report)write offs. (issue MOC / Qualify report) Old outstanding balances remaining Old outstanding balances remaining
unexplained and age wise analysis. unexplained and age wise analysis.
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 343404/21/2304/21/23
Item requiring special attention of Item requiring special attention of management.management.
Reconciliation not done / procedure not Reconciliation not done / procedure not followed.followed.
Material amount unadjusted for a long Material amount unadjusted for a long time.time.
Items affecting financial statements may Items affecting financial statements may be reported in the Statutory Report. be reported in the Statutory Report.
Balance with RBI, SBI and other Banks (cont’d)
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 353504/21/2304/21/23
Money at call and Short Money at call and Short NoticeNotice
Report even if a single transactionReport even if a single transaction Confirm that the transaction is as per Confirm that the transaction is as per
the instructions/guidelines.the instructions/guidelines. Unauthorized deposits and excess of Unauthorized deposits and excess of
authorized deposits to be reportedauthorized deposits to be reported
..
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 363604/21/2304/21/23
InvestmentsInvestments
Physical verification on behalf of H.O.Physical verification on behalf of H.O. Ensure that income earned on such Ensure that income earned on such
Investments is not accounted by Branch.Investments is not accounted by Branch. Matured or overdue investments not Matured or overdue investments not
encashedencashed Guidelines of RBI for transaction and Guidelines of RBI for transaction and
valuation followedvaluation followed
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 373704/21/2304/21/23
AdvancesAdvances Examination of all large advances Examination of all large advances
and a test check of other advancesand a test check of other advances Questionnaire in four Broad Questionnaire in four Broad
categoriescategoriesCredit AppraisalCredit Appraisal Sanctioning / DisbursementSanctioning / DisbursementDocumentationDocumentationReview / Monitoring / SupervisionReview / Monitoring / Supervision
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 383804/21/2304/21/23
Other AssetsOther Assets
Stationery and Stamps. [Clause 6(a)]Stationery and Stamps. [Clause 6(a)] Comment on existence and Comment on existence and
compliance with. Internal control compliance with. Internal control system over valued stationery with system over valued stationery with regard to issue and custody.regard to issue and custody.
Instances of missing or lost items of Instances of missing or lost items of stationery to be given (new clause).stationery to be given (new clause).
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 393904/21/2304/21/23
Other Assets (Cont’d)Other Assets (Cont’d)
Suspense Accounts / Sundry Suspense Accounts / Sundry Assets.Assets.
Critically Scrutinize these accounts.Critically Scrutinize these accounts. Details and clarification in respect of Details and clarification in respect of
old unadjusted entries be obtained.old unadjusted entries be obtained. Balances which in your opinion are Balances which in your opinion are
not recoverable. not recoverable. eg: Advance against travelling.eg: Advance against travelling.Payment to merchant establishment.Payment to merchant establishment.Legal expensesLegal expensesDividend / Interest paid.Dividend / Interest paid.
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 404004/21/2304/21/23
Other Assets (Cont’d)Other Assets (Cont’d)
Unusual items in these accounts be Unusual items in these accounts be reportedreportedeg: Cash in transit eg: Cash in transit Difference in balancing.Difference in balancing.Difference in cash.Difference in cash.
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 414104/21/2304/21/23
Deposits Deposits
Compliance with guidelines in Compliance with guidelines in respect of inoperative accounts.respect of inoperative accounts.
Instances if not complied with the Instances if not complied with the guidelines.guidelines.
Seek clarification for unusual Seek clarification for unusual movements after balance sheet date.movements after balance sheet date.
Quantification of Overdue / Matured Quantification of Overdue / Matured term deposits at the year end.term deposits at the year end.
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 424204/21/2304/21/23
Bills Payable / Sundry Bills Payable / Sundry Deposits / Contingent Deposits / Contingent
LiabilitiesLiabilities Details of old items to be reported.Details of old items to be reported. Unusual items and matured Unusual items and matured
withdrawals or debits to be reported withdrawals or debits to be reported along with their nature and amounts.along with their nature and amounts.
List of major items of contingent List of major items of contingent liabilities other than Guarantees, LCs, liabilities other than Guarantees, LCs, Endorsements, Acceptances etc.,Endorsements, Acceptances etc.,
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 434304/21/2304/21/23
Profit and Loss AccountsProfit and Loss Accounts
Existence of system to compute Existence of system to compute discrepancies in interest / discount discrepancies in interest / discount income as well as interest expenditure income as well as interest expenditure & timely adjustment thereof.& timely adjustment thereof.
Discrepancies if material to be reported Discrepancies if material to be reported (MOC to be issued)(MOC to be issued) Existence of systemExistence of system Discrepancies to be checked by branchDiscrepancies to be checked by branch Findings of Concurrent Audit/Revenue Audit.Findings of Concurrent Audit/Revenue Audit.
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 444404/21/2304/21/23
Profit and Loss Accounts Profit and Loss Accounts (Cont’d)(Cont’d)
Compliance with Income Recognition Compliance with Income Recognition NormsNorms
System of estimation and provision System of estimation and provision of Interest on overdue / matured of Interest on overdue / matured term deposits.term deposits.
Divergent trends in major items of P Divergent trends in major items of P & L A/c if not satisfactorily explained.& L A/c if not satisfactorily explained.
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 454504/21/2304/21/23
GeneralGeneral
Proper maintenance of manual Proper maintenance of manual Books of Accounts.Books of Accounts.
In respect of Computerized In respect of Computerized Branches number of new areas Branches number of new areas prescribed.prescribed.
