How to plan before Bank audit to make audit fast and efficient

1. WIRC of ICAI
Audit Planning & Audit
Certification including GoshJilani Report
Presentation By
CA. Nitant Trilokekar
Email: nitanttrilokekar @yahoo.com
Internet: nptbanking.blogspot.com

2. ct
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rtly
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ed

3. Plan your work and work your plan
BY FAILING TO PREPARE
YOU ARE PREPARING TO
Benjamin Franklin
FAIL

4. Why Plan
Well planned activity is well
Well planned activity is well
done
done
Time available does not match the scope and risk
Time available does not match the scope and risk
Channel increase & computerisation has
Channel increase & computerisation has
permitted manifold increase in business of the Bank
permitted manifold increase in business of the Bank

5. Types of Branches
‘Regular’
Branches
‘Specialist’
Branches
5

6. Type of branch 1 st Step of
planning
HR
HR
Plan
Plan
Requisite staff to match the Branch
Requisite staff to match the Branch
profile
profile
Brushing up certain areas like Foreign Exchange
Brushing up certain areas like Foreign Exchange
Time to go through the RBI Master and
Time to go through the RBI Master and
subject relevant circulars
subject relevant circulars

7. Documents - the start and end
Appointment letter 1 st Document
Appointment letter 1 st Document
Letter of requirements
Letter of requirements
Minute your discussion with
Minute your discussion with
full identification of person
full identification of person
Working papers (next slide)
Working papers (next slide)

8. Working notes different from Corporate
sector
Signed Final
Signed Final
Accounts
Accounts
Trial balance
Trial balance
Scroll of each department –
Scroll of each department –
Advances – New advances, sticky advances
Advances – New advances, sticky advances
Important Extracts of other
Important Extracts of other
Audit Reports incl previous year’s
Audit Reports incl previous year’s

9. Start before the year end
Acclimatize to the Branch profile, Staff, Tea
Acclimatize to the Branch profile, Staff, Tea
etc.
etc.
Health of majority borrowers not likely to change
Health of majority borrowers not likely to change
Study thoroughly
Study thoroughly
1.Previous report
1.Previous report
2.Concurrent Audit report
2.Concurrent Audit report
3.Revenue Audit report (if any)
3.Revenue Audit report (if any)
4.System Audit report (Jalani Committee)
4.System Audit report (Jalani Committee)
5.Unit/stock Inspection reports
5.Unit/stock Inspection reports

10. Co-ordinate plans with Bank
Branch
Request for sitting on Sundays and Bank
Request for sitting on Sundays and Bank
Holidays
Holidays
Unit visits chosen by you – especially for
Unit visits chosen by you – especially for
outstation location
outstation location
Sharing your strategy will
Sharing your strategy will
ensure staff and physical accomodation
ensure staff and physical accomodation
Meeting the Concurrent Auditor with Branch
Meeting the Concurrent Auditor with Branch
Manager to discuss serious pending issues
Manager to discuss serious pending issues

11. Planning for different elements of
Audit
Planning for Branch Health incl Fraud/leakages
Planning for Branch Health incl Fraud/leakages
Planning for Health determination of borrowers
Planning for Health determination of borrowers
Planning for Computer related issues
Planning for Computer related issues

12. Planning for Branch health
Ratio analysis – same year & Comparison
Ratio analysis – same year & Comparison
Books to tally
Books to tally
Revenue accuracy
Revenue accuracy
Top 10/20 borrowers
Top 10/20 borrowers

13. Planning for health determination
of borrowers
Branch returns--half year/monthly
Branch returns--half year/monthly
Cash Credit--Account Turnover 10 times
Cash Credit--Account Turnover 10 times
the sanctioned limit
the sanctioned limit

14. Planning for Computer related
issues
Identify application brand and available reports
Identify application brand and available reports
Obtain sufficient number of User ID
Obtain sufficient number of User ID
TXT file to Excel
TXT file to Excel
Read Jalani Committee recommendations
Read Jalani Committee recommendations

16. RBI site must be in your book mark
AT THE TOP

17. Off B/S items
CAR
Credit conversion factor (CCF)
Credit conversion factor (CCF)
Financial guarantees are direct credit substitutes
Financial guarantees are direct credit substitutes
Performance guarantees
Performance guarantees
(( CCF of 100 per cent ))
CCF of 100 per cent
(CCF of 50 per cent )
(CCF of 50 per cent )
(i) Bid bonds;
(i) Bid bonds;
(ii) Performance bonds and export performance guarantees;
(ii) Performance bonds and export performance guarantees;
(iii) Guarantees in lieu of security deposits // earnest money deposits (EMD) for participating in
(iii) Guarantees in lieu of security deposits earnest money deposits (EMD) for participating in
tenders;
tenders;
(iv) Retention money guarantees;
(iv) Retention money guarantees;
(v) Warranties, indemnities and standby letters of credit related to particular transaction.
(v) Warranties, indemnities and standby letters of credit related to particular transaction.

