Audit Planning and Documentation for Banking Branches

CA MV KALI PRASAD FCA Sr Partner KALI & Co., CHARTERED ACCOUNTANTS Hyderabad Presents complements and Welcomes you to a presentation on

PLANNING AND DOCUMENTATION FOR AUDIT OF BRANCH OF A BANK KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466

Disclaimer The views and opinions expressed in this presentation are those of the presenter and do not necessarily replace independent professional judgement, nor is endorsed by organisers of the session. Examples included within this presentation are only examples. They may not be utilized in real- world situations as they are based only on very limited information based on past experience of the presenter. The presenter neither is endorsing nor is recommending any of the tools or applications discussed during the presentation and are only used as examples KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466

PLANNING FOR AUDIT This is done by the partner/ proprietor of the firm taking into account A) size of the firm B) break up of the advances C) Number of accounts D) Reports/ observations of inspections/ concurrent auditors/ Risk based RBI inspections, KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466

There are certain mandatory procedures during the course of the audit of a branch Audit of Advances Audit of deposits Audit of Bills LFAR IFCOFR Tax Audit KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466

The principal would guide on how to go about with the procedures depending upon the given situation. Planning depends upon several factors such as: Nature of activities Core Banking solutions Materiality levels KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466

Coordination with branch management Time frame Annual closing guidelines issued by the head office Latest guidance note issued by ICAI RBI circulars KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466

WHY DOCUMENTATION? Essential for an auditor to prove that he has conducted the audit as required by the generally accepted auditing practices. Helps as an evidence in case of a charge of negligence. Helps as a record and guidance for subsequent audit During peer review, the PR would look into the documentation. KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466

SA:230 ON DOCUMENTATION Read carefully the requirements of SA:230 on documentation before commencing the audit to understand what is required of you. Compliance with SA:230 is essential. Make necessary adjustments / additions to comply with SA:230 KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466

WHAT IS TO BE DOCUMENTED? The whole process of branch audit starts with applying for empanelment Keep a copy of the application and acknowledgement from the PDC in working file. Upload the consent letter and declarations to the banks website site and keep a copy of the consent letter in your file as well. PDF copy of the signed documents shall be kept in the folder. KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466

LETTER OF APPOINTMENT After sending the consent, the bank sends the appointment letter indicating the branches allotted together with the details of the following: Name and numbers of the branch manager Location of the branch Tentative advances at the branch Branch code. Contact numbers of the controlling office Contact numbers and address of the outgoing auditors KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466

List of documents/ reports/ certificates to be signed by the auditors Details of the statutory central auditors Tentative date of commencement and date of completion as required by them. Your principal will schedule the work accordingly. KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466

COMMUNICATION WITH OUTGOING AUDITOR Code of ethics requires the auditor to communicate with the outgoing auditor. This is required for the branch audit as well Keep a screenshot of the letter in the file along with the reply received if any. Please note that the communication should be before acceptance of the audit. KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466

BRANCHWISE DOCUMENTATION The following should form part of the documentation in a chronological manner. Composition of the team Partner designated to the branch General guidelines for the staff. Documents should be dated and labelled. KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466

ON REACHING THE BRANCH Issue LOE and seek MRL signed by the branch head. Basic information of the branch: Date of starting of the branch Details of the present manager Branch staff KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466

No. of ATM both onsite and off site. Details of the concurrent auditors if any. Date of last inspection Last RBI inspection Earlier years branch audit report. Branch responses to findings of RBI/ Inspection Any suits filed by or against thebranch KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466

Concurrent audit reports of the current year. NPA Status Any change of staff during the current year Classification of advances Details of any frauds unearthed during the year under audit Rescheduled accounts KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466

DURING THE COURSE OF AUDIT CASH VERIFICATION INCLUDING ATM CASH: Who constitute the team for cash verification Date and time of verification Cash as per the statement Physical verification Denominations Variations if any KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466

Note cash retention limits. Note cash balance as on the date of audit as well as the date of balance sheet. Reconcile the cash balance from the date of audit to balance sheet date, and keep the reconciliation on file. Check the frequency for cash on hand in excess of retention limits. KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466

BALANCES WITH OTHER BANKS Letter of balance confirmations from other banks if any. If there are no bank accounts, a certificate from the branch manager to that effect. KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466

ADVANCES Your principal will give guidelines for selection and the procedures to be carried out. Samples selected for scrutiny. Full details of the samples examined and observations thereon, KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466

IRAC NORMS Carry to the branch the latest RBI guidelines on NPA norms for any reference if needed. Document the procedures followed for identification of NPA. Report your findings to the principal. Document every item you have examined. KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466

LFAR Understand LFAR before reaching the branch Lot of information is required to fill up LFAR Source data for LFAR should be documented. Every opinion in the LFAR should be supported by findings Keep authentic information in your documentation. KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466

IFCOFR This is about the Internal financial controls. Just signing the report generated by the branch is not acceptable. Justify every statement mentioned in LFAR and IFCOFR KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466

THAT IS IT FOR NOW HAPPY AUDIT ENJOY THE WORK KALI & CO., HYDERABAD WWW.KALIANDCO.IN 9849041466