Inquire aboutInquire aboutBanks policy Banks policy Compliance of the policyCompliance of the policy Internal Control & Security measures.Internal Control & Security measures.Backups and Disaster Recovery PlansBackups and Disaster Recovery Plans
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 464604/21/2304/21/23
General (Cont’d)General (Cont’d)
Suggestions for the improvement in the Suggestions for the improvement in the systemsystem
Reconciliation of control and Reconciliation of control and subsidiary records.subsidiary records.
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 474704/21/2304/21/23
General (Cont’d)General (Cont’d)
Inter Branch Accounts, (Very Inter Branch Accounts, (Very Important area)Important area)Understand the systemUnderstand the systemDaily Communication to HO/Designated Daily Communication to HO/Designated
cell statement of debit / credit cell statement of debit / credit transaction.transaction.
Agreement between balance in HO Agreement between balance in HO Account Branch Accounts.Account Branch Accounts.
Old outstanding debits in the Head Office Old outstanding debits in the Head Office Account. Account.
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 484804/21/2304/21/23
General (Cont’d)General (Cont’d)
Expeditious compliance to Expeditious compliance to communication from HO / Designated communication from HO / Designated cell (Report unresponded entries)cell (Report unresponded entries)
Items of Double response in HO Items of Double response in HO Account.Account.
Old / Large outstanding transaction at Old / Large outstanding transaction at debits as at year end.debits as at year end.
Audit and InspectionAudit and Inspection
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 494904/21/2304/21/23
General (Cont’d)General (Cont’d)
Particulars of frauds discovered Particulars of frauds discovered during the year together with your during the year together with your suggestions to minimize the same.suggestions to minimize the same.
Window dressing to be reported Window dressing to be reported eg. Large deposit at year end.eg. Large deposit at year end.
Under utilised facilities converted in Under utilised facilities converted in Deposits. Deposits.
Unsecured loans shown as secured.Unsecured loans shown as secured.
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 505004/21/2304/21/23
General (Cont’d)General (Cont’d)
Maintenance of Fixed Assets Maintenance of Fixed Assets Records.Records.Documents of title in relation to branchDocuments of title in relation to branch
Non compliance with Ghosh and Jilani Non compliance with Ghosh and Jilani Committee recommendations.Committee recommendations.
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 515104/21/2304/21/23
Ghosh and Jilani committee Ghosh and Jilani committee recommendationsrecommendations
Ghosh committee : A high level Ghosh committee : A high level committee was set up to enquire into committee was set up to enquire into the various aspects of fraud and the various aspects of fraud and malpractices in the bank and to malpractices in the bank and to make recommendations to reduce make recommendations to reduce such instancessuch instances
Jilani committee : A working group Jilani committee : A working group was formed to review the internal was formed to review the internal control and inspection/audit system control and inspection/audit system in bankin bank
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 525204/21/2304/21/23
GHOSH COMMITTEE GHOSH COMMITTEE RECOMMENDATIONS RECOMMENDATIONS
WERE FOR WERE FOR Improvement in day to day administrative Improvement in day to day administrative
functionsfunctions For ensuring safety of assets For ensuring safety of assets Compliance with the let down policies and Compliance with the let down policies and
proceduresprocedures Accuracy and completeness of accounting Accuracy and completeness of accounting
and other recordsand other records Proper segregations of duties and Proper segregations of duties and
responsibilities of the staffresponsibilities of the staff Timely prevention and detection of frauds Timely prevention and detection of frauds
and malpracticesand malpractices
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 535304/21/2304/21/23
Ghosh Committee Ghosh Committee RecommendationsRecommendations
Recommendations divided in to four Recommendations divided in to four groupsgroups
• Group-A: Recommendations, which Group-A: Recommendations, which have to be implemented by the banks have to be implemented by the banks immediatelyimmediately
• Group-B: Recommendations requiring Group-B: Recommendations requiring Reserve Bank of India’s approvalReserve Bank of India’s approval
•
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 545404/21/2304/21/23
RecommendationsRecommendations
• Group-C: Recommendations Group-C: Recommendations requiring approval of Government of requiring approval of Government of IndiaIndia
• Group-D: Recommendations Group-D: Recommendations requiring further examination in requiring further examination in consultation with IBA.consultation with IBA.
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 555504/21/2304/21/23
Ghosh Committee Ghosh Committee
Out of 97 recommendations, Out of 97 recommendations, 27 required to be reported at the 27 required to be reported at the
branch levelbranch level43 at Regional Office (RO), Zonal 43 at Regional Office (RO), Zonal
Office (ZO), or at Head Office (HO)Office (ZO), or at Head Office (HO)27 at both the levels i.e. Branch as 27 at both the levels i.e. Branch as
well as RO/ZO/HOwell as RO/ZO/HO
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 565604/21/2304/21/23
JILANI COMMITTEEJILANI COMMITTEE
Working group to review the internal Working group to review the internal control and inspection and audit control and inspection and audit system in bankssystem in banks
Contains 25 questions and to indicate Contains 25 questions and to indicate the answer as either “Implemented “ the answer as either “Implemented “ or Not Implemented”.or Not Implemented”.
CA Atul C. Bheda MumbaiCA Atul C. Bheda Mumbai 575704/21/2304/21/23
JILANI COMMITTEE JILANI COMMITTEE RECOMMENDATIONSRECOMMENDATIONS
Broadly divided into three categories Broadly divided into three categories • Dealing with the EDP environment in Dealing with the EDP environment in
the banksthe banks• Dealing with the inspection/Internal Dealing with the inspection/Internal
audit system in the bankaudit system in the bank• Dealing with other miscellaneous Dealing with other miscellaneous
aspects of functioning of a bank. aspects of functioning of a bank.