18. Indirect
financing
Upfront disbursal of sanctioned individual housing
Upfront disbursal of sanctioned individual housing
loans to the builders
loans to the builders
No link to stages of construction of housing project
No link to stages of construction of housing project
EMI & interest serviced by the builders during the
EMI & interest serviced by the builders during the
construction period/specified period
construction period/specified period
Disputes/non service by builders lower credit
Disputes/non service by builders lower credit
rating/scoring of such borrowers by credit information
rating/scoring of such borrowers by credit information

19. WIRC of ICAI
Certification including GoshJilani Report
Presentation By
CA. Nitant Trilokekar
Email: nitanttrilokekar @yahoo.com
Internet: nptbanking.blogspot.com

20. What is a Certificate
Final Accounts
Final Accounts
Annexures
Annexures
LFAR
LFAR
PMRY etc.
PMRY etc.

21. Certificates
• Certificate relating to DICGC transactions in respect of Credit
Guarantee scheme
•PMRY Certificate
•Certificate relating to cash and Bank Balances
• Certificate relating to investments held
• Certificate in respect of segment Reporting (AS 17)
• Certificate on risk weighted assets for BASEL-II CRAR
• Certificate of NPAs at the Branch
• Interest subvention claim (short term crop loans, Kisan Credit card,
Warehouse receipt to small and marginal farmers)
• Central interest subsidy scheme for Education loan to students
belonging to economically weaker section (EWS)
• Utilization certificate under the scheme of 1% interest subvention on
Housing Loans (upt 10 lacs and upto 15 lacs)
• Certificate for having given effect of MOCs suggested during the
previous year.

22. Protocol for issuing a Certificate
•The audit report/ certificate should be printed on the
letterhead of the auditor firm.
•It should be dated not earlier than the date on which
the financial statements/ certificates are signed by the
Branch Manager.
•The audit report/certificate should be signed in the
personal name of the partner and on behalf of the firm.
•Firm registration number of ICAI should be invariably
mentioned in the audit report along with the firm’s seal.

23. Jilani committee recommendation
status
Complaint
Complaint
re:
re:
Auditors
Auditors
Mere replica of previous reports.
Mere replica of previous reports.
May be held accountable under ICAI disciplinary process.
May be held accountable under ICAI disciplinary process.
25 questions to be answered. Implemented/not implemented
25 questions to be answered. Implemented/not implemented
Some of the Recommendations are to be implemented at
Some of the Recommendations are to be implemented at
Branch Level and some of them at RO/ZO Level
Branch Level and some of them at RO/ZO Level

24. Jilani committee recommendation
status
Sr.
no
Reco
mme
ndati
on
no.
Nature of Recommendation
1
39
Follow up on major/serious irregularities detected during
concurrent audit immediately taken up with the HO. A time
bound action programme for rectification to be drawn up and
closely monitored. Fraudulent transactions to be reported to
Vigilance/Chief of Inspection/Audit etc.
2
44
Auditors to get majority of irregularities rectified during their
stay at the branches concerned and guide them as well.
3
45
4
53
5
54
Immediate action to be taken to plug gaps in serious irregularities/revenue
leakages which have surfaced due to loopholes in existing procedures,
abnormal deviations from laid down procedures/ norms in consultation
with the departments concerned by issue of fresh guidelines.
Appropriate control measures should be devised and
documented to prevent the computer system from attacks of
unscrupulous elements. All aspects of security, reliability, and
accessibility are ensured before introduction of EDP application
in place of manual system by having pilot parallel runs.
Various tests to be carried out to ensure that EDP applications
have resulted in consistent and reliable system for inputting,
processing and generation of output of data.
Implimentation
status at Br.

25. Ghosh committee recommendation
status
Committee formed to review the causes of frauds and
Committee formed to review the causes of frauds and
malpractices in Banks and give recommendations on minimising
malpractices in Banks and give recommendations on minimising
the same.
the same.
Complaint
Complaint
re:
re:
Auditors
Auditors
Mere replica of previous reports.
Mere replica of previous reports.
Branch Management is required to prepare this report
Branch Management is required to prepare this report
“YES” or “NO” Format
“YES” or “NO” Format
Branch Auditor is required to verify the answers
Branch Auditor is required to verify the answers

26. Objective
a. Safety of assets,
b. Compliance of laid down procedures,
c. Accuracy and completeness of accounting
and other records,
d. Proper segregation and rotation of duties and
responsibilities of staff and,
e. Measures for the prevention of frauds.
f. Timely detection of frauds and malpractices
and taking corrective actions

27. Ghosh Committee Recommendations
Sr.
no
Reco
mme
ndati
on
no.
Nature of Recommendation
1
3.3
2
3.4
Joint custody and dual responsibility of cash and other
valuables.
Transactions in the currency chest to be reported to RBI
on the same day.
3
3.5
4
8.10
Adhering to the prescribed norms and safeguards issued
by RBI on issue and payment of high value drafts,
depositing large amounts in new accounts without verifying
antecedents, opening of benami accounts, etc. to prevent misuse
of banking channel.
a. System of exclusive scrutiny of credit portfolio with focus on
larger advances and group exposures.
b. Special scrutiny of high value accounts shifted to the bank
along with executives and account transferred from
other branches along with officials. The observations of RBI
Inspections should be promptly and effectively followed up by
banks.
Implementation
status at Br.

28. Q & A?
Thank you